The European Association of CCP Clearing Houses (EACH) responded to the European Central Bank (ECB) consultation on a possible extension of T2 operating hours.
Key messages:
- EACH supports longer operating hours in the long term for real time gross settlements (RTGS) and central liquidity management (CLM), focusing on weekdays and public holidays only, rather than 7 days a week, 365 days a year operations.
- EACH supports shifting the current maintenance window starting at 18:00 away from these core clearing hours, in the short term.
- EACH believes a phased implementation approach, with a reasonable transition period of at least two years would work best, thereby ensuring market participants can adapt smoothly and in coordination with related TARGET services.
In addition, extending T2 operating hours would:
- Strengthen the international role of the euro by enhancing the attractiveness of EU post-trade infrastructure and CCPs, particularly in critical markets such as energy, including by allowing clearing participants to rely on the euro for margin payments later into the day and reducing reliance on non-euro currencies.
- Reduce operational risks and costs by addressing the current 18:00–19:30 CET maintenance window, which restricts euro liquidity when CCPs may issue margin calls, particularly visible during volatile periods and under T+1.
- Support cross-border payments by increasing the speed, transparency, and finality of settlements, consistent with the G20-endorsed roadmap for enhancing cross-border payments.
- Future-proof T2 against potential future shorter settlement periods and longer global trading hours.
When asked how important would it be to actively manage credit lines during the extended operating hours, either by mobilizing new collateral or by reassigning already mobilized collateral to the intraday credit line, EACH replied that “collateral pledges and reassignments should be possible throughout the entire period that T2 is open to ensure that credit lines can be actively managed during extended operating hours.”