SIX Group mulls creation of euro CSD

SIX Group mulls creation of euro CSD

ECB harmonized securities settlement moves ever closer

SIX Securities Services, a subsidiary of financial infrastructure provider SIX Group, is weighing up the creation of a central securities depository in the eurozone. Speaking on Tuesday at an event organized by the Swiss Finance Forum for Standards and Operations in Zurich, Thomas Zeeb, CEO of SIX Securities Services, explained that SIX Group has been examining six different options for responding to the European Central Bank's proposed introduction of TARGET2-Securities (T2S) in the eurozone. Having discarded four of these, the discussion is now focused on whether Switzerland will participate directly in T2S or whether it will create its own central securities depository (CSD) in the eurozone. Zeeb believes that the second of these options is "particularly attractive".

T2S is an ECB project aimed at creating a single infrastructure platform in the eurozone that can be used to settle all European cross-border securities transactions. This settlement takes place after the trade has been executed and cleared. The roll-out of T2S was originally planned for September 2014, but this date has since been pushed back to June 2015. According to Helmut Wacket, who was representing the ECB at the same event, this will give the ECB time to respond to market requests for additional functions and a longer test phase.

The largest CSDs in Europe are Clearstream and Euroclear, with Monte Titoli and Iberclear also operating in this area. SIX Group is confident that it can establish itself as Europe's third largest CSD behind the two market leaders. At present, the ECB is negotiating with CSDs over signing contracts, a process that is expected to be finalized by summer 2012. In a bid to encourage participants to sign up sooner rather than later, it is offering to reduce transaction costs and waive any admission fees.

All central banks and CSDs in the eurozone will participate in T2S (indeed they have no choice) and negotiations are also taking place with Scandinavian central banks. The Swiss National Bank (SNB) has indicated it is not prepared to participate in T2S, instead preferring to maintain complete control over its monetary policy. Furthermore, Switzerland's financial center was split over the issue of T2S, meaning it did not put any pressure on the SNB in this respect. Switzerland is not alone, however; the Bank of England has also opted to stay on the sidelines for now.

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This article was published on NZZ Online on 30.11.2011.