Flashnews: T2/T2S consolidation postponed for one year and ECMS at least for seven months


On 28 July 2020, the ECB announced that the Council of Governors had in its wisdom validated the industry’s request to postpone the implementation of the T2/T2S consolidation and, consequently, the launch of the ECMS platform (European Collateral Management System).

This decision follows the recommendations of the Market Infrastructure Board (MIB) at the end of June 2020. MiB, the governance body for Eurosystem infrastructure initiatives, built on the findings of a consultation launched in the spring of 2020 to determine the appropriateness of industry-raised concerns about the ability of stakeholders to meet the schedule.

The latter highlighted that the majority of user communities were in favour of postponing the consolidation of the TARGET 2 and TARGET 2 Securities platforms initially scheduled for November 2021. Two events have determined this demand:

  • The first is the result of SWIFT’s decision to postpone to November 2022 the date of migration to ISO20022 of payment messages affecting the correspondent banking (often called "cross border payment").
  • The second, although not the main factor, is the result of the effects of the COVID19 crisis on some players. Beyond the operational aspects, this crisis may have reduced the capacities dedicated to the T2/T2S consolidation project.

The consolidation of TARGET 2 (T2) and TARGET 2 SECURITIES (T2S) systems will eliminate the current T2 real-time gross settlement system, in favour of a new RTGS aligned, in terms of technical and functional coherence, with TARGET 2 Securities, the ECB’s securities settlement tool. In addition to streamlining the tools, this new system should offer optimised liquidity management by using the various “TARGET” services.

The postponement of this consolidation leads to postpone the deployment of the European Collateral Management System (ECMS) at the European Central Bank  initially scheduled for November 2022.

On this subject, the Board of Governors asked the MiB to provide a new calendar for October 2020 with a “window of opportunity” between June and November 2023.

This project has significant impacts for the securities industry. Beyond the deployment of the platform, it imposes compliance with new standards on Post Trade’s activities, well beyond its immediate scope, namely collateral management through its Single Collateral Management Rulebook for Europe (ScoRE). Indeed, whether it is in terms of Corporate Actions or General Meetings, actors will have to adapt to the new rules for all these activities with the aim of moving globally to the ISO20022 format on a target horizon that remains to be specified (initially identified in 2025 with intermediate stages).



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