1 BCP - European Central Bank

TARGET2-Securities (T2S) – Outcome of the 17th NUG-PT Meeting
Venue: Banco de Portugal, Edifício Portugal (Room 7.1.6)
Date: 28th March 2014 - 10h30 a.m.
Banco de Portugal:
Departamento de Sistemas de Pagamentos (DPG)
Jorge Egrejas Francisco
Fernando Chau
Nazaré Correia
Anabela Mendes
Lara Fernandes
João Sarilho
Fábio Michelli
Duarte Martins
Maria Bettencourt
Departamento de Mercados e Gestão de Reservas (DMR) Pedro Corsino Matos
Anabela Cardoso
Departamento de Organização, Sistemas e Tecnologias Catarina Ribeiro
de Informação (DOI)
Comissão dos Mercados de Valores Mobiliários (CMVM)
Manuela Peixe
Rui Matos
Jyrki Leppänen
APB - Associação Portuguesa de Bancos
João Tomaz
Ricardo Ribeiro
BNP Paribas
Bernardo Silva
Banco Santander Totta
Rita Roque
Banco Português de Investimento
Carlos Ferreira Machado
Banco Espírito Santo
Bruno Pinho
Deutsche Bank AG
Pedro Campos
Citibank International PLC, Sucursal em Portugal
Giselle Toloi
LCH.Clearnet SA
Ana Paula Carreira
Luís Sequeira
Miguel Maurício
1. Follow-up on recent developments of the project (AG, PMG and OMG)
In the introductory remarks, the participants were informed about the following:
(i) the beginning of the Eurosystem Acceptance Testing Phase, scheduled to
start in April, which is subject to T2S Board 1 confirmation; (ii) Banco de
Portugal’s testing plan is being prepared, detailing requirements for connecting
to T2S on the 1st migration wave; and (iii) Interbolsa’s testing plan (to the 2nd
migration wave) was already published.
Advisory Group (AG)
Concerning the AG, the following facts were highlighted:
1) CSDs’ proposal for defining SF1 - Settlement Finality 1 (moment of entry of
transfer orders into the system) is under consideration by the Eurosystem.
2) The preparation of the T2S go-live (June 2015) includes an early start of the
T2S Corporate Actions Gap Analysis of 2014. The deadline of this exercise on
harmonization of Corporate Actions is April 17th. Furthermore, the test cases on
Corporate Actions are being prepared and could be included, on a voluntary
basis, in the T2S User Testing Phase.
3) In order to enhance the migration of the 2nd wave, and in view of the
exceptional alignment of T2S holidays with those of TARGET2, the possibility of
considering, in 2016, Good Friday and the Monday after Easter as T2S
4) The T2S Board is considering a proposal for enlarging the cost recovery
period for T2S (currently at 8.75 years), with the aim to reduce the pressure on
increases in T2S pricing2, to be submitted to the Governing Council.
The fulfillment of this Synchronization Point (SP5) is the responsibility of ECB and, according to the plan, the execution
phase of these tests are planned for between May and September of this year.
According to the Framework Agreement Schedule 7-Pricing, the Governing Council undertook the following
“…The Governing Council of the European Central Bank (ECB) decided to set the Delivery versus Payment price for
TARGET2-Securities (T2S) at 15 eurocent per instruction. This price will be fixed for the period from the T2S Go-Live
Date until December 2018. In order to provide assurance to market participants about T2S prices after 2018, the
Governing Council has made a commitment not to increase T2S fees by more than 10% per year between 2019 and the
end of the cost recovery period...”
Project Managers Group (PMG)
NUG-PT members were informed on the testing calendar of Banco de Portugal,
Interbolsa and of the Users. For the Portuguese market, multilateral tests
(involving jointly BdP and Interbolsa) will begin on 4th May 2015, the community
tests (involving the national community) will begin on 21th September 2015, and
the Business Day Tests, involving all communities of the 2nd wave migration
(the go-live date is planned for 28th March 2016) will start on 18th January
In preparation for the migration / connection to T2S, the institutions that act as
financial intermediaries in Interbolsa or payment banks for the cash leg, shall, if
they have not started already, organize a project team3, in order to identify,
budget and implement functional and organizational adaptations due to T2S4
so that difficulties related to lack of resources are taken care of in due time.
Operations Managers Group (OMG)
The OMG is responsible for T2S Manual of Operational Procedures, which will
be released by publishing two versions:
Version 1, scheduled for April 2014, provides all the chapters needed for the
preparation of the testing phase and was approved at the recent meeting of the
Version 2, whose release is scheduled for September 2014.
It was also mentioned that the DCAs denominated in euros will be within the
operational framework of TARGET2, as they are in this regulatory system.
Thus, the operating procedures of TARGET2 will be adapted to accommodate
the strong interconnection between the two platforms.
The team should consist of members from various departments impacted with the migration to T2S on organizational
or functional levels, for example, representatives of the markets / securities, treasury, information technology and
Identification of business and technical requirements stemming from migration to T2S, such as which connectivity to
adopt, the impacts on their internal applications, and impacts on schedule and mode of operation due to night time
The operating procedures applicable to holders of Dedicated Cash Accounts
are set by Central Bank Operational Managers (CBOM), in particular by
adapting the Information Guide for TARGET2 Users, to be completed by early
2015, at which time information sessions for participants will be held.
2. Recent developments of the T2S project viewed by Interbolsa
a. Recent developments
It was mentioned that new version of the T2S documents are already available
(URD v5.03; BDP v1.2; GUI v1.9; UHB v2.0) and the release dates of UDFS
v2.0 and T2S Manual of Operations Procedures, v1 had been published.
A list of institutions that have shown interest in being Directly Connected
Participants (DCP) for the securities side in the 1st migration wave was
presented, as well as the dates in which the Interbolsa and the BdP must inform
the T2S Programme Office on the type of connectivity of their respective users,
ie, whether to be directly connected (DCP) on the securities side, or just direct
DCA holders (via U2A or A2A)
b. Interbolsa adaptation plan to T2S
Interbolsa presented their adaptation plan to T2S, highlighting the main
activities and the respective calendar. Also in this context, Interbolsa is advised
by a specialized and independent firm.
Regarding the publication of support documentation of the project, Interbolsa
informed that during the current year, it will publish documents such as User
Functional Description, User Detailed Specifications and all documentation to
support the testing of the new Interbolsa browser version (STD 4.0)
The presentation of the content of the adaptation plan was organized according
to the structure of that plan. Interbolsa noted also that in the case of DCP, even
though they are directly connected to the platform, the legal relationship with
Interbolsa remains, and that matching of instructions will be migrated to T2S.
Interbolsa recall that the most significant organizational change, to take into
account in the migration to T2S, is related to the schedule of transactions
settlement. That is, operations that currently settle immediately following the
opening of the system (around 8:30 am of D day) will be processed during the
"night time settlement", immediately following the start of the day in T2S,
between 18:00 and 18:30 in day D-1. This change has implications for the
organization of participants’ activities, especially in regard to the management
of funds between RTGS accounts and DCAs.
Users were also informed by Interbolsa of the establishment of a link with
Euroclear (France), namely the legal issues of opening the account of
Interbolsa in Euroclear are already completed. This link is not yet eligible for
monetary policy operations, because for this purpose it will have to be
evaluated in advance by the Eurosystem. In this connection, Interbolsa
reiterated interest in establishing links with ESES, Iberclear, Clearstream and
Monte Titoli markets, stating that it initiated the analysis of business cases
associated with each of these potential links with a view to taking a decision
until August, 2014.
3. Project Planning issues and National Training calendar
Interbolsa and BdP mentioned to members of NUG-PT that 2014 and 2015 are
crucial in terms of the project, and the planning of adaptation activities is
essential. Thus, it is expected that each institution: (i) constitute a project team;
(ii) plan the activities, eg internal and external training; (iii) List the possible
changes in internal applications; and (iv) identify the impacts, both at
organizational and functional levels, resulting from T2S.
Banco de Portugal said that institutions wishing to open DCA accounts with BdP
for migrating in the 2nd wave and wish to be connected in A2A mode must, until
5 September 2014, notify BdP. BdP stated that, for this purpose, it will launch a
consultation and that, whenever the issues under consideration justify, BdP will
also run queries on users, in order to identify relevant items for the domestic
Regarding the training sessions, users were informed about the set-up,
highlighting the following:
(i) Interbolsa will host on May 6th in Oporto, a training session, with the
participation of BdP and SIBS, intended for all users.
(ii) BdP presented the training schedule with the most relevant issues for each
of the sessions. The sessions are organized based on three principles:
- The sessions are organized for small groups of a maximum of 30 people per
session, to foster interaction of a diversity of perspectives and potential of
debating issues;
- The organization of the session will be based on the "train-the-trainer”
principle, according to which the participants in the meeting will pass the
acquired knowledge to other colleagues in his/her institution involved in
activities related to T2S and the issues covered. Thus, it is expected that each
institution shall be represented by employees of various departments whose
daily activities will be impacted by T2S, up to a maximum of 4 people;
- Finally, the sessions will be organized based on the "on-demand " principle, ie,
the sessions will be based on the identification of themes of interest to the
national market and to the development of the project.
In short, BdP’s current training plan is scheduled as follows:
Interaction between T2S-TARGET2 (T2SI)
Cash connectivity modes (A2A, U2A)
Cash side services to be provided by SIBS for T2S in AT2
14, 15-05-2014
Liquidity management functionalities
24, 27-10-2014
Business day
Getting information (messages and reports)
20, 21-11-2014
Static Data management
Access Rights
1st half 2015
1st half 2015
Operational procedures
BdP billing
Contingency procedures
2nd half 2015
4. Client Readiness Monitoring
Members of the NUG-PT were also informed that, in order to monitor the state
of preparedness for migration / connection to T2S of payment banks and
financial intermediaries, both Interbolsa for the securities side, as BdP for the
cash side, will soon start regular consultations with their respective users.
5. 4th T2S Harmonization Report
Users were informed about the relevant progress in the 4th T2S Harmonisation
Report, the specific situation of each domestic market and additionally on the
possible negative impact of the difficulties of Monte Titoli regarding "reporting on
portfolio transfers"
6. Other topics
As proposed by Interbolsa at the beginning of the meeting, the institutions
presented the current situation of their internal projects to adapt to T2S.
Representatives of international institutions (eg, DCP) reported that their
adaptation process is centralized, therefore being the national branch’s
intervention rather limited; however, they have shown interest in participating in
training activities, hosted both by Interbolsa as well as BdP.
Representatives of the national institutions were very positive about Interbolsa
adaptation plan, released in late February, based on which they were able to
identify more accurately the adaptations to be internally implemented.
Regarding the current situation of their activities, it differs from institution to
institution; thus, some institutions reported that they already have organized
project teams, with the participation of various departments with an interest in
T2S, while others are still at a very early stage of the adaptation work.
APB mentioned that, if the Proposal for a Regulation on the reporting and
transparency of financing transactions using securities presented by the
European Commission on January 29, 2014, is not changed, negative
consequences are foreseen for the autocollateralisation functionality in T2S,
with indirect impact on the liquidity needs of credit institutions.