It is an infrastructure project to standardise and gather in one place the settlements of domestic and cross-border securities transactions.
In most countries, central securities depositories (CSDs) are responsible for the processing of securities transfers and maintain respective information systems for this purpose. Usually such (securities settlement) systems operate efficiently, when settlements of domestic transactions are made, but settlements of cross-border transactions are not so efficient. It is one of the obstacles to the creation of a single market of the EU.
On the initiative of the Eurosystem, the TARGET2-Securities (T2S) project has been initiated in order to create a single technical platform, to which CSDs will migrate all securities transfers. The platform will operate according to agreed procedures and enable efficient performance of both domestic and cross-border settlements in euro. In addition, it will also be open to other currencies.
T2S will have the most advanced liquidity and financial risk management measures: auto-collateralisation and intraday credit facility, continuous optimisation processes, settlement recycling and night-time settlement. The funds of participants held with central banks will be used for settlement. CSDs will remain responsible for maintaining legal relations with participants (including securities custody).
T2S technical development and operation of the platform were entrusted to four Eurosystem central banks: Deutsche Bundesbank, Banco de Espańa, Banque de France and Banca d’Italia, whereas the owner of the platform is the Eurosystem.
After consultations with participants, the Central Securities Depository of Lithuania (CSDL) decided to participate in the T2S project and use the T2S technical platform for the settlement of securities transactions in euro from the beginning of its operation, which is planned for June 2015. To express its support for the project, the CSDL signed the Memorandum of Understanding with the Eurosystem in 2009.
To implement the T2S project successfully, a close cooperation of each country’s CSD and its users (banks, financial brokerage companies) is important. For this purpose, in Lithuania the Bank of Lithuania created the T2S national user group, which consists of the representatives of the Bank of Lithuania, the Securities Commission of the Republic of Lithuania, CSDL, AB NASDAQ OMX Vilnius, commercial banks, foreign bank branches, financial brokerage companies and the Association of Lithuanian Banks. This group analyses the impact of T2S functions on the national market, assesses whether they match the needs of market participants, participates in the consultations organised by the ECB on various T2S-related issues, analyses other legal and technical aspects.