T2S Economic Impact Assessment (EIA)

Transcription

1 T2S Economic Impact Assessment (EIA) T2S Info Session 12 June 2008 Bernhard Stricker T2S Project Team European Central Bank

2 T2S EIA Agenda T2S EIA Methodology overview T2S conservatively expected impact

3 Methodology of the economic impact analysis T2S EIA compares current CSD average settlement fee to T2S average settlement cost under 2007 market conditions T2S URD specifies expected market conditions 2013, especially for traffic volumes T2S EIA conservative approach: 2007 market prices versus T2S calculated full cost recovery Full cost recovery calculated on basis of expected 2013 volumes T2S EIA average cost is no indication of any to be expected T2S average settlement fee in 2013 but a comparator to current market conditions

4 Specific aspects of T2S EIA ECB economic impact assessment is unique in terms of transparency (long and repeated discussions with market participants, followed by a public consultation and an assessment thereof). The ECB methodology is very conservative; in case of doubt, T2S related costs are included while benefits are only counted if they can undisputably be reaped. Several scenarios are calculated: Scenario 1: All settlements in euro central bank money in euro area Scenario 2: Scenario 1 plus settlements in GBP, DKK, SEK, CHF Scenario 3: Worst-case (50% of euro-only scenario volumes) 4

5 Tri-angulation of T2S EIA The ECB also adapted earlier studies of Euroclear and Clearstream to the scope of T2S and this outcome confirms the ECB s findings it is even more positive Dynamic and second-round effects of T2S will pass through the market to increase trading activity, reduce trading spreads, increase competition and lower service prices, thus improving welfare in general

6 T2S EIA Agenda T2S EIA Methodology overview T2S conservatively expected impact

7 T2S EIA Base data Settlement instruction volume of participating CSD for 2007: Volume scenario 1: 345 mio instructions = 172 mio transactions Volume scenario 2: 640 mio instructions = 320 mio transactions Volume scenario 3: 172 mio instructions = 86 mio transactions Eurosystem cost for T2S: Development cost for T2S: Euro 203 mio for total development Operating phase: Volume scenario 1: Euro 72 mio plus investment cost recovery Volume scenario 2: Euro 105 mio plus investment cost recovery Volume scenario 3: Euro 65 mio plus investment cost recovery

8 Results of the economic impact analysis Settlement Fee per Instruction Settlement fee per instruction compared under 2007 market conditions: Scenario 1 Scenario 2 Scenario 3 Current average fee: 73 cents 62 cents 73 cents T2S fee 2007 conditions 32 cents 21 cents 57 cents CSD add-ons 7 / 24 cents 6 / 24 cents 7 / 24 cents Total settlement fee 39 / 57 cents 26 / 44 cents 64 / 82 cents Benefit settlement fee 34 / 16 cents 36 / 18 cents 10 / (8) cents

9 Results of the economic impact analysis Custodian / Banks reported savings with T2S Custodians / Banks savings with T2S in operation (rounded to Euro Mio p.a.) Scenario 1 Scenario 2 Scenario 3 Back office savings 48 Mio 58 Mio 24 Mio Required investments (13) Mio (16) Mio (7) Mio Collateral savings 53 Mio 68 Mio 26 Mio Total savings Euro Mio p.a. 89 Mio 110 Mio 44 Mio

10 Results of the economic impact analysis Overall results of the static cost analysis T2S EIA static cost analysis (rounded to Euro Mio p.a.) Scenario 1 Scenario 2 Scenario 3 ECB Study Re-scaled Clearstream study n.a. Re-scaled Euroclear study n.a. Even in the worst case scenario (euro area 50%) the T2S business case remains positive

11 Results of the economic impact assessment including dynamic effects Static impact Dynamic impact Volume Scenario 1 Euro area only ECB survey (net impact, minimum) 145 1,119 Rescaled Clearstream study (gross benefits) 376 2,891 Rescaled Euroclear study (gross benefits) 274 2,110 Volume Scenario 2 Euro area with UK, Swiss, Sweden and Danmark Static impact Dynamic impact ECB survey (net impact, minimum) 223 1,594 Rescaled Clearstream study (gross benefits) Rescaled Euroclear study (gross benefits) 390 2,914

12 THANK YOU 12