T2S: Planning Pricing - Harmonisation

Transcription

1 0 T2S: Planning Pricing - Harmonisation NBB-SSS, 23 April 2012 Annemieke Bax - T2S Programme Office European Central Bank

2 1 T2S Introduction Purpose and Benefits of T2S A Service offered to CSDs for Settlement only Registration of issuer indebtedness and investor holdings Notary Function Notary Function Settlement Settlement Function Function Change of ownership among investors e.g. coupon payments, redemptions, stock splits Custody and Custody/ asset-servicing asset-servicing Function Function Banking Function Banking Function* e.g. lending and borrowing only in some (I)CSDs

3 2 T2S Introduction Purpose and Benefits of T2S Settlement in central bank money Commitment to EU-integrated and efficient financial markets Neutrality as a supranational organisation No economic interest, due to cost recovery principle Facilitator to balance different requirements Experiences in successfully establishing EU-wide infrastructures (i.e. TARGET and TARGET2)

4 3 Table of Contents T2S: Planning Pricing - Harmonisation Planning Pricing Harmonisation

5 4 Planning Overview of T2S Timeline Development Phase EAT CSD/CB Feasibility Assessment User Testing Phase Phased Go-Live CSD/CB proposal for migration waves Agreement on migration waves SP2-Feasibility Confirmation by CSD/CB SP3-T2S Programme Plan Comprehensiveness SP5-Start of Eurosystem Acceptance Test SP8-Start Bilateral Interoperability Testing SP16-T2S Go-Live

6 5 Planning Migration Phase ST Wave pre-migration activities and migration Pre-migration activities and migration of remaining waves SP16-T2S Go-Live of 1 ST wave T2S Go-Live of contingency wave

7 6 Table of Contents T2S: Planning Pricing - Harmonisation Planning Pricing Harmonisation

8 7 Pricing Financial Equilibrium in T2S Tariff Structure Investment cost PLUS Running costs Volume estimates TIMES Prices

9 Pricing T2S Pricing Policy DVP price fixed at 15 cent per instruction until the end of 2018 A financial incentive package offered to CSDs that sign the Framework Agreement with the Eurosystem early Commitment to not increase fees by more than 10% per year from 2019 until the end of the cost recovery period Conditions of T2S pricing policy; - Non-euro currencies add at least 20% to total settlement volumes - EU settlement volumes are not more than 10% lower than those projected by market participants and the T2S Programme Board 8

10 9 Pricing Price List Price Items Price Explanation Settlement Services * Two instructions per transaction will be charged Delivery versus payment 15 cents per instruction * Free of payment 9 cents per instruction * Payment free of delivery 9 cents per instruction * Internal T2S liquidity transfer 9 cents per transfer Account allocation 3 cents per instruction * Matching 3 cents per instruction* Intra-position movement 6 cents per transaction Intra-balance movement 6 cents per transaction Auto-collateralisation service with payment bank 15 cents for issue and return, charged to collateral provider Intended settlement day failed transaction 15 cents surcharge per business day failed per instruction * Daytime settlement process 3 cents surcharge per instruction *

11 10 Pricing Price List (ii) Price Items Price Explanation Settlement Services (cont.) * Two instructions per transaction will be charged **Daytime congestion charge, from 2-4 p.m. 0 cents additional surcharge per instruction* **Auto-collateralisation service with NCB 0 cents for issue and return, charged to the collateral provider **Instruction marked with top or high priority 0 cents surcharge per instruction* **Cancellation 0 cents per instruction* **Settlement modification 0 cents per instruction* Information Services A2A queries and reports U2A queries Message subscription services Account Management Services 25% of annual revenue per business item in any report or query generated per executed search function per message **Securities account 0 cents Fee options: a) monthly fee per ISIN in the account or b) monthly fee per account **Fee per cash account 0 cents Monthly ** These items will initially be set at a zero price, presuming that actual usage will be within an expected consumption pattern. Reviews, however, occur at regular intervals to identify any stronger than expected usage and thus reconsider zero pricing.

12 11 Pricing CSD Reshaping to T2S CSD infrastructures require adaptations to integrate with T2S CSD T2S Lending Reporting Custody Settlement Coll. Mgmt. Others

13 Pricing CSD Reshaping to T2S (ii) A set of functionalities for CSDs to individually design T2S interaction schemes according to business or legal needs Reshaping options; - Data replication: entirely or partially by real-time messages (push mode) - No data replication: outsourcing to use functionalities on request (pull mode) - A combination: some data are replicated and others are queried Data replication requires redundant storage of T2S data through quality and reconciliation controls Maximisation of future savings, in case of outsourcing to T2S Minimizing adaptation costs now leads to higher running costs in the future 12

14 13 Pricing CSD Reshaping to T2S (iii) costs T2S without Reshaping Present Cost Level T2S with Reshaping today time

15 14 Table of Contents T2S: Planning Pricing - Harmonisation Planning Pricing Harmonisation

16 Harmonisation in T2S T2S harmonises settlement and thus indirectly fosters further alignments of EU market practices Progress is defined in line with T2S stakeholders and other market initiatives The Eurosystem co-operates with market participants and public authorities to align the harmonisation process (e.g. CSD regulation, Joint Initiative on Market Infrastructures JIMI Steering Group) T2S is a unique opportunity to remove Giovannini barriers by harmonising EU post-trading 15

17 16 Harmonisation in T2S (ii) Status-quo of T2S AG sub-structures deal with harmonisation issues - Corporate actions - Messages - Cross-CSD settlement (TFAX) In addition, enhancement of T2S role in harmonisation; - Harmonisation Steering Group to exclusively steer T2S alignments o Composed of Programme Board and AG senior members o Supported by the T2S Programme Office and NUGs o Reporting to the AG

18 17 T2S Harmonisation List Activities status 27/03/2012 ACTIVITIES - HIGH PRIORITY 1. T2S MESSAGES 1.1 T2S ISO messages G G x 1.2 T2S matching fields G G x 2. SCHEDULE OF SETTLEMENT DAY G G x 3. CROSS-CSD SETTLEMENT TFAX Y x x DEFINITION MONITOR IMPLEMENT 4. T2S CORPORATE ACTIONS STANDARDS 5. LEGAL HARMONISATION G G R 5.1 Settlement finality I (moment of entry) Y x x 5.2 Settlement finality II (irrevocability of transfer order) G G Y 5.3 Settlement finality III (irrevocability of transfers) G G x 5.4 Location of securities accounts (Law applicable) Y x x 5.5 Outsourcing IT Y x x

19 18 T2S Harmonisation List Activities status 27/03/2012 ACTIVITIES - HIGH PRIORITY DEFINITION MONITOR IMPLEMENT 6. SETTLEMENT DISCIPLINE REGIME Y x x 7. SETTLEMENT CYCLES Y x x 8. OMNIBUS ACCOUNTS G G Y 9. REGISTRATION PROCEDURES Y x x

20 19 T2S Harmonisation List Activities status 27/03/2012 ACTIVITIES - LOW PRIORITY DEFINITION MONITOR IMPLEMENT 10. CORPORATE ACTIONS MARKET STANDARDS CA market (CAJWG) standards G G R 11. PLACE OF ISSUANCE Y x x 12. TAX PROCEDURES 13. CROSS-BORDER SHAREHOLDER TRANSPARENCY 12.1 Withholding tax procedures G Y x 12.2 Transaction tax procedures G Y x Y x x 14. INVESTMENT FUNDS SETTLEMENT R x x 15. MARKET ACCESS Y x x 16. CSD ANCILLARY SERVICES Y x x 17. SECURITIES AMOUNT DATA G G Y

21 20 T2S Harmonisation List Activities Colour Index Colour Description Green Harmonisation Activity/Deliverable is within the required scope and quality and is on time (NOTE: not necessarily completed) Green in implementation process indicates that the standard has either been implemented or that there is low risk of noncompliance prior to T2S launch. Yellow Harmonisation Activity/Deliverable will not have the required scope, will be/is delayed and/or not of the required quality if no corrective measures are taken. Yellow in implementation process indicates that the standard has either been partly implemented or that there is medium risk of non-compliance prior to T2S launch. Red Corrective measures have not delivered the expected effect or no corrective measures are possible. Deliverable/Activity will be delayed to achieve the required quality or scope if no extraordinary action is taken and requires escalation. Red in implementation process indicates that that there is high risk of non-compliance prior to T2S launch.

22 T2S Harmonisation Task Force on Adaptation to Cross-CSD Settlement The TFAX was established with the aim to propose common best practices to selected issues hampering cross-csd settlement in the post-t2s environment. - Focus of the TFAX is on the process-based and technical aspects of adapting to T2S. - The common best practices will assist CSDs and other market participants to adapt to T2S in a harmonised manner. A mini-consultation was distributed via the NUGS which is running until the end of April. Its aim is to verify the drafted solution papers: - Topic 1: Registration processing; - Topic 2: Tax processing; - Topic 3: CSD ancillary services; - Topic 4: Portfolio transfers / Bond stripping and reconstitution / Account segregation by currency.

23 22 Wrap-up and Information on T2S T2S on the web - Publication of all relevant information and key documents - Access to documents of all T2S working groups - Spotlight on latest information on the project - Insights on project plan, governance, pricing, harmonisation - Ad hoc sections dedicated to all stakeholder categories (CSDs, banks, NCBs, others) - Publication of quarterly newsletter T2S OnLine

24 Thank you for your attention