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T2S and regulatory framework are shaping a new post-trade world | Whitepaper


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T2S and regulatory framework are shaping a new post-trade worldFour years ago, the ABBL and Deloitte published a white paper on the impact of the future Target 2 Securities (T2S) platform in Luxembourg. At that time, T2S was not well-known and this paper was amongst the very first to introduce what is now probably considered as the most important project affecting the post-trade activities of the securities transaction business in Europe.

Today, T2S is still a project under development. Together with an ambitious regulatory agenda including but not limited to MiFID 2, MiFIR, EMIR, CSD, Securities Law and UCITS V, T2S will reshape the structure and inner workings of the complete value chain, from trade execution to post-trade functions.

The combination of the new regulatory and infrastructure frameworks will only really impact the trade and post-trade value chain during 2015, which is when the first T2S related regulations and directives will come into force.

In the context of this fast evolving landscape, the value chain’s stakeholders are currently beginning to identify their strategic options and define their future organisation as well as their business and operational models. In a nutshell, they need to ask themselves: what will my securities business look like in 2015 and beyond?

Whilst our first white paper explained the main principles of T2S and their impacts, this document focuses more on the different business scenarios and options currently available to financial institutions operating in the EU.

The first part of our paper provides a global overview of the major changes and drivers that currently impact the trade and post-trade value chain. Secondly, we highlight the latest updates and next steps in the T2S project. The third part of our paper reviews the different business perspectives and options that are emerging or that may present themselves to the concerned actors by 2015. Finally, we focus on the opportunities and challenges from a Luxembourg perspective.

The views and opinions presented in this paper are based, amongst others, on various interviews conducted with senior representatives of the post-trade value chain, including market infrastructure providers, asset managers, custodians and asset administrators to name but a few. Their contribution has been exceptional and we would like to thank them all for their honesty and transparency in sharing their views on T2S with us.

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