The Europeanisation of the back office - The implications of CSD Regulation and T2S

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Jan Martin Frie

The progress made in two paramount initiatives in post-trade infrastructure – the Target-2 Securities System and the Central Securities Depositories Regulation – was the focus of discussion at an ECMI-CEPS lunchtime meeting on July 11th. The discussants pointed out that while the initiatives could operate independently from each other, only their complementary nature will create the synergies that can result in safer and more efficient markets. They will for instance allow operation of only one collateral pool and will optimise the back office. At the same time, it was highlighted that settlement is only one of multiple post-trade services and not the most costly one. The main cost factor and the greatest operational risk arises from services related to corporate action such as taxation. There was general agreement among the participants that in order to achieve further cost reductions and efficiency gains, more far-reaching harmonisation is needed, especially in the field of security laws.