23 May 2017
Reporter: Drew Nicol

Lacklustre T2S take up drives volume drop-off

Moves to the Target2-Securities (T2S) platform across the EU has not yet “translated in market participants changing their model to take full advantage of the T2S benefits,” according to Clearstream CEO Marc Robert-Nicoud.

Currently, legal barriers still make it complex to hold securities cross-border, explained Clearstream in its monthly volume report for April.

This leads to higher costs for transactions and causes uncertainty among investors when exercising their rights abroad.

“Further measures, such as a reduction in the realignment fees charged by central securities depositories (CSDs) to each other as part of their cross-border links, are therefore essential in order to increase the attractiveness of doing business cross-border in T2S”, the report continued.

Clearstream noted that its migration to T2S earlier this year meant volumes on the platform had doubled to 500,000 transactions per day. However, cross-border activity in central bank money through T2S remains a small fraction of these volumes.

Robert-Nicoud commented: “The harmonisation objective requires both infrastructure development and a change in market behaviour. T2S migration has not yet translated in market participants changing their model to take full advantage of the T2S benefits.”

“When contributing to market safety and efficiency, market harmonisation should be welcome by all market participants. We continue to develop T2S driven solutions in close cooperation with clients and other market infrastructure providers to ensure that T2S delivers on its pan-European ambitions.”

“We see these efforts as critical to ensure that the market gets the benefits of the investments made over the last years.”

Clearstream saw outstanding volume in its global securities financing drop 13 percent year-over-year for April.

The Deutsche Börse subsidiary recorded monthly volume of €460.2 billion in April, down from €530.1 billion during the same period in 2016.

Clearstream’s January to April average volume was €479.8 billion, down from €530.2 billion in 2016.

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