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The financial crisis has sharpened the debate on Europe’s back office architecture.
The paper reviews the ECB’s decision to proceed with its T2S project, which aims to establish a common IT platform for securities settlement, reducing differences between current infrastructures and creating a borderless pool of pan-European securities.
The apparently solid configuration of the project shakes, however, when we closely examine the impact of this common infrastructure on the competitive landscape. Notably, non-discriminatory access to the platform (low barriers to entry), clearer and independent governance, and full participation by Central Securities Depositories (CSDs) are essential conditions to ensure the initiative’s success.
The paper also looks into the possibility of building a level playing field for CSD in Europe and evaluates the ESCB/CESR recommendations, discussing the progress achieved with the industry’s Code of Conduct and evaluating, as follow-up to the financial crisis, the relative merits of multiple vs single Central Counterparty Clearing (CCP) in OTC markets.
The paper is attached below.