07.10.2013

BNP Paribas Links to T2S

07.10.2013
Terry Flanagan

BNP Paribas Securities Services (BNP Paribas) is collaborating with Swift to ensure the alignment of its technical architecture with the requirements of T2S.

As the largest European custodian, BNP Paribas has tapped Swift to help it to provide the most reliable and resilient infrastructure for communication with T2S.

Swift, a financial messaging provider, said that BNP Paribas will use Swift’s Value Added Network (VAN) solution to connect to T2S.

“As a major securities services provider, we will connect directly to T2S to reap its benefits and pass them on to our clients,” said Alain Pochet, head of clearing, custody and corporate trust services at BNP Paribas Securities Services. “We will therefore build our services for the T2S environment on the strongest foundations. We are confident that Swift’s T2S connectivity solution is the best choice for us and our customers, bringing unmatched benefits in terms of resilience, reliability and cost.”

The objective of T2S is to facilitate post-trading integration by offering core, neutral, harmonized and commoditized delivery-versus-payment settlement in central bank money in substantially all securities in the Eurozone. Swift’s VAN solution will enable T2S participants to connect to the T2S platform with the highest resilience, at the best price and with the least upfront cost.

BNP Paribas has capitalized on its long-standing and close relationship with Swift. The collaboration will ensure that BNP Paribas’ technical architecture is closely aligned with the requirements of T2S.

As a major Swift user, BNP Paribas can take advantage of Swift’s pricing structure for T2S which is designed to enable direct connectivity while minimizing the financial impact of T2S messaging. Swift’s VAN is considered by BNP Paribas to be the most cost-effective T2S connectivity platform.

“We are delighted to see this latest development in our relationship with BNP Paribas,” said Alain Raes, Chief Executive, EMEA and Asia Pacific, Swift. “This agreement shows the value of Swift’s VAN solution for T2S for securities services providers. We look forward to supporting BNP Paribas and all our customers during the transition to this new European settlement platform and beyond.”

Currently most trades are settled in batches and netted overnight, with firms having until the evening of T+2 to get trades into the last batch and then settling the remainder in real-time on T+3.

Under the new regime, the last batch will be at the end of T+1, which could mean fewer trades making the batch (and therefore fewer netted), and more settled in real-time on T+2.

The U.S. and Japan currently operate on a T+3 settlement cycle, Hong Kong is on T+2, and Russia is following suit. The U.S. will probably move to T+2 in the near future.

Last year, the U.S. CSD, the Depository Trust & Clearing Corporation (DTCC) commissioned Boston Consulting Group to look into the costs and benefits of shorter settlement cycles. It estimated that the costs of moving to T+1 would be so high that it would take 10 years for the costs to be recouped, whereas for T+2 the payback would come after three years.

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