European Central Banks Connect to T+2

Terry Flanagan

Four central banks that manage the single Eurosystem platform for the settlement of large-value payments and securities transactions have built an intelligent network infrastructure to monitor and manage the data traffic, providing a single virtual infrastructure to support the geographical distribution of vital applications for the European financial system.

Colt, in partnership with SIA, announced that it won the tender issued by DeutscheBundesbank, on behalf of Banca d’Italia, Banque de France and Banco de España (the 4CB), to create and deliver the network infrastructure.

The 4-CentralBank-Network (4CBNet) will provide a high-speed backbone (10 Gigabits) ensuring continuity of information flows for the four central banks, preserving integrity and confidentiality. These capabilities enable the synchronization of the four central banks’ data centers.

“We are pleased to add another piece to the pan-European-wide project that we are building together with SIA,” said Hugh Cumberland, solution manager, financial services sector at Colt. “The T2S project, of which the network 4CBNet is part, requires specific skills in terms of technology, integration and support services that Colt, as the information delivery platform, guarantees.”

The new network infrastructure 4CBNet will be ready by September 2013.

TARGET2, the platform of payments in Euro for the real-time settlement of high-value transactions in central bank money, is already in live use. TARGET2-Securities, the single European platform for the settlement of domestic and cross-border securities transactions, will go-live in 2015.

TARGET2 and TARGET2-Securities (T2S) are part of the initiatives for the creation of the single European market after the Euro, SEPA (Single Euro Payments Area) and PSD (Payment Services Directive). According to estimates by the European Central Bank, TARGET2-Securities will process a daily average of over 1 million securities transactions, as well as contributing to significant cost reduction of cross-border settlements.

At the Moscow Exchange, activation of T+2 in March this year required ARQA Technologies, a provider of automation of operations in Russian financial markets, to modify significantly its software solutions for keeping client positions with deferred settlement.

A new limitation scheme of keeping a client position for different settlement dates was added to QUIK platform’s main functionality. The scheme allows keeping client obligations for different settlement dates – T0, T1 and T2, as well as building a planned position for these settlement dates and considering operations in different trading modes separately for one client account.

“We have always worked in close collaboration with the Moscow Exchange,” said Yury Voronov, CEO of ARQA Technologies. “And we are doing our best to make sure our clients are equipped with effective solutions to catch new trading opportunities provided by the exchange.”

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