ABBL

On November 24, the ABBL presented its white white paper on the impact of Target 2 Securities (T2S) on the Luxembourg financial centre to its members.

The T2S project was launched by the European Central Bank in 2006 with the aim to  extend Target 2 to encompass the field of securities. Its main objective is the centralisation  of the Settlement of euro denominated securites for participating institutions on a single pan-European platform by 2013. Thenceforth, national and cross-border transactions will be treated on an equal basis.

The creation of such a single platform aims to counter the following challenges:

• Restructure the European post trade landscape
• Reduce post trade costs
• Promote and reinforce market integration
• Promote competition and transparency of Clearing and Settlement operations

Today, one could say that Settlement operations take place via small country roads  connecting towns and cities. T2S will allow the creation of highways that only interconnect  with major cities. Luxembourg hopes to be to one of these major cities in the future in order to strengthen its competitiveness in this field.

T2S, which is planned to officially launch in 2013, represents a significant stake for the  Luxembourg financial centre. The scope of targeted products is extremely wide and will  eventually include, beyond traditional shares and bonds, investment funds and other  SICAVs. In the shorter term, the impacts will be equally important, as the platform will encourage the emergence of large pan-European actors in the field of securities custody.

The ABBL wishes to raise awareness amongst financial actors of the stakes for our  financial centre and, more concretely, intends to establish working groups in order to prepare Luxembourg as comprehensively as possible to this large-scale project.

The T2S white paper is the result of a collaboration between Deloitte S.A. and the Banque et Caisse d'Epargne de l'Etat, Luxembourg.