Post-Trade interviews: regulation dynamics & CCP surprises

April 7, 2014 - PRLog -- What progress has been made for interoperability between ICSDs / Triparty agents? What are the hurdles European CCPs face in accepting cash collateral? What are the benefits and down-sides of T2S and will companies be ready for both testing and migration to the platform?And will it resolve the continent's back-office problems?

ICMA's Godfried De Vidts, European Central Bank's Marc Bayle, Dennis Mullany of CME Clearing Europe, Euroclear's Olivier Coolens and Deutsche Bank's Britta Woernle, who will be speaking at Fleming Europe's

Post-Trade (http://finance.flemingeurope.com/post-trade-forum?utm_source=mp_generic&utm_medium=PRarticle&utm_campaign=BAFC207_PRoninterview_generic_main)Forum (http://finance.flemingeurope.com/post-trade-forum?utm_source=mp_generic&utm_medium=PRarticle&utm_campaign=BAFC207_PRoninterview_generic_main)2014, discussed these questions.

Will the T2S project solve the back-office problems of Europe, or do companies need to be more aggressive? According to Mr. Coolens, today clients suffer from collateral fragmentation: T2S will ease the settlement of T2S securities, easing the transfer of European Collateral from one place to another.

Marc Bayle, ECB's T2S programme manager explains: a single pan-European technical platform for securities settlement will simplify the settlement process, with its processes being kept as lean as possible. Mrs. Woernle elaborated on the issue further, saying that besides a significant degree of harmonization in the settlement area “there are a number of other T2S harmonisation activities in the corporate action space, registration procedures, settlement finality and also attempts to harmonize tax procedures across countries.” Yet she also points out potential sources of problems: leaving room for individual markets to adapt to T2S and in other areas such as tax handling where significant changes in local law are required.

What about CCPs? Dennis Mullany explains that under EMIR, they are required to securitise 95% of the cash they are given as collateral on a rolling monthly basis. “The usual method of doing this is through the repo markets but there is no guarantee that eligible securities will be available at the market,” he warns.

Mrs. Woernle provides deeper insight: the full consequences of a CCP insolvency remain unclear. “In the event of a CCP default, it should be the clearing members of the CCP who are responsible for the bail-in of the CCP. This is odd, as the banks had been forced to move their business to the CCP in order to reduce risk.” What might a future development look like? Will we see the long-expected consolidation of the CSD space? “Recent evidence has shown that more CSDs than less have been set up. On the other side, we have seen CCPs merging their business, maybe this is another trend for the next 10 years: few large CCPs will concentrate the global clearing business,” she says.

Would you like to read more? The full interview is available for download (http://finance.flemingeurope.com/post-trade-forum/intervi...)
at Fleming Europe's website, reflecting not only the situation with CCPs and the benefits of T2S, but also topics such as process harmonization possibilities in the field of post-trade, the importance of upcoming post-trade regulatory changes and much more.

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For further information about the event, cost and registration please contact Will Hoss via will.hoss@flemingeurope.com or call +421 257 272 144.