The ECSDA was formed in 1997 in Madrid in order to provide a forum for CSDs to exchange views and take forward projects of mutual interest. ECSDA focuses on conducting joint work on common interest issues in European clearing and settlement and on promoting the removal of obstacles on cross border settlement . This task has to be done in close cooperation with the market participants (such as operators of exchanges and trading platforms, issuers, intermediaries) and the institutional authorities.
The 2024 ECSDA Conference brought together the CSD ecosystem thought leaders and visionaries, participants and most advanced technological suppliers helping the community in building the European and global financial markets. The topics of settlement efficiency and shortening of the settlement cycle, new CMU priorities, FMI interoperability on settlement of Digital Assets and others were under the attention of the Conference speakers and participants.
Javier Hernani, Head Securities Services, SIX had the opportunity to discuss with leading representatives of various European infrastructures from the industry about the “Vision for the Industry: Post-trade 2030”. Javier stressed that the Europe needs to get its priorities right and take actions on them. The real fragmentation in the post trade comes from the lack of harmonization of certain legislations, such as corporate law, taxation rules and others, however, little to none has been done to correct it. Instead, numerous regulations on financial markets infrastructures have been adopted to only stifle the growth and increase costs. To a questions what keeps the panelists optimistic, Javier responded that “T2S is the reason to be optimistic in Europe. It is the great tool to generate growth. We will be able to hold entire Europe with one single account. Let's make that happen!”.
Jesús Benito, Head Domestic Custody & TR Operations, SIX, shared his thoughts about the “Next Steps for the CMU and Its European Infrastructure Agenda”.
CSDs are critical market infrastructures that are necessary in any financial market, and of course, in the CMU. CSDs have achieved a lot in harmonization and navigated various crisis well. CSDs are the part of the solution, not the problem. CSDs have cooperated with the ECB in building the highway, which is T2S. We all have to understand why it is still an empty highway, which is not used for cross-border settlements, as expected.
As previously many panelists highlighted, the EU is not a single jurisdiction, and therefore, we need a solution that suits us best. Europe does not need only one CSD, but CSDs which work and operate as one single CSD. The key here is interoperability and competition which can be achieved through harmonization of the local jurisdictions and regulations.
The arrival of a new European Commission has refocused discussions on achieving sustainable growth for the EU. Recently three different Reports, - i.e. Letta, Noyer and Draghi - have analyzed and eventually proposed different problems and recommendations in order to foster European competitiveness. CSD fragmentation, actions by the CSD community and public authorities to address these challenges, reflections on the supervisory architecture, and what CSDs can do to increase the attractiveness of European capital markets compared to global competitors like the USA and Asia, were the main topics discussed during the panel.
Jesús Sánchez, Head Settlement Services, SIX, had the opportunity to offer his insights and experience about the “Settlement Efficiency and Cycle: Priorities of the Roadmap, Challenges and Costs”.
CSDs will have the responsibility to coordinate their communities to be ready for the implementation of T+1 on 11 October 2027, despite the additional costs and the need for adjustments to systems and procedures. Settlement efficiency has been a constant concern, accentuated by the entry into force of the Settlement Discipline Regime (SDR) in February 2022 and especially in view of T+1. In this regard, improvement and coordination works are being carried out in working groups such as the ECSDA Settlement Working Group and the T2S Market Settlement Efficiency Workshop, both led by Jesús.
To ensure adequate efficiency, early instructions by markets and CCPs are crucial. In this regard, there is a need to agree on an appropriate delay and flexibility on the night-time cycle (NTS), looking for an industry consensus agreeing on the number of cycles and their spacing.
And David Newns, Head SIX Digital Exchange (SDX), participated in an interesting debate on “New Technology and Innovation, Future Markets Architecture, and AI.” The participants agreed that all innovative technologies — not just DLT and digital assets — should enhance post-trade processes. They emphasized market efficiency, defined as the ability to manage securities more quickly, cost-effectively, and resiliently, as a driving force for the industry. Most market participants view these technologies as enablers of growth and improved client experiences. Additionally, asset fungibility remains a top priority for the sector.
It was certainly an exciting day full of interesting panel discussions highlighting the challenges and goals that the post-trade industry will face in the coming years.