11/12 T2S. Clearstream TARGET2-Securities Bulletin. Welcome to our first T2S Bulletin

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1 Clearstream TARGET2-Securities Bulletin 11/12 T2S Welcome to our first T2S Bulletin We are delighted to launch Clearstream s T2S Bulletin which contains news and insights about TARGET2-Securities plus Clearstream s solutions for our customers. 1. Welcome 2. Interview: Karla Amend and Volker Riebesell 3. Task Force Workshops T2S presentation 4. T2S Client Paper Web portal Single point of contact 5. Customer communication Our value proposition 6. Simulation and transition outlook Clearstream and LuxCSD were among the first to sign the T2S Framework Agreement in May 2012 and there are now 23 (pending signature by Cyprus) CSDs across Europe which have committed to joining the initiative. Clearstream has now moved into a new phase of the T2S project to prepare a smooth transition to T2S which is scheduled to go live with the first wave of CSDs mid This first issue of Clearstream s T2S Bulletin introduces some of the customer readiness activities which are already under way. We have been proactive in working with T2S from the outset and are still actively participating in a number of working groups and advisory bodies which aim to ensure that T2S works for the infrastructures, for the financial institutions, for the market as a whole. We will continue to work very closely with our customers and our partners to ensure that the migration to T2S is as smooth and as successful as possible. T2S is certainly a game-changer for the entire European securities industry and it will have a significant impact across all layers of our business, far beyond its actual focus of settlement in central bank money in Europe. It has already taken a long time to get to this point since the concept of T2S was first announced and yet we still have a long way to go and a great deal to do. Some questions are still to be answered but, at Clearstream, we firmly believe that T2S will lead to greater choice and greater opportunities for our customers. In this issue, we introduce the Clearstream T2S project heads who will be your partners as we all make the journey towards T2S and beyond together. 1

2 Our journey towards T2S May 2012 brought an important milestone in the T2S journey when Clearstream and LuxCSD were among the first CSDs to sign the T2S Framework Agreement and thereby committed to join the initiative. Here Karla Amend, who heads the Clearstream T2S Governance Team, and Volker Riebesell, who leads the Clearstream T2S Implementation Team, talk about the challenges ahead. Volker Riebesell Karla Amend T2S it seems to have been a long and winding road? Karla: Yes it has definitely been a lengthy and exciting journey. Clearstream has supported the T2S initiative since its inception in 2006 and we had 10 team members from various business and technical areas working on it constantly. As the German CSD, Clearstream will be the largest participant in the T2S settlement platform and so we have attended countless conferences, meetings and discussions over the years to make sure we could get the best outcome for our customers. What comes next? Karla: We are currently waiting for the ECB to review a number of change requests which arose from our submission of feasibility assessments for Clearstream and LuxCSD. Each participating CSD was required to declare its functional and technical feasibility to achieve an efficient transition to the new settlement platform. Both Clearstream s CSDs confirmed feasibility in general but highlighted some items pending from both the Framework Agreement and the specification documents that needed addressing urgently. In addition, we are also looking forward to the Eurosystem announcing the CSD migration schedule and the composition of each T2S migration wave. The Eurosystem is expected to make the announcement by the end of By the end of the year, the project should reach a major milestone, SP3. This synchronisation point sets out to provide a comprehensive programme plan on which all CSDs can base their own adaptation plan. Tell us about your T2S Implementation Team Volker: The last 12 months have been spent outlining - and beginning to deliver - Clearstream s T2S implementation strategy. Based on Eurosystem documentation, we have been developing a high-level solution for our systems and the customer interfaces. We are keen to engage with customers as early as possible and have been involved in a number of market consultation activities for more than a year now. These have been supported by Clearstream Banking Frankfurt s Advisory Board and the T2S Task Force activities. Our T2S implementation project involves a large team which is still growing. Our team members are dealing with topics such as functional and architectural design, testing and migration, internal readiness and, especially important, customer readiness and communication based on the Eurosystem s documentation. We make sure we analyse each project activity from different angles; this is an essential part of how we are meeting the T2S challenge. Each project team is working on detailed planning and well-defined tasks as well as clear deadlines these are key components in managing the project. I know I can rely on my team and I hope you will get to know us all better through these newsletters. This time, we are featuring photos of the workstream leads with a few words about T2S. What do you see as the main challenges ahead? Volker: We have many activities to carry out. In addition to preparing for T2S, we are also harmonising connectivity channels, streamlining our custody network and improving our asset servicing and collateral management services. This complete offering will give our customers a very attractive entry point to the T2S settlement platform and we are currently on target to reach our strategic goals. Overall, we are developing our solution in a multinational, multiorganisational project which is the exciting nature of T2S. This adds to the overall complexity of the project but it all makes my job interesting! 2

3 Time to get ready Task Force Workshops We launched our Task Force Workshops around a year ago in order to provide a channel through which our T2S project teams and our customers could exchange important information on preparing for the T2S initiative. Partnership is an important part of Clearstream s ethos and the T2S Task Force Workshops are a good example of the benefits in working closely with our industry partners. So far, 10 workshops have taken place and these have helped to ensure our customers are aware of the most important T2S issues. They have also been instrumental in identifying the impact on our customers which has enabled us to align adaptation requirements between Clearstream and market participants. This alignment is important as there is no time to waste: all players in the European settlement sector need to finalise their development and organisational measures for the scheduled beginning of the test phase in the second half of Clearstream and our customers are faced with an ambitious timeline and so all the basic cornerstones need to be in place as early as possible. The workshops have explored settlement and transaction lifecycles; connectivity and Clearstream s customer interface; legacy systems; migration and testing. In addition to the Task Force Workshops, Clearstream has undertaken several market consultations to validate its T2S conceptual solution and to review Clearstream s functional design. This work has also been supplemented by a number of bilateral meetings particularly with our ICSD customers. The outcome of this extensive programme of workshops and meetings has been the production of a presentation that forms a solid foundation for Clearstream s T2S solution for customers. Presenting our approach A key outcome of the successful Task Force Workshops has been an overall presentation that outlines our approach to T2S. The aim was to provide Clearstream customers with up-to-date information about the progress of the T2S implementation project, an overview of required customer readiness tasks plus a comprehensive look at Clearstream s future service offering. We hope customers will find this document a useful and informative starting point for their T2S preparation. The presentation will be regularly updated the latest available version was published in October with the next version planned at the end of The presentation is available on our website. Please click here. We are always interested to hear our customers feedback as we want to make sure we deliver the best possible customer service to you. If there is any additional information you feel should be included in the presentation, please let us know. Clearstream T2S Customer Readiness We are looking forward to supporting and guiding you T2S will facilitate cross-border settlement for all market participants in the Eurozone. T2S Communication Channels - Clearstream T2S Bulletin - Clearstream T2S Web Portal - Clearstream T2S Distribution List (containing approx recipients) T2S Customer Business Events - Bilateral Meetings - Customer Readiness Roadshows Clearstream Customer T2S Customer Readiness Team - T2S Mailbox T2S-support@clearstream.com - Tel. +49 (0) 69 / Fax. +49 (0) 69 / Patricia Preusser Workstream: customer readiness 3

4 Bernd Rossbach Workstream: CSD implementation, development Our customers will gain the opportunity to simplify their IT interaction with the involved CSDs and central banks. T2S will bring standardised connectivity formats to the European market. Who is your SPOC? Ensuring a good communication flow between our customers and Clearstream is vital to the success of our T2S preparation activities. It is for this reason that customers of Clearstream Banking Frankfurt were asked to nominate a single point of contact (SPOC) throughout the lifetime of the project. The SPOC will act as the central point of contact for securities accounts related to a single legal entity. Clearstream will then liaise with the SPOC, providing him or her with all important information on T2S implementation. We look forward to getting to know your SPOC at dedicated Clearstream customer events. The SPOC s job will be to pass on information about Clearstream s T2S-related activities within his or her organisation and will be responsible for the associated readiness tasks plus the management of activities related to the necessary transition of securities accounts. T2S Client Paper now available Clearstream s Group Executive Management members and T2S experts take a look at the changes T2S will bring, give their views on the future European post-trade landscape and outline our unique value proposition to customers in the new T2S Client Paper published in October The document is a combination of industry insight and opinion while providing guidance to customers on how Clearstream will approach T2S in the next few years. It is written as individually-authored sections which discuss T2S challenges and the opportunities from now until the go-live in 2015 and beyond. The T2S Client Paper is available as a pdf in the T2S section of our website (clearstream.com) or go straight to the ebrochure here. Just a click away A dedicated T2S section on the Clearstream website is just a click away. Here you will find all our up-to-date T2S-related information. You can reach the T2S web section from our homepage at (see below). Götz Donalies Workstream: CSD implementation, connectivity 4

5 Keeping you in the know T2S activities and certainly those around communication have been gathering pace since the first CSDs signed the Framework Agreement in May 2012 and it became certain that the T2S initiative was going ahead. We want to make sure that all our customers are given relevant and timely information about the future functional design of the system. Clearstream has therefore adopted a phased approach for its T2S communication plan. In spring 2013, we will publish a T2S Introduction Note as the first step to our Detailed Functional Description (DFD) and this will outline the results of the Clearstream T2S Design phase as well as the Task Force Workshops. We believe this will be a valuable tool for helping our customers to begin developing their business solution at a conceptual level. It will be based on the T2S outline presentation for Clearstream customers giving more information from a functional perspective and will be especially Our value proposition Clearstream is uniquely positioned to leverage the potential of T2S for all its customers, not just clients of our CSDs. We believe that our customers can gain great benefits through Clearstream being both a CSD, in Germany and Luxembourg, and an ICSD that serves the international community from its base in Luxembourg and nine other locations around the world. Additionally, customers can take advantage of Clearstream s position within the Deutsche Börse Group. focused on settlement, lifecycle and connectivity. In a second step, Clearstream will provide further detail on the DFD to customers in three releases, starting mid The DFD will enable customers to develop their T2S-related adaptation needs. The first release, DFD1, will be concerned with the entire settlement landscape while DFD2 will explore value-added services and DFD3 will feature specific Clearstream services. The DFD will be a living document and so, in addition to the three releases, we will be continuously updating it in order to incorporate changes triggered by the Eurosystem such as change requests. taking advantage of Clearstream s superior collateral management capabilities to decrease the cost of collateral and liquidity management; - close-to-market asset servicing through our local agent bank partners; - easy access to Deutsche Börse services offered through Xetra and Eurex. In short T2S will not be a Euro-only environment. The Danish central bank has announced that it expects settlement in DKK to be possible on the platform from Europe has long suffered from being very fragmented. In 2009, there were 40 CSDs operating among the 27 countries of the European Union. T he ECB gave a project update presentation with information on opportunities for non-european participants in the project at the Sibos conference in Osaka on 1 November The ECB reported that 80% of T2S system software has already been developed and is undergoing testing. Harmonisation in T2S posttrading processes will result in greater efficiency and less risk. We will deliver: - integrated ICSD and CSD services with a harmonised connectivity through a single window and at a competitive price; - the ability to pool liquidity and thereby improve the fungibility of assets while In summary, the T2S environment will enable Clearstream to expand its offering to customers with a greater choice of transaction channels, a greater reach through our expanding global network of markets and even greater business opportunities. Josée Prim Workstream: internal readiness 5

6 Friedrich Franke Workstream: CSD implementation, business functionality Jürgen Witzel Workstream: testing and migration The extended Clearstream offering will bring tangible benefits and greater choice for all our customers. With T2S, post-trade market members will benefit from an efficient use of hard-to-get collateral to acquire cash in the short term. Our aim is streamlined efficiency Ensuring our customers have a smooth transition to T2S is a major priority for us here at Clearstream and we will do everything we can so that you migrate successfully to the T2S settlement environment. All preparation activities will be aligned to the latest information provided by the Eurosystem. We are currently engaged in a number of workshops being conducted with the Eurosystem (specifically the four central banks operating the system), national central banks and other CSDs. These activities should enable us to agree an achievable approach. Based on this, we will involve our customers through the Task Force on Testing and Migration. These activities should enable us to provide our customers with documentation on testing and migration in the second half of The first part of this documentation will give overall guidance for the simulation period. We will be able to inform our customers about test environment requirements, connectivity testing plus a detailed timeline and test cases to be executed. Following this, we will issue a migration guide giving information about the migration waves and related activities for our customers. Additionally, we aim to provide a timeline for the transition period and a checklist of tasks relevant on the customer side. Coming in the next T2S Bulletin Based on the final decision of the Eurosystem regarding the T2S migration wave composition, the next T2S Bulletin will provide an overview of migration planning. Contact info We are looking forward to supporting and guiding you on a smooth and successful transition towards T2S. Please do not hesitate to contact us. T2S Customer Readiness Team T2S-support@clearstream.com Tel +49 (0) 69 / Fax +49 (0) 69 / /