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White Paper

T2S – Simplifying Settlement in Europe


The integration and harmonization of the European financial market has been the main driver for many regulatory and market initiatives in order to promote competition, transparency and growth.

Currently, the post-trade settlement infrastructure in Europe is fragmented with each country having its own national Central Securities Depository (CSD).

The European Union has around 40 CSDs compared to only one - The Depository Trust & Clearing Corporation DTCC - in the US for clearing and settlement. This scenario has led to a monopoly in the domestic markets and higher costs for cross-border settlements. The European Central Bank (ECB) has already implemented the Target2 system for real-time settlement of Euro payments. Taking this harmonization initiative further, another large program, Target2 Securities (T2S), has been initiated. T2S aims to commoditize settlement in Europe by offering secure and real-time Delivery Versus Payment (DVP) settlement for all European securities against central bank money.

In this white paper, we discuss the main challenges for CSDs / custodians and other market participants while adapting to the T2S initiative. We also present various considerations to ensure efficient implementation as well as suggestions for future business models.