Securities Settlement Systems (SSS)

Securities Settlement Systems enable the transfer of securities, for instance following trading on a stock-exchange or over the counter. There are two legs for the settlement of such a trade: the delivery of the securities and the corresponding payment which takes places in a payment system, unless the delivery is free of payment. The delivery of securities takes place by book entries in computerized systems. Both legs must be simultaneous and linked to limit risks. Moreover, transactions settled in SSSs are considered final and irrevocable (i.e. unconditional) when they meet certain conditions.

SSSs either settle on a gross basis or on a net basis.

Securities are held with central securities depositories (CSD), who are notably responsible for ensuring securities’ integrity. Next to the safekeeping function, CSDs enable securities’ mobility as they operate securities settlement engines.

There is usually at least one CSD and one SSS in each EU country. In Luxembourg, Clearstream Banking Luxembourg S.A. is the national CSD for the collateral required from counterparties for the credit facilities granted by the central bank. Since 2009, BCL accepts in addition collateral in VP Lux.

Target2 – Securities (T2S)

T2S, which will operate on a centralized engine, aims at providing harmonized clearing and settlement services of securities in euro, and in other currencies providing interest of non-euro area central banks, and in central bank money. T2S is envisaged with an integrated model whereby the cash account and the securities account are centrally managed.T2S shall be based on the TARGET2 platform.

Following the decision of the European Central Bank’s Governing Council in July 2008 to go ahead with T2S, the project entered in the platform’ specification phase. The current phase is planned to run until the 1st quarter 2010 in order to meet the launch date, i.e. June 2013.

Information on the progress made on the project, which is run in close cooperation with the market, is available on the dedicated website www.t2-s.eu, as well as the minutes of the various working groups, which benefit from CSDs and banks’ participation.

The BCL participates in the European workstreams on T2S. In addition, it heads a national working group on T2S (National Users Group on T2S or T2S-NUG). Its T2S team is reachable on finstab@bcl.lu.