Shearman & Sterling LLP | Financial Regulatory Developments Focus | European Central Bank Confirms Collective Agreement Between TARGET2 Participants
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  • European Central Bank Confirms Collective Agreement Between TARGET2 Participants

    The European Central Bank has confirmed that a collective agreement signed between the central banks operating TARGET2 component systems and the central securities depositories operating on the TARGET2-Securities platform can enter into force. The provisions of the Collective Agreement will take effect on March 20, 2018. The Collective Agreement provides a definition of a “common moment of entry” for payments and securities transfer orders that are matched in the systems of the signatories to the agreement. This common moment of entry will either be the moment at which a transfer order has been declared compliant with the technical rules of T2S by either the T2S platform or, if the CSD is operating a separate matching component, by the CSD. Defining the common moment of entry makes it possible to establish the point at which securities transactions become irrevocable and accordingly will provide certainty regarding the treatment of outstanding transactions if a participant becomes insolvent.

    In its explanatory note the ECB stated that the Collective Agreement “marks the latest step in the process of harmonization of procedures and tools among the system operators using the T2S platform and is a further milestone in the integration of payments and securities settlement systems across Europe”.

    View the Collective Agreement.

    View the explanatory note.