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Luxembourg : VP LUX as the gateway to T2S.

Luxembourg and Belgium's securities infrastructures share many aspects in common. In future, they will also share a unique position as the only European markets that will migrate more than one Central Securities Depository (CSD) to the future Eurosystem settlement platform, TARGET2-Securities (T2S).

VP LUX and LUX CSD both signed the T2S framework agreement in May 2012, while in July 2013 London Stock Exchange Group announced that they intend to establish a new CSD that will also operate out of Luxembourg and offer settlement in T2S. VP LUX mainly offers services to issuers of securities and therefore welcomes this market infrastructure enrichment that will bring additional services to investors, and potentially also additional distribution channels for securities issued via VP LUX.

The VP LUX T2S project is proceeding according to schedule

VP LUX will migrate to T2S in the third wave, together with Clearstream Banking Frankfurt, LUX CSD and VP SECURITIES, among others. As a consequence, as from 12 September 2016 all settlement in central-bank money via VP LUX will take place in T2S. All securities currently issued via VP LUX (mainly financial sector bonds and Luxembourg investment fund units) will be eligible for T2S settlement.

The VP LUX system will migrate to T2S at the same time as the parallel migration of the VP SECURITIES system. Currently, the analysis phase is being finalised and the actual coding of the new system began in the spring of 2013. This work will be finalised during 2014. Our internal testing with the Eurosystem will begin on 1 October 2014 and our testing with customers will start on 4 March 2015.

Therefore, with less than 15 months to the go-live date for T2S in June 2015, now is the time for market participants to take stock of their current and planned post-trading value chains and to assess whether T2S migration may bring opportunities for the re-design and/or further automation of their own or their clients' back-office processes.

New VP LUX settlement services after migration to T2S

T2S will allow VP LUX to offer the settlement of bonds and investment fund units via a single European harmonised, straight-through-process in central-bank money. In T2S, cash payments (settlement, issuance and corporate actions) will be booked across all T2S CSDs to a single central-bank cash account (the T2S Dedicated Cash Account). Market participants and their clients can therefore benefit from a single, harmonised securities settlement process, as well as from improved cash liquidity management in their back-office processes.

In future, banks can send their securities instructions to T2S either via the VP LUX interface or directly to T2S, acting as a Directly Connected Participant (DCP).

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Publication:Mena Report
Geographic Code:4EULU
Date:Mar 28, 2014
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