TARGET2 Securities

T2S is the Eurosystem’s single technical platform enabling central securities depositories (CSDs) and national central banks to provide securities settlement services, on a delivery-versus-payment–(DvP) basis, in central bank money. 

T2S was officially launched in June 2015, with the System for Monitoring Transactions in Book-entry Securities (BOGS) of the Bank of Greece being among the first to be connected to the platform. The ECB’s Market Infrastructure Board manages the day-to-day running of T2S. 

What does T2S do?

When investors buy and sell securities, the security and payment need to change hands – a process called securities settlement. T2S is a safe platform where the exchange can happen simultaneously, i.e. where delivery versus payment is possible. Settlement takes place in real-time, even when cross-border settlement procedures are involved. This is why T2S is considered to have revolutionised securities settlement in Europe as it brought an end to complex cross-border settlement procedures and the problems caused by different settlement practices among countries.

With T2S we have a common platform on which securities and cash can be transferred between investors across Europe, using harmonised rules and practices. Currently 20 European countries use T2S.

How does it work?

Every market participant wishing to settle securities transactions on the T2S platform needs to have a securities account with one of the central securities depositories (CSDs) connected to T2S and a dedicated cash account with one of the central banks connected to the platform. These two accounts exist side by side on the common platform. For each transaction, settlement instructions from the CSD and the central bank are matched on the T2S platform. T2S then settles the transaction on a delivery-versus-payment basis, i.e the money and securities change hands simultaneously. Transactions are carried out in central bank money, which reduces risk. T2S also offers a set of sophisticated technical features, including optimisation algorithms and advanced collateral automation mechanisms.

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