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ECB ’ s T2S platform sees surge in transactions without sacrificing settlement efficiency

The growth in transaction values this year reflects a broader trend of increasing financial activity and confidence in the T2S system .

The European Central Bank ’ s ( ECB ) Target2-Securities ( T2S ) platform has experienced a significant increase in transaction volumes since the beginning of the year . Notably , this growth has occurred without a rise in settlement failures ; in fact , rates have decreased . January began with a € 18,324.1 billion in settled transactions , and by May , this figure had surged to € 21,894.9 billion . Daily transaction values mirrored this upward trend . In January , the daily average was € 832.9 billion , but by June , it had climbed to € 1,055.4 billion . Similarly , daily transaction volumes increased from 735,856 in January to 798,294 in June . This surge in activity illustrates a vibrant and expanding market , despite some suggestions in the past that T2S has not lived up to its full potential . One of the most noteworthy aspects of T2S ’ s performance this year is its ability to handle this increasing volume without a rise in settlement fails . In fact , settlement efficiency has been improving . The value of transactions settled efficiently remained high , peaking at 97.5 % in April and maintaining strong levels throughout the year . Settlement fail rates have actually dropped , a potential sign of T2S ’ s effectiveness . While settlement efficiency by volume showed slight fluctuations , the overall trend has been positive . The volume efficiency was 95.1 % in March and saw a slight decrease to 92.4 % in June , but it ’ s worth noting that these numbers still indicate a very high level of performance . Pete Tomlinson , director , post-trade and prime services for the Association for Financial Markets in Europe ( AFME ) commented on the figures on LinkedIn , stating : “ CSDR cash penalties are working !”. Auto-collateralisation , a key feature of T2S , has also demonstrated stability . The value percentage ranged from 15.6 % in January to 13.1 % in May , with volume percentages remaining steady around 1.8 % to 1.9 %. This consistency supports the growing volume of transactions while maintaining a reliable system of collateral management . As transaction volumes increase and liquidity flows expand , the system has managed to handle these changes with high efficiency . The drop in settlement fail rates amidst rising activity is evidence and shows improving performance of T2S .

14 Global Custodian Fall 2024