LuxCSD joins TARGET2-Securities
The Board of Directors of LuxCSD decided at its meeting on 27 April 2012 that the central securities depository (CSD) for Luxembourg would join TARGET2-Securities (T2S) and signed the T2S Framework Agreement. T2S is a pan-European settlement platform that will be launched by the European Central Bank in 2015. It will bring a single integrated process across Europe for delivery-versus-payment (DVP) settlement in Euro central bank money. The aim of T2S is to significantly reduce the fees of domestic and cross-border settlement in central bank money across Europe to around 15 euro cents per transaction. The first signing deadline for participation in T2S was 30 April 2012.
Mark Gem, Chairman of the Board of Directors of LuxCSD and Head of Business Management atClearstream, said: “LuxCSD will provide Luxembourg with a national access point to T2S enabling market participants to reduce their settlement risks. This is an important factor in helping the Luxembourg market to remain competitive as a financial centre once T2S is established. LuxCSD has the advantage that it can leverage the deep service range of Clearstream, i.e. an extensive settlement network covering all future T2S markets and many more, and offer value-added services that will be of interest beyond Luxembourg. Our partnership with the Banque centrale du Luxembourg foreshadows our future wider partnership with the Eurosystem in T2S.”
Patrick Georg, General Manager LuxCSD, said: “The development of T2S, coupled with other market and regulatory initiatives, was the key driver for the launch of LuxCSD. LuxCSD will be the natural gateway for Luxembourg to the new pan-European settlement platform. Cross-border transactions are at the core of the Luxembourg financial centre and it was therefore essential that LuxCSD will be part of T2S and will so remain the central European hub for the distribution of cross-border investment funds. By signing the T2S Framework Agreement ahead of time we wanted to show the Luxembourg financial community and our regulator our commitment to T2S. We will continue to enhance LuxCSD to support cross-border transactions.”
LuxCSD provides the Luxembourg financial community with central bank money settlement services in Euro as well as issuance and custody services for a wide range of domestic and international securities including investment funds. LuxCSD is jointly owned by Banque centrale du Luxembourg and Clearstream International S.A. (50:50). It was founded in 2010 and went live in 2011, shortly after it was designated a Securities Settlement System by the Luxembourg central bank. The company’s commitment to join T2S marks another milestone in the young life of the Luxembourg CSD.