TARGET2-Securities


TARGET2-Securities, in shorthand T2S, is the Eurosystem's platform for securities settlement in central bank money. T2S offers centralised delivery-versus-payment settlement across several European securities markets, without being itself a central securities depository since it does not offer CSD services such as custody or asset servicing.
T2S is one of the Eurosystem's TARGET Services, together with T2 and TARGET Instant Payment Settlement for cash payments.N

Background

Historically, financial market infrastructures in Europe were created to meet the requirements of national financial markets. In most cases, there were one or two dominant players at each stage of the value chain: typically one stock exchange for trading, one central counterparty for clearing and at least one CSD for settlement. Furthermore, these national infrastructures were primarily designed to manage securities denominated in the national currency. Securities settlement across Europe thus remained costly and cumbersome.
Despite the introduction of the euro in 1999, the provision of post-trading services remained heavily fragmented along national lines. For example, there were still 19 CSDs operating in the euro area in 2009 and almost 40 in the 27 countries of the EU.
This situation was viewed as encouraging each country's financial market to remain domestically oriented, thus being detrimental to the aim of market integration. Investors continued to invest mostly in domestic securities, and as a result, the euro-area financial market could not fully benefit from the risk diversification and competition benefits that arise from having a single currency. These barriers which provoke a considerable competitive disadvantage for European capital markets were identified in a report by the Giovannini Group led by Alberto Giovannini in 2003.
Some initiatives by the European Commission to remove impediments to competition between national markets have included the Markets in Financial Instruments Directive, the European Market Infrastructure Regulation and the Central Securities Depositories Regulation. T2S as a pan-European platform was intended to complement these existing initiatives by boosting competition, increasing price transparency, and harmonising practices across Europe.

History

The ECB first announced it was "evaluating opportunities" for a TARGET2-Securities settlement services on. After market consultations and a decision by the Governing Council of the European Central Bank, the project was launched in 2008 and the platform started operations on. The development and operation of T2S was assigned to four central banks of the Eurosystem—those of France, Germany, Italy, and Spain, with the ECB providing project coordination. The T2S Framework Agreement, negotiated between CSDs and the Eurosystem, has been signed by 24 CSDs, of which 19 migrated to the T2S platform in four waves between June 2015 and February 2017.
These were, in alphabetical order of countries: OeKB CSD, Euroclear Belgium and NBB-SSS, VP Securities, Nasdaq CSD, Euroclear France, Clearstream Banking AG, BOGS, KELER CSD, Monte Titoli, LuxCSD, Malta Stock Exchange, Euroclear Nederland, Interbolsa, Depozitarul Central, CDCP, KDD, Iberclear as well as SIX SIS.
In addition, the Danish RTGS Kronos2 was connected to T2S on, allowing T2S to settle the cash leg of a securities transaction in Danish krones.
In October, 2020, T2S and the associated ECB payments system TARGET2 experienced an outage for nearly 11 hours. Not long before, Euronext NV had also experienced outages.
On, five more CSDs connected to T2S, namely Euroclear Bank, BNBGSSS and Central Depository AD, SKDD, and Euroclear Finland. By end-2023, there were 892 active Dedicated Cash Accounts for settlement in euro on the T2S platform.

Operations

Two types of accounts are located and maintained on the T2S platform: securities accounts provided by participating CSDs, and cash accounts in central bank money provided by participating central banks. Thus, T2S embeds contractual relationships between central banks and individual CSDs, but not with the latter's clients who are the beneficial owners of the securities. As of 2024, industry participants estimated that some T2S account maintenance functionalities had been maintained in parallel by participating CSDs, generating redundancy of processes, risks and unnecessary costs. Even so, the same source assessed that T2S had significantly contributed to market practice harmonization.

Central Securities Depositories

As of late 2024, 24 CSDs were directly connected to T2S, of which 22 national CSDs and 2 international CSDs. The third ICSD, Clearstream Banking SA, is also connected to T2S via an omnibus account in Clearstream Banking AG, the German national CSD.

National CSDs

EU-based CSDs that were not connected to T2S as of early 2025 included the Cyprus Stock Exchange, CSD Prague, Hellenic Central Securities Depository, the Central Securities Depository of Poland, and Euroclear Sweden. Uniquely in the EU, Ireland has no national CSD, and has been using Euroclear Bank for that purpose since 2021.