The European Central Bank (ECB) is pushing ahead with the next phase of its controversial project to establish an integrated securities settlement system in the euro zone, despite on-going criticism and scepticism about the scheme from market participants.
The ECB's governing council has approved the next phase in its efforts to create a common securities settlement platform after performing an initial feasibility study. The next step for the project entails the definition of user requirements, "within a reasonable cost and time scale".
The ECB envisages that Target2-securities (T2S) will connect all clearing networks in the euro zone into a single platform, extending the payments system used for central bank operations to cover securities settlements.
The ECB's plans have come under fire from European Central Securities Depositories Association (ECSDA) as TS2 would supplant services currently provided by its members.
But Europe's banks have come out in support of the scheme, although only on condition that they get more say in the design and implementation of the system, and that banks have direct access to T2S.
The ECB says it will specify governance arrangements by then end of April, with a view to balancing the views of the CSDs and their users. It will then also launch a further round of public consultation. A final decision to press ahead with development will be made in early 2008 on the basis of feedback to the fully-articulated user requirements.
The ECB says that four national central banks - Deutsche Bundesbank, Banco de España, Banque de France and Banca d'Italia - are ready to develop and operate the settlement system.