ECB sets T2S framework agreement deadline; UK looks to opt out

ECB sets T2S framework agreement deadline; UK looks to opt out

The European Central Bank has set an October deadline for its final offer to central security depositories (CSDs) on a framework agreement for the Target2Securities (T2S) system. However, the UK now seems certain to turn its back on the project.

The T2S initiative - which will create a pan-European securities settlement system - has been dogged by controversy since it was first mooted back in 2006, with an update report last year setting the latest go live date at September 2014.

In a bid to increase momentum, the ECB governing council says it will make a final offer on a framework agreement with interested CSDs by the end of October, drawing to a close nearly two years of negotiations.

This agreement will be a contract clarifying the rights and obligations "providing a solid legal basis for CSDs to adapt to T2S and safeguarding the Eurosystem's investment". The CSDs are expected to decide whether to sign up by the end of the year.

However, T2S looks set to go ahead without Britain, Europe's biggest securities market, according to the Financial Times, which cites sources claiming that the Bank of England has decided against joining.

The move would not be out of the blue - two years ago BoE executive director Andrew Bailey wrote a letter to the ECB executive board member Gertrude Tumpel-Gugerel, raising concerns over the governance and cost involved in the project.

UK turns down ECB securities project - FT (subscription)

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