6th Summit for an Enlarged Europe T2S – The impact on the securities industry Jean Paul Rousseau International Securities Affairs May 27, 2010
� � � � � � � � � � Agenda Contents of the ING internal T2S White Paper T2S: Setting the scene What is T2S? The T2S actors Status update & next phases of the Programme Open issues How it will function Interactions with stakeholders in the Programme Other European projects and initiatives Potential impacts and opportunities for market infrastructures and participants ING vision and questions & answers T2S: The impact on the securities industry 1
� T2S : setting the scene What is T2S � Ensuring consistent understanding � Managing expectations � Outsourcing: � CSDs, NCBs and SSSs of NCBs (acting as CSD for Debt Instruments) � Integrated DVP model versus Interfaced � T2S is a Platform, not a Service Provider T2S: The impact on the securities industry 2
T2S : setting the scene (ctd.) � T2S actors � Market infrastructures � Exchanges, MTFs, electronic trading platforms, CCPs, CSDs, ICSDs � Countries involved � 29 CSDs signed the M.O.U. � CEE countries: Slovenia, Slovakia and non-euro: Romania, Poland � UK? � Countries joining the euro as from 2015 � Users of market infrastructures � Banks, brokers, CSDs having links to other CSDs � Issuers? T2S: The impact on the securities industry 3
T2S : setting the scene (ctd.) � Status Update & Next Phases of the Programme � User Requirements Document (URD): frozen Q1, 2010 � User Detailed Functional Specifications (A2A): H1, 2011 � User Handbook (U2A), H1, 2012 � Platform available for testing: January 2014 � Platform in production for first group of CSDs: September 2014 T2S: The impact on the securities industry 4
T2S : setting the scene (ctd.) � Open issues � Connectivity to the CSD or to the T2S platform � ISO 2022 standards � Connectivity: competing network providers � Investor CSD role � Settlement costs announced and fees charged by CSDs and banks � How it will function � Main functionalities and features � Non euro settlements � Instruments accepted T2S: The impact on the securities industry 5
� T2S : setting the scene (ctd.) Interactions with stakeholders � Adivsory Group � Sub-working groups � National User Groups � Information sessions and workshops � Task forces � CSDs Contact Group T2S: The impact on the securities industry 6
� T2S : setting the scene (ctd.) Governance � No need for a Separate Legal Entity � Topic for the next AG in June � On-going: � Framework Agreement for CSDs � Draft to CESR by July 2010 � Signature expected by April 2011 � Currency Participation Agreement for non euro countries � Dedicated task force to negotiate and find agreement by the Autumn 2010 T2S: The impact on the securities industry 7
T2S : Other European projects and initiatives � Private sector � Public sector � The “knowns “ and “unknowns” until 2014 � Sequencing of all the initiatives and moving targets? T2S: The impact on the securities industry 8
T2S : Other European projects and initiatives � Giovannini Barrier 3 � Harmonisation of Corporate actions on flow and on stock � Standards for General meetings and proxy services � Withholding tax procedure � ECSDA standards � Settlement cycle harmonisation � Securities law directive and possible impact on future IPOs � ISO 2022 � E.M.I.L.: CCP links � New MTFs, Dark Pools, Clearing Houses, CSDs (LUXCSD) � Countries joining the euro � Funds business evolution and convergence T2S: The impact on the securities industry 9
T2S : Potential implications and opportunities � Exchanges and trading venues � CCPs � National Central Banks � CSDs � ICSDs � Global Custodians � Local Custodians � Multi-direct Custodians � Retail banks � Payment banks � Broker/dealers T2S: The impact on the securities industry 10
T2S : Potential implications and opportunities � Exchanges and trading venues � Markets without CCP � Other trading platforms feeding CCP and/or NCBs � CCPs � Access to CSDs � Use of settlement banks � Option of direct connectivity � National Central Banks � Interfaced model � Integrated model � CSD role for Debt instruments T2S: The impact on the securities industry 11
T2S : Potential implications and opportunities � CSDs � Migration plan “all things being equal” � Existing bilateral links with CSDs and ICSDs � Link-up markets � By-passing local agents? � CSDs with/without banking license � ICSDs � Commercial Bank Money settlements? � Volume evolution? T2S: The impact on the securities industry 12
T2S : Potential implications and opportunities � Global Custodians � Keep existing arrangements � Go direct and build own asset servicing expertise � Go direct and use local provider for asset servicing � Use a few regional agents � A combination of these options � Local Custodians � Role and value added of local custodian � Some options T2S: The impact on the securities industry 13
T2S : Potential implications and opportunities � Muti-direct Custodians � Direct connectivity requires coordination and solution for cash management � Possibility to centralise some processes (and harmonise) � Need to involve now countries currently “out of scope” � Need to “watch out” the entire region � CSDs � Platforms � Fee harmonisation � Competition T2S: The impact on the securities industry 14
T2S : Potential implications and opportunities � Broker/dealers � Evolution of the trading and post-trading space � Self clearing � CeBM versus CoBM � Settlement volumes � CSD competition � Back Office cost reduction versus risks T2S: The impact on the securities industry 15
T2S : ING vision and questions & answers T2S: The impact on the securities industry 16
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Certain of the statements contained in this release are statements of future expectations and other forward-looking statements. These expectations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING’s core markets, (ii) changes in the availability of, and costs associated with, sources of liquidity such as interbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterparty creditworthiness, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations, and (x) changes in the policies of governments and/or regulatory authorities. ING assumes no obligation to update any forward- looking information contained in this document. www.ing.com T2S: The impact on the securities industry 18
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