News

Wave 1 of T2S (Target2-Securities) is set to go live on 22 June, representing the first step towards the implementation of a single settlement platform across Europe. The project was first conceived in 2006 and launched in 2008. Throughout its existence, the project has been subject to numerous delays and as the starting line approaches, it looks as though it could face another.

On 29 April, ESMA (the European Securities and Markets Authority) recognised 10 third country CCPs (central counterparty clearinghouses), meaning that they can offer clearing services to European market participants on an equivalent basis to their European counterparts. The jurisdictions in which they operate have been deemed equivalent by the European Council in regards to their rules and regulations governing clearing houses.

Asset managers and end investors should consider increased due diligence as to the way in which their assets are held in custody at their custodian banks following the UK Financial Conduct Authority’s (FCA) £126 million fine of BNY Mellon.

The major impact of new European directives AIFMD and UCITS V has been, and will be, an increased need for market monitoring by custodian banks. Whilst the monitoring of market stability in markets in which clients are invested has been common place in the industry, it is now a formalised regulatory inevitability.

The European regulator, ESMA (the European Securities and Markets Authority), has so far deemed the rules and their regulatory outcome around central clearing to be equivalent to its own standards in Japan, Singapore, Australia and Hong Kong, with the frameworks in Canada, Mexico and India expected to follow shortly. The big name missing from this list is the US.

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