On 20 September 2016 KELER, the Hungarian CSD, held a meeting for the market participants to present its BCP solutions for T2S operations in the event that its system is not ready to support T2S functions, partially or entirely, in time for Hungary’s T2S accession. As communicated earlier, KELER will join T2S in the 4th Wave i.e. on 06 February 2017.
KELER identified three T2S BCP scenarios as stated below:
- BaNCS (KELER’s new system) does not go live until T2S migration – T2S BCP is needed to cover full T2S operation with KELER’s old system;
- BaNCS goes live until T2S migration, but its T2S functionalities are not operational – T2S BCP is needed to cover full T2S operation with BaNCS;
- BaNCS goes live until T2S migration and only its T2S functions for master data handling is operational – T2S BCP is needed for T2S transaction management with BaNCS.
In any of the above scenarios, KELER will provide minimum T2S coverage partially through manual operation. The minimum T2S services supported by KELER in T2S BCP mode are as follows:
- Support of ICP connection only (no support for DCP mode and for CSD links outside of T2S) – in such a case, only KELER can place instruction for its account in T2S, the place of matching is in KELER and if needed, KELER forwards the instruction to T2S;
- Operations only via KELER’s omnibus EUR and securities accounts in T2S (no segregated accounts will be available);
- Management of EUR settlement transactions – all EUR instructions have to be sent to T2S for settlement by KELER;
- Handling of T2S specific reference numbers – forwarding them to market participants;
- Availability of HU ISIN in T2S;
- Continuous synchronisation of the master data between KELER and T2S;
- Handling of Corporate Action events for HU ISIN registered in T2S.
According to KELER’s projection based on historical data, there would be a small number of instructions/transactions that will need to be handled in T2S under minimum T2S service coverage. Therefore in line with KELER‘s T2S BCP, KELER will handle these manually in T2S, while they will be handled automatically in KELER (either by the old or by the new system).
In T2S BCP mode, the EUR settlements will take place as follows:
Settlement instructions (for EUR) will need to be sent to KELER that will match the instructions in its system. After successful matching and if the necessary cash/securities coverage are available KELER will settle the transaction in its system and then send the instructions manually via T2S GUI to T2S for settlement. Legally, finality of the settlement will occur in T2S – thus KELER will provide two settlement confirmations: once when the transaction settles in its system and another when the transaction settles in T2S.
In case of, T2S BCP KELER will introduce the below listed services at a later stage:
- Maintenance of segregated securities and cash accounts in T2S;
- EUR settlement outside of KELER;
- Conditional Securities Delivery (CoSD);
- Delivery With Payment ( DWP);
- Reservation and earmarking;
- Linking;
- Market Claim/Transformation.
The decision whether to invoke the above described T2S BCP by KELER will be taken in mid-December 2016 after the completion of the T2S Market Test. If the outcome is to call for the T2S BCP, then during the course of January 2017, a market test T2S BCP will be conducted as well.
Impact on investors: KELER has created a T2S BCP in the event that KELER’s system is unable to support T2S basic functions partially or entirely . In case T2S BCP is invoked by KELER, then limited T2S services will be available in the Hungarian market.