UniCredit Bulbank AD
Central Depository AD held a TARGET2-Securities (“T2S”)-related seminar on 9 May 2023
On 9 May 2023 the Central Depository AD (“CDAD”) organized a Spotlight on T2S seminar with market participants to update on the progress of CDAD’s readiness to join TARGET2-Securities on 11 September 2023 and to discuss and clarify open questions.
The main points from the seminar can be summarized as follows:
- In March 2023 CDAD has been fully certified by the Eurosystem for its forthcoming joining to T2S.
- Migration simulation tests have been successfully completed on 8 May 2023.
- Migration to T2S of approximately 5,000 positions in 80 EUR-denominated securities will take place in the period of 8-10 September 2023. To facilitate this migration no trades in such securities will be allowed 2 days prior to the migration start.
- CDAD will open in T2S two omnibus securities accounts per CSD participant – one for client securities and another one for proprietary holdings. These T2S omnibus accounts will be mirrored in CDAD’s Clearing and Settlement System (“CSS”) and will be linked to the existing accounts in CSS.
- T2S omnibus securities accounts will be linked to a DCA (Dedicated Cash Account) opened with TARGET2.
- CDAD will introduce minimum formatting changes in the templates of settlement instructions and for the time being the communication between CDAD and CSD members will continue to be via ISO 15022 standard. CDAD will translate bi-directionally the T2S messages which are based on ISO 20022 standard, aiming to minimize the impact for its CSD members.
- At a future stage, the communication between the CSD and its participants will need to be migrated to ISO 20022.
- In addition to the currently applied DVP Model 2 for settlement (gross settlement of securities, net settlement of cash) with three settlement cycles per day, CDAD will allow DVP Model 1 (gross settlement of securities and cash) on a per-instruction basis. DVP Model 1 shall be mandatorily used in case one of the counterparties settling a trade is a Directly Connected Party in T2S. The DVP model will be a matching criteria at CDAD.
- Upon successful pre-matching of settlement instructions and securities/cash availability check, CDAD will send settlement instruction to T2S on the intended settlement date, e.g. on T+2 for stock exchange trades.
- Syntax testing of settlement instructions is already possible in CDAD testing environment.
- From 15 May until 15 June 2023 CDAD will facilitate internally testing of settlement finalization, i.e. such settlement will not reach T2S.
- In the period 16 - 18 June 2023 a migration dress rehearsal will be performed.
- Community testing will take place from 19 June to 14 July 2023 with the data migrated to T2S.
- T2S joining will boost harmonization and standardization of corporate action (“CA”) processing at CDAD. Such CA processing will be compliant with Ami-SeCo (Advisory Group on Market Infrastructures for Securities and Collateral)’s SCoRE (Single Collateral Management Rulebook for Europe) standards.
- CA-related testing is expected in Q3 2023.
- At a subsequent stage CDAD will also perform testing covering Billing processes which will also be harmonized in line with EU standards.
CDAD intends to organize another seminar on T2S topics in the near future.
Impact on investors: For information purposes.