monte titoli for t2s: user requirements - mts · pdf filemonte titoli for t2s: user...
TRANSCRIPT
Monte Titoli for T2S:
User Requirements
Webinar
30th June 2014
London Stock Exchange Group Page 1
User Requirements
London Stock Exchange Group Page 2
Overview onT2S
T2S is the Eurozone’s
project for a single
platform for securities
settlement
Real time DVP settlement
in CBM
An integrated system:
securities and cash
Multicurrency
Webinar series "Monte Titoli in T2S" http://www.montetitoli.com/t2s/t2s.en.htm
Overcoming borders in
post-trade services
London Stock Exchange Group Page 3
User Requirements: impact areas
Pre-settlement & Settlement
Outsourced on T2S platform
New features in Monte Titoli via X-
TRM
Cross-border
settlement
Only through X-TRM
New extra-T2S links
Custody
Some functionalities not
included in T2S will be
accessible only via Monte
Titoli
Liquidity and Collateral
New functionalities introduced by T2S and
Monte Titoli
Asset Servicing
Some services not provided
by T2S will be accessible only
via Monte Titoli
Reporting
Further functionalities on
ICP mode
Monte Titoli’s User Requirements include all the adjustments needed to integrate T2S
with the current systems. T2S will impact on different operative business areas.
UR (2.3 version) can be downloaded from MT-X documentation
London Stock Exchange Group Page 4
Monte Titoli’s principles for UR
• Minimisation of operative and technological impacts
• Same services offering for DCP and ICP
• Possibility to develop tailored DCP/ICP solutions to access all functionalities required
by the participant’s actual needs and structure
ICP DCP
Limited operative impact;
technical impacts absorbed by
Monte Titoli
Messaging through SWIFT
15022 communication channel
Complete range of services
offered by T2S platform, plus
Monte Titoli’s additional
functionalities
Operative and technical impacts
aimed at a directly interact with
T2S
Development of ISO 20022
messaging system
Limited impacts on Monte Titoli’s
services not provided by T2S
London Stock Exchange Group Page 5
Operative Flow in T2S
Bank (ICP)
Markets
T2S
X-TRM (MT’s pre-
settlement
engine)
CC&G
Settlement instruction
Custody MT
Margins
Custody info
SWIFT 15022, MT-X
Target2
• SWIFT ISO15022 on settlement and custody
• U2A proprietary Web tools (X-TRM on line for settlement and MT-X for custody)
• Use of same cash and securities accounts
• SWIFT message layouts are accessible via MyStandards
Contracts OTC
Settlement
Clearing
Custody
& cash
Trading
Contracts
London Stock Exchange Group Page 6
Settlement info SWIFT
15022, X-TRM on line
Net settlement
Impact analysis
Pre-Settlement
Settlement
Cross Border
Settlement
Reporting
Liquidity and
Collateral
New functionalities and limited impacts on current operative processes
Cost reduction and improvement of operative processes
Access to new markets
Rationalised reporting functionalities to integrate T2S processes
New functionalities for the optimisation of cash management operations
Custody &
Corporate Actions Harmonisation of processes at European level
Implementation of User Requirements will allow Monte Titoli’s participants to benefit from
enhanced services, while optimising operative processes
London Stock Exchange Group Page 7
Customers will be able to maintain current counterparty and account codes
Static data and account
structure
Static Data
Data upload
DCA
Monte Titoli will convert current codes so that they are recognised by T2S
Monte Titoli will be in charge for static data upload in T2S
(Limited) missing information required in T2S will be filled by participants through a dedicated web tool
Cash account introduced by T2S, linked to RTGS account in T2
Automatic liquidity transfer DCA RTGS at the end of the day
Possibility to open DCA accounts in foreign currencies
SAC
Securities account in T2S, always linked to a DCA
CSD Participant Account (for settlement activities) and Issuance Account
DCA
RTGS
SAC SAC
SAC
London Stock Exchange Group Page 8
T2S Period XTRM/EX2 XTRM/T2S Description
Start of day N/A 18.45 -19.30 Business day management
Night time
settlement 19.45 -07.00 19.30 - 03.00 Settlement process
Maintenance
window 22.30-07.00
XTRM: 03.00 - 07.00
T2S: 03.00 - 05.00 Maintenance activity
Real time
settlement
Net 9.30 -13.00 Gross XTRM: 7.00 -18.00
Gross T2S: 05.00 -18.00 Settlement process
Gross 8.00 -18.00
Pre-settlement 7.00 -22.30 7.00 - 03.00 Acquisition, matching and
reporting
End of day N/A 18.00 -18.45 Controls and management of
pending instructions
• As today, if at 16.00 cut-off time trades are not settled, they will be sent to the next settlement day • Unlike today, fails are sent to the night batch cycle
• Time schedule similar to the current settlement day
• Settlement cut-offs are the same of T2S
• No cut-off by MT for sending instructions to T2S
Settlement Day – changes
London Stock Exchange Group Page 9
Start of Day (SOD)
Night-time Settlement
(NTS)
Maintenance Window
Real-Time Settlement
(RTS)
End of Day Procedures
(EOD)
• Change of business date in T2S
• Preparation for night-time settlement • Revalidation of Settlement Instructions/ Restrictions, etc..
• Consistency control on securities exposure.
• Cancellation of operations that are still pending and are at end of validity period
• Sending of end of the day reporting
Two distinct settlement cycles:
• First night-time settlement: sequences for cash sweeps T2T2S, cash settlement restrictions, CA on stock, liquidity transfers,
FOP/DVP, CBO, new liquidity transfer • Last Night-time settlement: sequences for DVP, partial settlement,
liquidity transfers, CA on flow
18:45
19:30
03:00
05:00
18:00
18:45
Settlement Day - detail
London Stock Exchange Group Page 10
• Real-Time Settlement Period: execution of all types of Instruxtions;
two dedicated partial settlement windows • Real-Time Settlement Close Period: DVP cut off h16.00; Automatic
Cash Sweep between T2ST2; FOP cut-off h18.00
Pre-settlement – Acquisition and
Validation
Instructions
acquisition
Monte Titoli will automatically convert instructions according to T2S standards by activating, if necessary, enrichment solutions (e.g., PCT,CVT,CTC)
FoP instructions will require matching and thus RNI msg.710 (allowing for unmatched FoP) will be dismissed
London Stock Exchange Group Page 11
T2S has a more comprehensive settlement fields set (partial settlement, links, etc..)
Validation Adjustment of current validation process to T2S standards
Pre-settlement – Matching
Matching
New mapping of compulsory/optional/additional fields
Other fields not admitted by T2S will still be managed by X-TRM
(Additional) fields introduced by T2S are included at the end of tracked messages, in order to limit technological impacts
London Stock Exchange Group Page 12
• Payment Type • Securities Movement Type • ISIN Code • Intended Settlement Date • Settlement Quantity • Receiving Party BIC • Delivering Party BIC • CSD of the Delivering Party • CSD of the Receiving Party • Trade Date
Mandatory Additional
• Opt Out ISO Transaction Condition Indicator
• CUM/EX Indicator
It is a matching field if it is valued by at least one
counterparty
Optional
• Common Trade Reference • Client of receiving CSD
Participant • Client of delivering CSD
Participant • Securities account of the
delivering party • Securities account of the
receiving party
It is a matching field only if it is valued by both counterparties It is always a matching field
Pre-settlement – Other
processes
Partialisation
Cancellation
Allegement
Unchanged rules for unilateral, bilateral, and automatic cancellation
Matched but unsettled transactions are recycled in T2S until settlement is achieved, unless the parties input bilateral cancellation instructions
Unmatched transactions are recycled in T2S for the following 20 days
Possible partialisation for all transactions (guaranteed and not guaranteed)
Partialisation in T2S includes updating of settled and pending quantities (currently managed through two separate instructions)
Amendment
Only modifiable fields: Partial Settlement Indicator, Priority, Linkages Block
In order to modify all other fields, it will be necessary to cancel and re-instruct
X-TRM process adjustment to T2S standards
London Stock Exchange Group Page 13
Pre-settlement – Enrichment
and Hold&Release
Enrichment
Hold &
Release
Not offered in T2S, it will be provided in ICP mode through X-TRM
Functionality already introduced by Monte Titoli in 2013
It will still be possible to use simple procedures for creating all types of operations that are currently supported in Monte Titoli’s systems, regardless to the different
messages used by T2S
The Enrichment information will be retrieved from Monte Titoli’s database and the instructions will be managed with intuitive procedures
Necessity to align the current procedure to T2S process
In T2S the H&R indicator will have 4 modes, applicable at securities account level
London Stock Exchange Group Page 14
Monte Titoli allows to see the counterpart’s H/R status information before ISD, if the Instruction is entered in ICP mode (in T2S not feasible)
Party Hold
CSD Hold
CSD Validation Hold
CoSD Hold
MT will allow to automatically complement information available in settlement instruction with the aim to: Assign securities settlement accounts/parties, Compute
interest ratio, Build start and end legs of repo transactions
End of the day fail recycle
T2S
Settlement type
Benefits
Fails are sent to next day RTGS cycle
Continuous settlement Easier settlement and lower number of fails
Net for night and day cycles and gross for
RTGS phase
Gross with optimisation mechanisms (i.e., technical netting)
Posting entry for each settlement Instruction
and not for the net amounts
Partial settlement
Only for CCP guaranteed operations
Possible for all operations
Dedicated windows at night and
real time settlement cycles Easier settlement
Settlement – functional analysis
London Stock Exchange Group Page 15
Operative day
sequence
Two batch cycles (nigh time and daytime) + one
real time day cycle
Night batch cycle and real time day cycle
T2S settlement day very similar to current one
Express2 (MT’s settlement platform)
1. Send settlement instruction
Settlement - Intra and Cross
CSD
Intra-CSD
Transactions between counterparties
both participating to Monte Titoli
ICP DCP
Monte Titoli
X-TRM
2. Send Instruction
Hold
3. Settlement Information
4. Settlement Information
1. Send settlement instruction
1. Send settlement instruction
3. Settlement Information
ICP
Monte Titoli
X-TRM
2. Send Instruction
Hold
3. Settlement Information
3. Settlement Information
4. Settlement Information
1. Send settlement instruction
DCP
Cross-CSD
Transactions between a participant of Monte
Titoli and a counterparty of a different CSD in T2S
London Stock Exchange Group Page 16
Monte Titoli
X-TRM
1. Send settlement instruction
2. Settl. Inst. Hold and
Positioning (prefunding
cash or securities)
9. Settlement Information
6. Settlement Information
3. Prefunding confirmation
4. Prefunding confirmation
Settlement - External CSD
T2S
4. Send settlement instruction
5. Settlement
8. Settlement Information
7. Release and Settlement
Instruction for realignment
1. Send settlement instruction
The other CSD is identified as MT
participant; transactions are
managed as Intra-CSD settlement
External-CSD
Transactions between a participant of Monte Titoli and a
counterparty of a different CSD outside T2S
ICP Participant of
external settlement system
Monte Titoli is the Issuer CSD
The other CSD is identified as
External CSD; transactions are
managed through Monte Titoli in
ICP mode
Monte Titoli is the Investor CSD
External settlement Transactions
are managed with the Conditional
Settlement (CoSD) functionality,
which is used for securities/cash
provision and for interaction with
the external CSD
External settlement
system
London Stock Exchange Group Page 17
Liquidity in T2S: key principles
For bonds and stocks payments there is full flexibility for paying agents and intermediaries
regarding the account (RTGS of T2 or DCA in T2S) in which to manage payments
However, payments for Italian Government Bonds will always be carried out in a DCA
account
London Stock Exchange Group Page 18
DCA
DE YYY
IT XXX
FR ZZZ
RTGS
T2 cash T2S cash T2S
securities Introduction of cash account in T2S (DCA) always linked
to an account in T2 for automatic sweep functionalities
The DCA account is managed at Central Bank level
Cash on the DCA can be employed in real time at every
moment of the operative day, also through the T2
interface
Automatic transfer of liquidity T2ST2 at end of day
Availability on DCA accounts for Regulatory capital calculation purposes
Auto collateral with Central bank
Express2 (MT’s settlement platform)
T2S
Limits management
Benefits
Self + firm collateral (versus Bank of Italy)
Equivalent (change of denomination - Coll. on
stock and on flow)
Possibility to automatically substitute securities Closing Operations
automatically generated
Caps management by payment bank (only for segregated accounts)
Credit Memorandum Balance for each SAC with possibility of autocollateral
Increased flexibility (3 levels); possibility to use
client collateralisation
Closure of operation
To be managed by the customer at an
administrative level
Closing operation automatically generated
Reduced administrative duties
Position management
Use of Instructions and Restrictions for Blocking
and Reservation New Earmarking function
Possibility to block securities for a specific operation or process
inside a SAC
Collateral – new functionalities
London Stock Exchange Group Page 19
Earmarking for auto-coll.: in use for T2S automatic auto-collateralisation processes
Earmarking: in use for other business purposes decided by T2S Actors; set by a CSD Earmarking
Position management
Blocking
Reservation
Adjustment of messaging system in order to use T2S Blocking function
Used to block a certain amount of securities in a SAC; if the instructed quantity is above available balance amount, the Instruction is not settled but recycled
until enough securities are received
Used to block a certain amount of securities in a SAC; if the instructed quantity is above the available account balance, the Instruction is partially settled and
recycled until enough securities are available
Adjustment of messaging system in order to use T2S Reservation function
London Stock Exchange Group Page 20
Reporting
Customer Monte Titoli
XTRM Monte Titoli
T2S
OTC
CCP
No CCP
Informative flow in T2S is unchanged
MT 536
MT 540/1/2/3
MT 544/5/6/7
Post-T2S Markets
London Stock Exchange Group Page 21
Message Information Method Timing
MT535 Daily/Monthly Statement of Holdings Push End of day
MT535 Intraday Statement of Holdings Pull Real Time
MT 536/7 Statement of transactions/pending transactions Push/ Pull
End of Sett. Cycles (5am, 6pm) Real time
MT586 Statement of Allegment Pull Real Time
MT549 Request for Statement of Holding/Transact./Allegm. Pull Real Time
Transaction acquisition
Settlement confirmation Statement of transactions
Comprehensive Reports
T2S core functionalities
Monte Titoli will use its current infrastructure in order to provide an enhanced range of
functionalities and information with respect to what is offered by T2S
Functionalities inside and
outside T2S
Validation, Enrichment, Market Specific Attributes
Pre-settlement
Settlement Intra-CSD, Cross-CSD External-CSD settlement
Reporting
Cash & Collateral
management
Pre-settlement & Settlement reporting
Autocollateral: Client & Central Bank collateralization, Earmarking
On exchange trades,
H&R indicator
Cash Forecasting Tool
Additional and integrated functionalities available via Monte Titoli
Validation, Modification, Cancellation, Links, Hold &
Release, Matching, etc
Custody Mark-down, Position Management
Issuance, Corporate Actions management
London Stock Exchange Group Page 22
Thanks for
your attention
London Stock Exchange Group Page 23
Q&A
London Stock Exchange Group Page 24
This presentation contains text, data, graphics, photographs, illustrations, artwork, names, logos, trade marks, service marks and information (“Information”) connected with Monte Titoli. Monte Titoli attempts to ensure Information is accurate, however Information is provided “AS IS” and on an “AS AVAILABLE” basis and may not be accurate or up to date. Information in this presentation may or may not have been prepared by Monte Titoli but is made available without responsibility on the part of Monte Titoli. The Company does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the presentation or any of the Information. No responsibility is accepted by or on behalf of Monte Titoli for any errors, omissions, or inaccurate Information in this presentation.
No action should be taken or omitted to be taken in reliance upon Information in this presentation. We accept no liability for the results of any action taken on the basis of the Information.
Monte Titoli promotes and offers the post-trading services in an equitable, transparent and non-discriminatory manner and on the basis of criteria and procedure aimed at assuring interoperability, security and equal treatment among market infrastructures, to all subjects who so request and are qualified in accordance with national and community legislation, applicable rules and decisions of the competent Authorities.
© June 2014 – Monte Titoli S.p.A. – London Stock Exchange Group