T2S: Two Years to Launch The Strategy of London Stock Exchange for - PowerPoint PPT Presentation

T2S: Two Years to Launch The Strategy of London Stock Exchange for T2S London Stock Exchange Group

The London Stock Exchange offer for T2S: a flexible and efficient solution Objectives Client Maximum flexibility and efficiency DCP 1 • Guarantee an easy and efficient access to the whole set of functionalities available in T2S Solutions for preserving current infrastructure and minimize ICP 2 impacts • Full coverage of asset servicing through SWIFT messages • Exploit current interfaces and accounting structures Possibility to choose Monte Titoli as unique access point to all 3 markets DCP • Expand the network for a complete markets coverage + • Supply a comprehensive set of services (fiscal, multi-currency, ICP asset servicing) London Stock Exchange Group Page 2

For DCPs T2S means: Flexibility and efficiency • Access to the whole set of DCP functionalities available in T2S • Competitive pricing • Possibility of a “mixed” connectivity model with more functionalities and information not supplied by T2S but Swift/ Swift/ Swift Swift X-trn X-Trm available through Monte Titoli The market approach followed by Monte Titoli allows its clients to act as an aggregation hub on multiple countries and markets London Stock Exchange Group Page 3

Connectivity options DCP ISO 20022 - T2S GUI Settlement ICP/DCP ISO15022 Asset servicing MT-X ISO20022 ICP Settlement ISO15022-20022 MT-X - MTA2A ICP/DCP (Pre) Settlement (*) (*) for information not directly available to DCP London Stock Exchange Group Page 4

Liquidity Management • Management of cash in Central Bank Money • Corporate actions payments both in T2 and T2S (client choice) • Centralised cash management through DCAs for all activity channeled via Monte Titoli • Auto-collateralisation ‘on flows’ facility • Cash forecasting

LSEG offering on repos • LSEG will keep on managing repos (DCP and ICP) • Both classic repos and buy sell back will be managed • Central engine for the calculation of the accrued interest • no risk of mismatch • Management of both spot and forward legs • Linkage between the two settlement instructions automatically created by LSEG before it is send to T2S • Possibility to keep the actual infrastructure flow London Stock Exchange Group Page 6

Integrated cash management in central bank money • Centralisation of liquidity within T2 / T2S • Possibility to use a single cash account in T2S to cover all settlement needs • Settlement in central bank money for all activities with counterparties connected to T2S • Neither split of liquidity nor use of commercial bank money • CA proceeds directly in T2 / T2S • No further use of domestic payment system • Full flexibility for clients in the choice of receiving proceeds (T2 or T2S accounts) • Clients may choose for single type of securities whether they wish to receive proceeds in PM account of T2 or in the DCA of T2S London Stock Exchange Group Page 7

Monte Titoli’s pricing principles • Investments for T2S project will not be transferred to clients • Monte Titoli confirms its commitment to maintain the cost for domestic settlement as it is until the start of the second wave of T2S inclusive of current services • Starting from Wave 2, the settlement fees will be reduced and will be applied both to domestic and non-domestic immediately after the entrance of the relevant Issuer CSD in T2S • From Wave 2, Monte Titoli will apply a differentiated fee for ICP and DCP, in order to guarantee participants a transparent and tailored pricing, according to the specific needs of the customer • Based on official T2S princing schedule of ECB London Stock Exchange Group Page 8

Pricing principles in T2S starting from Wave 2  DCP : flat fee for each trade based on the Pricing in T2S – from Wave 2 ECB price plus a mark-up for cost recovery Price  ICP : A tiered pricing structure that includes Current € 0.475 the following services:  Enrichment  Conversion of ISO15022 in ISO 20022  Routing ICP DCP  Matching € 0.25 (*)  Settlement reporting ECB cost  Queries will not be part of the standard Volumes offering (*) Internal estimate based on T2S offical pricing London Stock Exchange Group Page 9

Status of the T2S project London Stock Exchange Group Page 10

Completing the offering for T2S Page 11 London Stock Exchange Group

Pricing principles in T2S starting from Wave 2 Main project streams • Coverage of all markets • Corporate Actions • Fiscal services on foreign securities • Triparty collateral management Objective: Offering an unique access point to manage financial securities in T2S before the first migration wave London Stock Exchange Group Page 12

Market coverage (from 18 to 30) Markets Open Link A wide coverage of all T2S markets and G8  France ESES investor CSD countries will be implemented before the  Germany Investor CSD start of T2S  Austria Investor CSD Und. Devel. Investor CSD Luxembourg (VP Lux)  Finland Indirect via EB New markets Open Link  Spain Investor CSD  Portugal Investor CSD Remaining T2S markets By 6/2015 Indirect/Relayed (10)  Netherlands ESES Investor CSD Japan TBD Indirect  Sweden Indirect via EB Canada 2013 Indirect Und. Devel. Investor CSD Belgium NBB Russia 2014 Investor CSD  Belgium ESES Investor CSD Und. Devel. Investor CSD Greece BOGS  Switzerland (EUR) Investor CSD  USA DTCC (FOP) Investor CSD  UK &IE (EUR) Investor CSD Legend  Euroclear Bank Investor CSD T2S countries  Clearstream Luxembourg Investor CSD Extra T2S Page 13 London Stock Exchange Group

Asset servicing: same procedures for domestic and foreign securities • Corporate Action Harmonisation & Automation project guarantees some key advantages (to be released phase 1 June 2013 and phase 2 in Q4 2013):  Processes and messages currently in use for domestic securities will also be available for foreign securities  Introduction of native swift messages ISO15022 and ISO 152022  Two separate messages for capital reimbursement and interest payment (when paid same day)  All Corporate Actions proceeds paid in T2S  Identical processing for each security, irrespective of the country of issue • Other Services:  Hold & Release to be released in 3Q13  Multicurrency DVP by 4Q13 London Stock Exchange Group Page 14

Fiscal services: complete coverage Partnership with a major market actor to pursue the following objectives: • Supply Relief at Source services in each country where it is allowed by the local jurisdiction • Full coverage of all markets • Direct management by Monte Titoli of the whole payment process London Stock Exchange Group Page 15

X-COM: the new Triparty Collateral platform Objective Planning Use of the same pool/securities account to Phase 1 (pool Bankit): September 2012 cover different trading needs, financing and Phase 2 (Markets): Q1 2014 collateral - Full outsourcing of the management of Simplification in back financing operations and collateral office - Sophisticated\customised tools to control Reduced risk risks (hair cuts, eligibility criteria, margin calls, concentration limits, close links) - Immediate recall and automatic Full control on substitution of securities in collateral securities portfolio - Customised selection of collateral based Optimised use of on rating and size collateral London Stock Exchange Group Page 16

Why London Stock Exchange - Offering a single point of access for T2S markets for settlement, asset servicing and collateral management - Flexible service model with full T2S functionality - Harmonization and standardization of procedures for all securities in T2S - Partnering with a CSD that operates a low risk process (CBM and Agent Role) - Competitive pricing

Contact Us Alessandro Zignani Head of Post Trade Sales Phone: +39 02 33635212 Email: azignani@lseg.com Cristina Belloni Senior Sales Phone: + 39 02 72426504 Email: cbelloni@lseg.com Giovanni Costantini Senior Sales Phone: +39 02 33635283 Email: gcostantini@lseg.com David Smith Sales – UK clients Phone: +39 02 033635218 Email: d.smith@lseg.com Paolo Carabelli T2S Project Manager Phone: +39 02 33635 237 Email: p.carabelli@lseg.com