Introduction

TARGET2-Securities (T2S) is the name given to the integrated settlement platform provided by the Eurosystem that enables settlement of securities transactions with immediate finality in central bank money (euro and other participating currencies, such as DKK). While the cash accounts are subject to the sovereignty of the respective central banks, the corresponding securities accounts are assigned to the participating central securities depositories (CSDs). From an oversight perspective it must be ensured that T2S takes adequate precautions, particularly with regard to potential operational and legal risks.

Implementation

T2S oversight is limited solely to the functionalities of T2S, with the oversight of CSDs continuing to be the reserve of the competent national authorities. Due to the multinational character of T2S oversight and the impact on the functioning of the participating CSDs, there has been close cooperation between all authorities responsible for supervision and oversight since the outset. Alongside the Eurosystem central banks, these authorities include the national securities regulators (i.e. Germany's Federal Financial Supervisory Authority - BaFin) of the CSDs participating in T2S as well as the central banks of currencies that can be settled in T2S alongside the euro.

The Eurosystem has primary responsibility for the oversight of T2S, with the European Securities and Markets Authority (ESMA) having a coordination function for T2S supervision. In accordance with the PFMI, cooperation between the relevant oversight and supervisory authorities has been formalised in a cooperative arrangement (Responsibility E in the PFMI). The PFMI also form the material basis of T2S oversight, whereby due to the specific nature of T2S, only a subset of the enshrined Principles and related Key Considerations are deemed directly applicable to T2S.