The cost of cross-border trading could drop by as much as 90% after the implementation of by the Central Depository of the Target2 Securities platform which is targeting the streamlining of trade settlement across Europe, Jeam Michel Godeffroy, the chairman of the Committee for the implementation of the T2S platform of the ECB said yesterday. He attended the ceremony for the signing of the documents for the set up of the National Working Group for implementing the T2S platform in Romania.
The ECB intends to launch the Target2 Securities in 2014, after its implementation was postponed several times. So far, around 37 central depositories and three banks have announced their intention to implement the T2S platform.
"Right now, a cross border transaction costs around 2-3 Euros, but after the implementation of T2S, the costs could be lowered to as much as 15 Eurocents/trade", the representative of the ECB said.
However, he did stress that nothing is final for now, because the initial estimates concerning the volume of cross-border transactions were invalidated by the crisis and thus new calculations are required.
The volume of cross-border transactions was one of the indicators that the ECB took into consideration when estimating the cost of the investments required for the central depositories to implement the T2S platform.
"We have several scenarios concerning the liquidity of cross-border transactions and we estimate that we will announce the investment needed to implement the Target2 Securities system in the beginning of September. Before the crisis, the volume of cross-border trades increased by 12% a year on average, but in 2008-2009 the volumes have decreased. As a result, we will need to make new estimates by taking into consideration the cross-border trades of the first half of 2010, meaning one of the most difficult periods", sai
