The European Central Bank (ECB) launched Target2Securities (T2S) in 2006 as a multi-year project to harmonise, centralise and unify settlements across Europe with one engine for delivery-versus-payment settlement in central bank money. T2S is being rolled out in various waves between June 2015 and 2017 until all central securities depositories (CSDs) are connected to the T2S platform. This will cut fragmentation which will help to reduce cost and risk, as well as boosting competition between CSDs.

T2S for investment funds will enable investors, distributors, asset managers and service providers to benefit from secure and efficient cross border settlement using highly scalable and automated processes. Fund managers or their transfer agents will need to decide, in the coming months, how to gain convenient access to T2Sand how to continue to support settlement in commercial bank money as well as central bank money. They will also have to find the least disruptive ways of fulfilling their obligations regarding KYC and AML, distributor commission calculation or payments and sales reporting.

To help, ALFI has established a T2S Working Group, which is publishing an evolving set of guidelines on T2S for funds in the form of continually updated Q&As.