T2S opens many doors in the world of collateral and liquidity. At its simplest, financial intermediaries will soon be able to open up one account for settlement purposes and one for related cash settlement in place of one account in every market where they currently trade securities. This one dedicated account ought to consolidate settlement activity and reduce the amount of cash that traders are required to keep at Central Banks. It will also free up resources for investment in other areas. At a more complex level, T2S will dramatically expand the collateral available across the European and global marketplaces by consolidating settlement and merging collateral channels. This will be most profound in the use of equities as collateral.
We’ve had some thoughts this week about how securities finance markets are developing, including the prospects of more electronic trading and how to read available data. Here’s what we are seeing.
Bernie Sanders, the Vermont senator who is running against Hillary Clinton for the Democratic presidential nomination, has proposed a US Financial Transaction Tax (FTT).
T2S, Collateral and Liquidity
Frankfurt June 2, 2015
London June 3, 2015
Paris June 4, 2015
Clearing and Market Infrastructure for Repo, Funding and Liquidity
New York June 10, 2015