Euroclear Bank is to offer clients the choice of settling euro trades in both commercial bank and central bank money.
Euroclear, which is an international central securities depository (ICSD) based in Brussels, says the move would help fund managers and other participants to better manage risks and increase liquidity and efficiencies.
The option being assessed is to connect to the European Central Bank’s Target2Securities (T2S) system. T2S is a European settlement platform which offers centralised settlement in central bank money across all European securities markets and aims to reduce European fragmentation.
Euroclear Bank’s central securities depositories in Belgium, France and the Netherlands joined T2S in 2016.
Providing access to both central and commercial bank money would advance the T2S objective by creating a single pool of collateral liquidity across multiple currencies and market jurisdictions.
Lieve Mostrey, Euroclear Group chief executive, said: “Providing direct access to central bank money through Euroclear Bank is aligned to the EU's long standing policy objective of developing a more liquid and efficient financial market infrastructure environment. Our initiative will benefit investors and issuers alike and contribute to more robust capital markets.”
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