Target-2 Securities Estonian National User Group (EENUG)

19 March 2009, from 14.00-16.00
Eesti Pank, Tallinn

Minutes of meeting

Chairperson: Kadri Martin
Secretary: Keiu Sopp

Agenda

1. Preparation for the meeting of the T2S Advisory Group.
2. Overview of the recent decisions of the executive management of the Tallinn Stock Exchange/ Estonian Central Register of Securities (ESCD) in respect of the T2S project.
3. Overview of the Nordic-Baltic NUGs meeting in Copenhagen.
4. Any other business.

1. Preparation for the meeting of the T2S Advisory Group

Kadri Martin briefed the attendees on the T2S Advisory Group meeting due on 25 March 2009. The following topics were discussed more thoroughly:

SG on Process Efficiency
The members of the Estonian national user group were informed that Eesti Pank has forwarded Estonia's answers to the ECB and these are published on the web site of the ECB. In addition it was pointed out the answers of other countries' user groups (NUGs) are also available on the Internet. In general, all the user groups that had replied expressed support to the proposals of the SG on Process Efficiency (see also the minutes of the previous meeting).

Task Force on Contractual Issues
Kadri Martin emphasised that the Advisory Group is expected to approve the text of the memorandum of understanding (MoU) in March. According to the plan, all interested depositories should sign the MoU by 30 June 2009 and the depositories who do not sign it by this date will no longer be able to belong to the T2S Advisory Group and to be included in the governance structure.

Pricing
Kadri Martin summarised the T2S Advisory Group's restricted workshop on pricing held on 12.02.2009 and highlighted the most important issues:

  • 10-15 euro cents for DvP (delivery versus payment) to early joiners, whereas fees on settlement instructions would cover at least 70% of expenses.
  • Pricing proposals are tested to check their compliance with competition conditions.
  • An alternative Monte Titoli offer was presented. This proceeds from settlement volumes and takes into account the quality (speed) of settlements. Work on this proposal will continue.
  • In the case of initially agreed settlement volumes it was found, after a discussion, that preventive agreements would not be a reasonable step in the current market situation.
  • Write-downs are applied on user level (custodians' level), irrespective of the depository used.

Comments of EENUG members:
Ruta Tännav, representative of Swedbank AS, raised the issue of the high fixed fees. The entire EENUG was of the opinion that the annual fee of 100,000 euro is too high, especially from the point of view of the users.

At the same time it was admitted that the fixed fees are likely to depend on the number of acceding depositories and more specific pricing rules should be clarified prior to the signing, since pricing forms a part of the MoU.. In addition it was pointed out that the T2S Advisory Group is planning to convene a separate short-term working group which will deal with pricing issues.

Info Session in Madrid on 21.04.2009
Eesti Pank forwarded the information related to the Info Session to the EENUG contact persons and recommended that everybody having interest and the resources should definitely attend.

Comments of EENUG members:
Ruta Tännav, representative of Swedbank AS, raised the issue of possible account structures. She suggested considering different alternatives and related legal issues, cost, technical solutions, etc.
The members generally supported the proposal and considered it necessary to prepare a model for different scenarios and analyse it.

Next steps:
All the EENUG members will be able to send comments and proposals regarding the meeting of the T2S Advisory Group on 23.03 at the latest. The EENUG secretary will send to the EENUG the web site address of the T2S project team: www.ecb.int/paym/t2s/progress/html/nl0109.en.html.

 2. Overview of the recent decisions of the executive management of the Tallinn Stock Exchange/ Estonian Central Register of Securities in respect of the T2S project.

Andres Lips, representative of the Estonian Central Register of Securities (ECSD), gave a short overview of the recent decisions of the executive management of the Tallinn Stock Exchange/ Estonian Central Register of Securities in respect of the T2S project. Since the executive management regarded there is too much uncertainty, they decided to wait until the ECB replies to the letter the ECSD sent with the aim of acceding the T2S platform. They hope that the ECB's reply will give them a better understanding of how Estonia/the ECSD will be treated in the T2S project. In addition, more information is needed about Estonia's role until the adoption of the euro.

Comments of EENUG members:
Kadri Martin emphasised that so far, the opinions and proposals of observers have been taken into account, but after 30 June 2009 the countries whose depositories have not expressed their commitment to join the project will probably be excluded from the T2S governance structure. She also said it is important for Estonia to keep posted on all the recent information.

Next steps:
to await the ECB's reply to the ECSD's commitment letter of joining the T2S project and the MoU text. In order to identify the advantages and disadvantages of various accession alternatives and to analyse account structure possibilities, a brainstorm will be organised within a restricted circle in the EENUG.

3. Overview of the Nordic-Baltic NUGs meeting in Copenhagen

Kadri Martin briefed the attendees on the Info Session in Copenhagen.
The main discussion topics:

  • By end-March the Governing Council of the ECB will approve the MoU text, which should be signed by depositories by the end of the second quarter of 2009. Those depositories and central banks that will not sign the MoU by the end of the second quarter will probably be no longer able to participate in the work of the T2S Advisory Group. There will be high-level meetings between the Eurosystem and depositories (probably before the T2S Advisory Group meeting next week).
  • A short-term working group will be established to make proposals on the pricing of T2S.
  • Finnish representatives are of the opinion that not all legal issues can be established by agreements (the Eurosystem and depositories) and it is probable that EU legal acts need to amended as well. It was decided that cooperation will be made in legal issues on the Nordic-Baltic level. The ECSD and Eesti Pank submitted the names of their representatives to the Danish NUG member. If necessary, also the Ministry of Finance will be included.
  • Meeting with the Danmarks Nationalbank and the depository (VP). In Denmark, serious work on the T2S project started already in 2007, although the task was considered almost mission impossible. VP has been an initiator of discussions with market participants and so far three different account structure models have been analysed. Market participants have been supporting the project since 2008. It was also highlighted that in Denmark, systems are highly integrated with debt securities being issued in both Danish kroner and euro (VP Luxembourg was created). In addition, it was stressed than the exclusion of Denmark from the T2S project would not be a even option for the country and the objective is to devise a version suitable for the Danish market in any case (if necessary, the account structure will be changed) and to find the best solution for all market participants.

Comments of EENUG members:

Ruta Tännav, representative of Swedbank AS, drew the user group's attention to possible cooperation with other countries (Denmark and Norway), since these have already made a lot of preliminary work and their ideas could be used as a basis for devising our own model.
Kadri Martin offered Eesti Pank's support in developing cooperation with Nordic countries. Eesti Pank found general approval from all the EENUG members.

Next steps:
Eesti Pank will forward the summary and proposals of the Info Session to the EENUG contact persons.

 4. Any other business

Kadri Martin briefed the attendees on the activities carried out after the first EENUG meeting:

  • Eesti Pank sent to the ECB a letter about the creation of the EENUG and its reply regarding consultations with the SG on Process Efficiency.
  • A T2S web page has been created on the home page of Eesti Pank. The web page currently contains the regulation on the creation of the EENUG and the minutes of the first meeting.
  • The management of the CSD/ Tallinn Stock Exchange held a discussion.
  • An EENUG Info Session took place in Tallinn and a Nordic-Baltic NUGs Info Session was held in Copenhagen.

Upcoming events and activities:

  • A workshop within a restricted circle in the EENUG will be held on 16.04. Eesti Pank asked to be forwarded the names of those wishing to participate by the end of the first week of April (03.04). Kadri Martin proposed that the maximum number of attendees should not exceed 10. The exact agenda and topics will be specified by 09.04. Preliminary topics include: analysis of different account structure scenarios (the primary input will be made by the ECSD) and alternatives in joining the T2S project (preliminary input by Eesti Pank).
  • The brainstorm will include a further discussion of how to make reviewing the materials related to the T2S project more efficient.
  • To develop the idea of cooperation between Nordic-Baltic countries. This topic will be discussed at the 16.04 brainstorm.
  • The EENUG's annual plan, including the frequency of holding meetings, will be reviewed. The EENUG secretary sends the members the annual plan introduced at the first meeting. The plan is open to comments and proposals.
  • The EENUG members suggested that the Ministry of Finance be included in future discussions. However, it was decided to do it later, when project details are specified. The representative of the Ministry of Finance is currently among the receivers of the EENUG materials.

Payments