TARGET2-Securities

Currently the securities settlement market in Europe is fragmented with expensive and complex cross-border securities settlement. Hence, the Eurosystem launched TARGET2-Securities Project in 2006 to harmonise securities settlement in euro in all EU Member States with the single shared platform and legal framework, thus contributing to the implementation of the Lisbon Strategy. The implementation of Project will lead to harmonisation of securities settlement and reduction of costs incurred by securities market participants. TARGET2-Securities will be a technical basis for enhancing faster settlement of outstanding securities in Europe and ensuring maximum safety. TARGET2-Securities will provide settlement in other currencies which the respective national central banks will allow for settlement in TARGET2-Securities. The T2S Programme Board appointed by the Governing Council of the European Central Bank is responsible for the implementation of TARGET2-Securities Project, and the Project is developed by the national central banks of four EU Member States: Germany, France, Spain and Italy. The above banks will also be the operators of the single shared platform of TARGET2-Securities. National central banks and central depositories interested in the Project participate in the work of the national user groups of TARGET2-Securities. The launch of the single shared platform of TARGET2-Securities is anticipated in June 2015. The European Central Bank has published several information brochures on TARGET2-Securities.

Latvia supported the development of TARGET2-Securities Project at the meeting of Economic and Financial Committee (ECOFIN) held on 10 October 2006, where the European Central Bank informed the Ministers of Economy and Finance of the EU countries on the above Project. Latvia also supported the decisions regarding the implementation of TARGET2-Securities Project at the ECOFIN meetings held on 27 February and 3 June 2007. To participate in the Project, the TARGET2-Securities National User Group of Latvia comprising the representatives of the Latvian Central Depository, Bank of Latvia, Financial and Capital Market Commission, Treasury of the Republic of Latvia and Association of Latvian Commercial Banks, was established in 2007. The TARGET2-Securities User Group of Latvia is headed by the representatives of the Bank of Latvia and Latvian Central Depository. The Strategy for Implementing TARGET2-Securities in Latvia developed by the above group has been supported by all institutions representing TARGET2-Securities User Group of Latvia. The Board of the Bank of Latvia expressed support to the above Strategy on 1 July 2010. The Latvian Central Depository is the Project's main partner in Latvia to sign the Framework Agreement with the Eurosystem.

Similar to the national central banks of other European countries, the Bank of Latvia will ensure the settlement of the cash leg of securities transactions in euro through participation in TARGET2-Securities. The Bank of Latvia will open and maintain the TARGET2-Securities dedicated cash accounts in central bank money for eligible participants. The TARGET2-Securities dedicated cash accounts will be linked with real-time gross settlement systems, in Latvia - with TARGET2-Latvija. Based on the participant orders and via these links, the national central banks will transfer to TARGET2-Securities dedicated cash accounts the amount of liquidity needed for settling the securities related transactions. The end-of-day liquidity available on TARGET2-Securities dedicated cash accounts will be automatically transferred to the respective real-time gross settlement systems. Technically, both TARGET2-Securities dedicated cash accounts and TARGET2-Securities securities accounts will be located on a single shared platform. It will enable the Latvian securities market participants settling transactions in securities registered with any depository participating in TARGET2-Securities to use a single TARGET2-Securities dedicated cash account for settling the cash leg.

To prepare for participation in the single shared platform of TARGET2-Securities, the Working Group on TARGET2-Securities Project Concept Development has been established pursuant to the resolution of the Bank of Latvia Board "On the Bank of Latvia's TARGET2-Securities Project" of 12 August 2010.


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