Exclusive: ECB needs to consider fee hike for securities platform – ECB document

LONDON (Reuters) – The European Central Bank is being forced to consider raising the fees for its flagship securities platform after trading failed to reach its projected volumes, an ECB document showed.

Industry officials say the central bank is planning an increase, a step they say would undermine capital market integration that is already being threatened by Britain’s planned departure from the European Union. The ECB declined to comment on the future direction of fees.

Target 2 Securities (T2S) started operating in 2015 to link the patchwork of national stock and bond settlement houses, the market’s basic plumbing to exchange legal ownership of a security for cash.

A ECB presentation entitled “2018 T2S pricing review” shows that 128.5 million transactions were settled on T2S in 2017, 33.3 percent below the central bank’s projection.

Actual volume fell 3.8 percent in 2017, when the last of 22 settlement houses hooked up to T2S. Volume was 15.2 percent below ECB projections in 2015 and 26.3 percent below expectations in 2016, the presentation showed.

Settlement covers the bulk of T2S income, meaning the ECB is forced to consider raising fees to cover outlays that were paid for with public funds, an industry official said.

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