Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

ECB ups trading fees by half as its platform is shunned

Published 06/25/2018, 05:03 AM
Updated 06/25/2018, 05:10 AM
© Reuters. President of the European Central Bank Mario Draghi arrives at the news conference following the meeting of the Governing Council of the European Central Bank in Riga

© Reuters. President of the European Central Bank Mario Draghi arrives at the news conference following the meeting of the Governing Council of the European Central Bank in Riga

FRANKFURT (Reuters) - The European Central Bank will increase fees for its flagship securities platform by more than half from next year as volumes are far below its expectations, it said on Monday, highlighting its struggles to integrate Europe's patchwork capital markets.

Launched in 2015, Target 2 Securities, or T2S, was to link national stock and bond settlement houses, in the hope of eliminating barriers between domestic and cross-border settlement to reduce costs.

For graphic on volumes in ECB's T2S trading platform click https://reut.rs/2MVoqbJ

But volumes last year were 33 percent below initial expectations due in part a prevailing preference for well established national platforms, lower overall market volumes and lower migration to T2S due to fears over its costs.

To recoup costs, the ECB will raise the fee that depositories of securities will have to pay for each buy and sell order to 19.5 cents from 15 cents, plus implement a temporary surcharge of 4 cents, subject to trading volume growth.

The surcharge would be eliminated if actual volumes caught up to projections.

"Delays in the migration of certain T2S markets reduced the T2S income for the first two years of operation, causing timetable adjustments, higher operating costs and deferred revenues," the ECB said.

"The financial equilibrium of T2S depends largely upon all incurred costs being covered by the revenues generated over a predetermined period," the ECB said.

The recovery period on the project was also increased to 14.5 years from 8.75 years.

© Reuters. President of the European Central Bank Mario Draghi arrives at the news conference following the meeting of the Governing Council of the European Central Bank in Riga

T2S averages over half a million securities transactions per day with volumes over 800 billion euros.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.