* T2S pricing for customers of the German CSD applicable from 1 April 2013

* Clearstream will charge T2S settlement at the price of the European Central Bank

* T2S adaptation cost as co-investment with upscale potential

Clearstream has released its pricing model for TARGET2-Securities (T2S), addressing market concerns on T2S customer fees and implementation costs.

The basic principle is to keep both domestic and cross-border settlement costs at the German CSD as low as possible and to offer customers planning security in T2S cost-related questions. The following decisions were taken:

1. Clearstream will provide T2S settlement at the lowest possible price by passing on the settlement fee of the European Central Bank to its existing and future customers without adding any margin and without charging any settlement fee on its own. In doing so, Clearstream intends to encourage settlement volume to grow and to keep both domestic and cross-border settlement costs as low as possible in line with the T2S Economic Impact Assessment published by the ECB.

2. Clearstream plans to pass on about one third of the overall development costs – namely the external portion – to its customers. This will be done via a T2S investment cost contribution of EUR 0.094 that is added to each instruction settled on the German CSD’s settlement system CASCADE between 1 April 2013 and the company’s planned migration in November 2016, with a total cap of EUR 30 million.

3. Customers will also have the option of a deferred payment, depending on what best suits their business model. Clearstream is hereby giving customers the greatest possible flexibility to make the migration to T2S as smooth as possible and a manageable effort.

4. This represents a co-investment of Clearstream and its customers in the post-T2S offering of the German CSD that provides a full opportunity to share the upside of Clearstream’s investment case. Adaptation costs are linked to further fee incentives. Based on their contribution to the T2S implementation cost customers will benefit from a safekeeping discount for the German CSD.

5. Clearstream builds its approach to T2S on its collateral management leadership. Benefits of potential growth in Clearstream’s business following its migration to T2S are planned to be shared with customers to help to offset the T2S investment contribution. This will be done through a one-off share in possible profits Clearstream makes through T2S.

Stefan Lepp, CEO of Clearstream Banking AG, said: “T2S is a key component of European market infrastructure, to which 22 central securities depositories such as Clearstream have committed over the past months. Now that T2S is coming, banks and financial institutions will have to choose how to access the emerging pan-European settlement platform – for example via a national central securities depository like us. In establishing the cornerstones of a cost model, coupled with a clear strategy based on our industry leading collateral management services, we support our customers in moving towards T2S. Beyond a transparent cost model our customers will also benefit from the combined strength of our German CSD with our international central securities depository in Luxembourg.”

T2S is a central pan-European platform for national cross-border settlement of securities in central bank money. The platform is planned to go live in 2015 and aims to significantly reduce settlement costs in cross-border securities trading. Clearstream was one of the first central securities depositories to sign the T2S Framework Agreement in May 2012. LuxCSD, the central securities depository for Luxembourg, which was formed by Clearstream together with Banque Centrale du Luxembourg, also joined T2S in this first wave.