Speech by Ilmārs Rimšēvičs at the finance industry’s expert discussion “Financial Integration in Europe – Benefits for the Baltic Capital Market” (26.09.2017.)
Today we have gathered to mark an outstanding achievement for the Baltic capital market. Less than a fortnight ago two unique projects were completed, thus creating new opportunities for the Baltic capital market for years to come.
First, the Baltic capital market, in close cooperation with Latvijas Banka and central banks of our Baltic neighbouring countries, has joined TARGET2-Securities platform and the Eurosystem has successfully completed the respective TARGET2-Securities project of an unprecedented scale.
Never before have central securities depositories and market participants from 20 European countries joined a single platform to settle delivery versus payment securities transactions in a fast, efficient and harmonised manner. And now TARGET2-Securities settles more than 500,000 transactions, with their value exceeding 750 billion euro on a daily basis.
With joining TARGET2-Securities, the Baltic capital market has an opportunity to reap benefits of the European financial integration by using the same state-of-the-art features and possibilities as other European capital markets, including:
• a single gateway for investors and issuers into the Baltic and European capital markets;
• an integrated platform with no differences between domestic and cross-border settlement;
• harmonised post trade activities; and
• reduced need for intraday liquidity due to auto-collateralisation provided by national central banks.
Latvijas Banka as part of the Eurosystem has not only been involved in financing and steering the TARGET2-Securities project, but has also continuously supported the local infrastructure and market participants in preparing for operation via TARGET2-Securities platform.
Besides TARGET2-Securities, Latvijas Banka has supported another unique project that amplifies gains of European financial integration for the Baltic capital market. I mean the newly established Nasdaq central securities depository – a single institution for central securities depository services in all three Baltic States.
Not only does it provide a single technological solution and a single set of rules for three securities settlement systems operating according to Estonian, Latvian and Lithuanian national legislations, it is also the first central securities depository licensed under the new EU Central Securities Depositories Regulation.
Concentration of the best talents and technologies in a single central securities depository that has joined the pan-European TARGET2-Securities provides an opportunity for the Baltic capital market participants to receive high quality services and benefit from:
• harmonized access of issuers and investors to all three markets;
• unified participation criteria and modern messaging formats;
• effective liquidity savings tools provided by TARGET2-Securities and supported by Latvijas Banka.
I would like to express my sincere gratitude to the Nasdaq team, the national securities regulators and the national central banks of the Baltic States.
A great job has been done. But there are still new horizons ahead of us. European Capital Market Union, an idea developed to mobilise capital in Europe, is being actively implemented at the moment. Its aim is deeper and more integrated capital markets providing businesses with a greater choice of funding at lower costs and offering new opportunities for savers and investors across the EU. I am confident that Nasdaq depository will contribute substantially to this project by developing new and innovative services to channel European capital to the Baltic companies and projects, thus supporting growth and job creation in our region.