TARGET Working Group response to the ESMA Discussion Paper –
The Distributed Ledger Technology Applied to Securities Markets

Publication date: 02 August 2016

The TARGET Working Group (TWG) represents the industry in discussions with the ECB/Eurosystem in respect of the TARGET 2 euro RTGS system (T2)1 . We are therefore limiting our response to issues relevant to the TWG scope and to Target 2. Given the nature of our comment, we have deliberately not answered specific questions in the Discussion Paper (DP) but merely sought to ensure that our comments contain a clear rationale.

The TWG’s interest arises from the fact that ultimately cash settlement takes place in central bank money (see section 32 of the DP) and it is, of course, of paramount importance that certainty of finality including protection under the relevant national implementation of the SFD applies to transactions across accounts containing central bank money. In the case of euro this means TARGET2 which is underpinned by the T2 Guideline. Although badged as a Guideline, this is actually a legally binding instrument which includes annexes forming the basis for contracts between central banks and their account holders in T2. We make no comment about non-euro currencies except for brief references to connected NCBs and their currencies.