ECB warns over settlement volumes Users of Europe's planned Target2Securities project could face higher charges as soft trading in the eurozone threaten the economic assumptions of the new settlement system, the European Central Bank has warned. Jean-Michel Godeffroy, chairman of the T2S programme board at the ECB, has warned that settlement volumes were down nearly a fifth on the bank's projections and were "a cause for concern." IN Clearing & Settlement The bank also said Euroclear and Clearstream, the two privately owned central securities depositories (CSDs) that will account for the majority of the project's volumes, would not be fully migrated on to the system until the end of 2016. T2S is an ECB-backed project that aims to set up a single IT platform for securities settlement across Europe. The ECB believes it will significantly reduce the cost of cross-border settlement and help put Europe on a more even footing with the US, where post-trade costs are much lower. However it has been controversial as many national CSDs across Europe fear the project will take away the settlement business that provides them with steady revenues, forcing them to seek other business lines. The ECB has previously said that users would be charged a €0.15 fee for using T2S, but late last week warned that settlement volumes were down 18 per cent on its 2010 assumptions. "This gives the T2S Board cause for concern, as one of the underlying assumptions of the T2S pricing policy was that EU volumes would be no more than 10 per cent lower than the projected volumes," Mr Godeffroy wrote in the ECB's quarterly bulletin. The board will keep a close eye on this matter and explore all possible ways to avoid increasing fees for T2S users. Many in the settlement industry have said the economic assumptions were based on UK and Swiss participation in the project, but both countries have declined. The ECB also confirmed that migration on to the system would take place in three waves, beginning in June 2015. Monte Titoli, the depository owned by Borsa Italiana, and the privately owned SIX-SIS, will be among the first wave. Belgium's Euroclear and Deutsche Börse's Clearstream, which account for two-thirds of T2S volume, have been kept apart owing to market concerns about operational safety. Euroclear will join the second wave from July 2016 alongside Iberclear, the Spanish depository run by Bolsas y Mercados Españoles. Clearstream will be in the third migration wave, which will start in November 2016, and involve 10 CSDs migrating.