LONDON (Reuters) -The European Central Bank reported a problem in its securities settlement system on Thursday that disrupted communications within the network of operators that form the basic plumbing of financial markets.
The ECB said it had closed communication channels with its network service providers for its pan-European TARGET 2 Securities, or T2S, platform.
The Eurosystem, which comprises the ECB and the national central banks of countries that use the euro, was taking all measures necessary to resolve the incident as soon as possible and would provide an update by 12:15 GMT, the ECB said.
“The incident does not have any impact on life cycle management and matching, settlement, penalty mechanism processing, reference data management,” the ECB said in a statement. It gave no further details of the effects of the glitch.
The T2S system launched back in 2015 and was aimed at simplifying cross-border settlement within the 24 European countries that use it.
European stock, currency and bond markets appeared to be trading normally on Thursday morning, LSEG data showed.
Settlement on trades takes two working days, which might mean signs of any disruption may not show up until Monday.
One trading source said the glitch had affected critical communications between central securities depositories (CSDs), the sector that helps financial markets function.
Central counterparties, or clearing houses, ensure a stock, bond or derivatives transaction is completed. The final leg of a trade, known as settlement, is conducted by CSDs, such as Euroclear.
Market participants usually communicate with T2S via their CSD or central bank.
One CSD, Clearstream said on its website it would monitor the situation and update clients once it had further information.
Others, including Euroclear did not immediately respond to a request for comment from Reuters.
According to the ECB’s most recent figures, the system handled an daily average of around 800 billion euros in transactions in 2023.
(Reporting by Amanda Cooper, Sinead Cruise, Lucy Raitano and Samuel IndykEditing by Harry Robertson and Peter Graff)
