1. What will LuxCSD offer its customers?
Access T2S via LuxCSD

2. LuxCSD Gateway to T2S and the international markets for all types of securities
Target 2 Securities
ICSD Clearstream Banking
Luxembourg
Banks
Other market participants
Fund agents
Luxembourg Stock Exchange 1 1

3. LuxCSD Gateway to T2S and the international markets for all types of securities
T2S is live for the first CSDs – it is a reality
EUR denominated issuance into T2S brings significant advantages:
- Liquidity management advantages for issuers and investors
- Counterparty reach to all Eurozone CSDs and both ICSDs
LuxCSD combines the best of ICSD and CSD issuance approaches:
- an evolution of international market standards for issuers
- risk free central bank money issuance and corporate action cash flow
- Distribution into the combined T2S and ICSDs worlds

4. Access T2S via LuxCSD
LuxCSD will serve as a T2S access point for investment fund settlement in CeBM in the same way as it does for other asset classes. It will deliver routing services for fund orders and functions as a centralised facility for the issuance, settlement and custody of investment funds.
LuxCSD will also offer full access to all T2S markets and services:
- Issuer CSD capability into T2S
- All T2S markets will gradually be available to LuxCSD customers
- All T2S services will be available to LuxCSD customers (e.g. DCP)

5. Client: XXXXXX Title: XXXXXXX
Current CSD Participation Status 24 CSDs signed the Framework Agreement
Clearstream’s CSD in Germany and LuxCSD will count for up to 40% of the expected T2S settlement volume
Currently two CSDs will serve the Luxembourgish market

6. Client: XXXXXX Title: XXXXXXX
T2S enables new options for market access: Consolidation and direct access
Historic post-trade model
Emerging post-trade model
Bank / global custodian
Bank / global custodian
CSD(s)
Agent
Agent
Agent
Agent
Agent
Agent
Agent
Agent
Agent
Agent
Agent
Agent
T2S
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
CSD
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB acc
NCB account
Exposure to variety of banking counterparties
Cash account and collateral fragmentation
Limited settlement netting potential
Complex network of operations
Exposure to CSD & central bank infrastructure
Consolidation of cash and collateral
Improved settlement netting
Single point(s) of access
This is the description of the general T2S model, to show the T2S benefits. It does not entirely fit the LuxCSD approach.

7. T2S will trigger changes for market participants
Level of change
Extensive, for CSDs
Relevant, for direct customers of CSDs
Limited, for indirect customers of CSDs
Opportunities resulting from T2S
Reengineer cash and securities network with option to
- access infrastructure for cash and securities directly
- pool and centralize cash and securities

8. T2S features adaptation – Wave 4 LuxCSD – as Issuer CSD
Partial Settlement 
Matching Rules 
Bilateral cancellation  
Instruction Linking
LuxCSD 
Instruction Types
(in format)
Instruction Prioritisation 
Hold and Release of Instructions 
Auto-Collateralisation1 
Ex-/cum-flag and opt-out indicator 
T2S recommendations for Market claims and Transformations2 
1 Progressive Implementation

9. New Migration Composition and Timeline LuxCSD new migration date: 6 February 2017
LuxCSD adapts the new migration timeline which foresees a migration on 6 February 2017
T2S Settlement Volume*
15,5%
1,1%
22,1%
37,9%
23,4%
Balanced composition of new wave 4 reduces migration risks
Strong dependency remains to a successful migration of Euroclear ESES markets in September 2016
* Source figures (2014):

10. Application to Application (A2A)
LuxCSD Connectivity
A set of A2A and U2A connectivity channels will be provided
LuxCSD Connectivity
Application to Application (A2A)
Portal (U2A)
ISO
CreationOnline
Xact web portal1
Settlement and reconciliation 
Cash
Asset Servicing
Global securities financing (GSF)
Investment fund services (IFS)
On the A2A side, there is a high level of continuity in terms of connectivity channels.
On the portal side, LuxCSD will roll out in phases a new, state of the art portal – the Xact web portal. The Xact web portal will be available to LuxCSD customer for T2S settlement as from September 2016; CreationOnline will need to be used as a parallel system for asset services for a certain period of time (until November 2016).
U2A – User to Application
A2A – Application to Application
1 Detailed roll-out per service element to be announced

11. LuxCSD adopts new features of Clearstream Xact A progressive consolidation of the portal and SWIFT/File Transfer messaging across CSDs and ICSD
Today ... T2S Go Live … Post T2S
ClearstreamXact: a unique platform to access Clearstream's ICSD and CSD services
Harmonised Instruction and report formats to cover all business services of CSD and ICSD (common subscription and format)
Clearstream’s ICSD and LuxCSD Connectivity
SWIFT
CreationOnline
File transfer
(internet and VPN)
Clearstream Xact
- Xact via SWIFT
- Xact via File Transfer
Clearstream’s German CSD Connectivity
SWIFT
CASCADE Host/PC
File transfer and real-time
- Xact Web Portal
For T2S settlement activity, clients are required to use Xact, however, our existing channels remain accessible for non T2S activity
New Connectivity, simple, efficient, secure

12. Xact Web Portal: access to all services Single sign-on to access the full range of services
Dashboard
Settlement
Asset Servicing
Tax
Cash
Reporting & Monitoring
Reference Data
User Management
Help & Resources
Xact Web Portal
Customer
Access in one single place to all services for your activity with both the CSDs and ICSDs

13. ClearstreamXact also via Swift and File Transfer LuxCSD will ensure the translation of customers formats to T2S
Today ... T2S Go Live … Post T2S
ISO 20022
ISO 15022
Customer
Directly connected Customer
ISO 15022
ISO 20022
Indirectly connected Customer
ISO 15022
ISO 15022
Customers acting in ICP mode will provide their messages in ISO
Customers acting in DCP mode will provide core settlement instructions in ISO to T2S.
LuxCSD will translate ISO from customers to ISO for T2S.
LuxCSD will also translate ISO from T2S to ISO for customers.
ISO 20022

14. Client: LuxCSD clients Title: TESTING PREPARATION WAVE 3
yes
LuxCSD T2S readiness
The LuxCSD T2S readiness is delivered by Clearstream. It ensures a smooth transition to T2S for its customers, based on a Staged Implementation delivering
Continuity of services and quality service level throughout adaptations to T2S
Key service elements deployed starting as of Wave 4, to allow customers to fully leverage the benefits of T2S
2016
2017
2018
Q1 Wave 2 Q2
Q3 Wave 3 Q4
Q1 Wave 4 Q2 Q3 Q4
Issuer CSD
Luxembourg (LuxCSD)
Settlement adaptations to T2S
Investor CSD1
Investor CSD
Product & Services roll-out
22 September 2018
1 Service elements roll-out plan to be announced in Q2

15. LuxCSD – Client Readiness1
Client: LuxCSD clients Title: TESTING PREPARATION WAVE 3
yes
LuxCSD – Client Readiness1
2016
2017
Q1 Wave 2 Q2
Q3 Wave 3 Q4
Q1 Wave 4 Q2 Q3 Q4
Set-up, Testing, and Migration Windows
Client Consultation
LuxCSD T2S information meeting for all LuxCSD clients
BIC11 and DCA set-up
Account opening2
U2A – inbound (T2S community environment)
A2A – outbound (T2S community environment)
Training (Xact test environment)
Migration (Pre/Post-Implementation)
Consultation
Middle of March
Ref Data set-up
Account Set-up
U2A
A2A
Training
Migration
T2S Test Phases
Community Test
Wave 3
Wave 4
Multilateral Test Wave 4
Migration Test Wave 4
Multilateral Test
W3 Migration Test
W4 Community Test
W4 Migration Test
06/02 – Go Live W4
17+18/12 - MWDR
09+10/07 - MWDR
01+02/10 – MWDR (optional)
U2A – User to Application – Xact Portal (1CSR for settlement, 1CAS for asset servicing)
A2A – Application to Application (Swift, CDI)
Wave 4 Business Day Test
MWDR – Migration Weekend Dress Rehearsal 14
1 Client Readiness documentation will be gradually released to Clients starting Q1 2016

16. LuxCSD for investment funds

17. Current European investment fund landscape
Domestic European fund domiciles (Germany, France, …) co-exist with two important cross-border fund domiciles (Luxembourg and Ireland)
The largest domestic markets are CSD markets which show very limited cross-border distribution volumes
Investment funds domiciled in Luxembourg and Ireland are distributed in Europe, but also around the globe wherever investor demand exists
Luxembourg is a register funds market, but has the challenge of several parallel delivery locations for fund shares
Register
One or more CSDs
One or more ICSDs

18. Client: XXXXXX Title: XXXXXXX
Overall principle in Luxembourg The delivery of fund shares follows investor demand
Domestic Investor - Distributor
International Investor - Distributor
T2S principle
Perspective
Transfer Agent
Lux Funds

19. Client: XXXXXX Title: XXXXXXX
The investor view
Is there demand from investors?
T2S principle
Perspective

20. Challenges for fund promoters and transfer agents
Transfer Agents (TAs) might face an increasing demand from distributors to facilitate settlement through a CSD
TAs will need to accommodate this while protecting the transparency of their distribution for commercial policy and trailer fee processing
TAs having access to central bank money will potentially want to move settlement there
TAs not having central bank money access might need an agent in one of the CSD markets

21. Current service offering of CSDs
Most countries and their respective CSDs offer services for investment funds for local domiciled funds
In most countries the full issuance of the investment funds are in the CSD (some countries have „mixed models“)
Most CSDs offer clearing, DvP settlement and/or cash netting services for investment funds in the same way as for equities, ETFs, certificates, etc.

22. Client: XXXXXX Title: XXXXXXX
The TA view
Domestic Investor - Distributor
International Investor - Distributor
International Investor - Distributor
Is there a demand from TAs to
actively address a consolidation of their various CSD links, i.e.?
centralise the issuance process strategically?
actively address the transparency aspects?
T2S principle
Perspective
Transfer Agent
Lux Funds

23. How will this evolve in the future?
Client: XXXXXX Title: XXXXXXX
How will this evolve in the future?
Investor demand? ?
The TA´s strategic intentions?
T2S principle
Perspective

24. Delivery of fund shares into T2S A streamlined, single point of access
Access to the T2S environment
Harmonised infrastructure
Central bank money where needed
Commercial bank money where necessary i.e. co-existence with delivery of fund shares in the register for e.g. Asian investors
Dedicated services for funds e.g. transparency reports