The project, known as Target2Securities (T2S), envisages the creation of a single platform for cross-border and domestic securities settlement against central bank money by 2013. T2S is part of a wider European project to harmonise cross-border processes and reduce capital market transaction costs to make the region more competitive with the US, where post-trade processes such as clearing and settlement are cheaper.

T2S would affect the 15 nationally-based central securities depositories, which settle trades but also perform custody functions such as the safekeeping of securities.

Given that Britain is the largest single securities market in Europe, its non-involvement in T2S would be likely to make it more expensive to implement, industry experts have said.

The UK could also suffer. One settlement industry executive said: “The UK potentially loses out on the benefit of any future reductions in settlement costs. However, at the moment there are no cost savings. It's all about investing in joining”.

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