IBS Journal April 2015


Hungarian CSD gears up for T2S with major systems modernisation


Keler, the Hungarian central securities depository (CSD), has completed two major initiatives in preparation for its migration to the new Target2-Securities (T2S) infra- structure. Keler is due to migrate to the new platform in September 2016. The first phase of its modernisation involves the replacement of its 20 year old in-house developed legacy core CSD system. As at the recent project at Euroclear Finland (the Finnish CSD), Keler is installing the Bancs Market Infrastructure platform from India- based TCS. In addition, Keler has worked with Italian software firm SIA to roll out its T2S connectivity solution (SIA and Colt, a telecommunications network provider, are one of the value added network solution providers for T2S, alongside Swift). Kristof Matuszka, head of the strategic


modernisation programme for T2S at Keler, explains that the project is a result of over two and a half years of work for the CSD. ‘Keler celebrated its 20th anniversary in 2013, but our IT systems were also 20 years old,’ he says. There had been an organ- ic development of these systems over the years, adds Matuszka, but there were some limitations in terms of launching new prod- ucts. Coinciding with its migration to T2S, Keler has ambitions to become the gate- way CSD for the whole Central and Eastern European region, so it needed a more ‘state


Budapest, home of Keler ©Alessandro Caproni, Flickr


of the art’ system. ‘We have been satisfied with the current systems for a long time, but nowadays you find when you would like to go for a new product idea, the devel- opment is either very expensive or it will heavily impact on the core functionality, so it might not support our future product development strategies,’ says Matuszka. Keler took the opportunity present-


ed by the T2S initiative to embark on the changes required. ‘At the same time that we decided on a strategy to join T2S in wave three [September 2016], we decided to carry out the system integration project,’ says Matuszka. ‘So when we were look- ing for a system, it had to be T2S capable, as well as having state of the art technol- ogy.’ Other requirements included having interoperability between regional markets, as well as having standardised methodol- ogies for market infrastructures, including the use of the ISO 20022 messaging stand- ard. Keler also offers custodial services and some specialised banking services (it has a limited banking licence), so the system was required to support these too. The CSD undertook a system selection


Kristof Matuszka, Keler


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process, involving four main stages, recalls Matuszka. The first was a discovery phase, to analyse what the options were on the market. This was followed up with a formal RFI, and then an RFP with a shortlist of two vendors. Keler also undertook a detailed scoping exercise. ‘This meant that we got to work for two weeks with the vendors,


© IBS Intelligence 2015 www.ibsintelligence.com


and helped them to make their final pro- posals as well as helping us to get to know the systems more in depth,’ says Matuszka. In the end, TCS Bancs Market Infrastructure was selected on the basis of the vendor’s ‘superior expertise in T2S’, references, the broad functionality of the system and the economic terms offered. Matuszka adds that whilst a lot of


CSDs maintain systems internally and have proprietary technology, Keler was keen to adopt an out-of-the-box solution. ‘This requires some customisation and flexibili- ty, of course, but the level of customisation required with Bancs was quite reasonable,’ he muses.


Keler is now testing the solution inter-


nally, with the community testing with market participants due to start soon. Matuszka says that a go-live will happen later this year. Keler is keen to support par- ticipants to connect to the new infrastruc- ture, ‘it requires a lot of collaboration, how- ever the participants won’t have to make too many changes to their systems’, says Matuszka. In parallel, Keler has been working on


connectivity to the T2S infrastructure. The main T2S platform is a proprietary devel- opment under the steam of four central banks, Banque de France, Banca d’Italia, Banco de Espana and Deutsche Bundes- bank, based on a Cobol mainframe-based back-end and Java front-end. The platform will go live in June this year for participants


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