U2 collets are unfortunately 20mm, not 16 and likely different collet angle as well.
I would make one with the max 12mm hole (no slitting) as McGyver suggested, then use an ER16 straight shank chuck for everything else. If you are ambitious make one with an ER16 head on it. If you can get the blank centred well in a 5C collet or in a 4 jaw, then that should result in 'close enough' runout.
L20's are also known as U2 and E355 with likely som detail differences.
Gerrit
Quote "The cutter to be sharpened was secured in, on early models, an unknown type of collet with a 16 mm shank that had a maximum capacity of 1/2" (12 mm). Later (and by far the more common type) used what the makers listed as a Schaublin Type L20 with a 5/8" capacity (17 mm), collet angle being 15-degrees and the thread 19.7 x 2 and 45/5 degrees. Hence, as the early collets are now unobtainable (though they can be specially made), before buying one of these machines (or ordering new collets) do check what the situation is, An early model without a complete set of collets, or with ones that are worn, will be very expensive to rectify - and should be far cheaper to buy than one fully equipped. A further problem arises with regard to the later collets sold around the world as the Type U2 and often listed as being: "suitable for Alexander and Deckel grinders". Owners report that these fit the Alexander version, but not the Deckel - or the threads, at least, are different. " from lathes.co.uk