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De Nederlandsche Bank. Oversight on Systemically Important Payment Systems Paul Osse Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems Ohrid 24 June 2008. Agenda. Oversight general Oversight and Supervision Oversight in NL (general) - PowerPoint PPT Presentation
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De Nederlandsche Bank Eurosysteem
Oversight on Systemically ImportantPayment Systems
Paul Osse Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems
Ohrid 24 June 2008
De Nederlandsche Bank
De Nederlandsche Bank Eurosysteem
Agenda
Oversight general
Oversight and Supervision
Oversight in NL (general)
Oversight standards
Trends / developments
De Nederlandsche Bank Eurosysteem
Oversight general
Oversight is a task of a central bank aiming:
to contribute to the reduction of systemic
risks by performing oversight on clearing and
settlement systems
to promote the adequate functioning of the
payment system by performing oversight on
the payment chain/infrastructure
De Nederlandsche Bank Eurosysteem
Systemic risk (general)
Systemic risk Systemic risk is the risk that propagation of a
serious failure in a sector of the society will imperil other sectors (a ‘domino’ effect). The infection is propagated via the interfaces between the sectors
De Nederlandsche Bank Eurosysteem
Systemic risk
In case propagation leads to a
effect
a systemic risk has occurred
De Nederlandsche Bank Eurosysteem
Oversight and Supervision
The objective of Supervision is to assess the
(financial) health of an individual financial institution
Oversight has its focus on the chain/infrastructure,
with specific attention for the security and continuity of
the payment infrastructure (payment systems,
payment products etc.)
Oversight assesses against (national or international
accepted) oversight standards
Oversight can be legally or not legally (moral suasion)
based
De Nederlandsche Bank Eurosysteem
Oversight in NL (general)
Objects of oversight Payment clearing and settlement systems
Whole sale (DNB: TOP / TARGET, CLS)
Retail (Equens: CSS) (UPSS: UPSS system)
Securities settlement systemsClearing and settlement systems of Euroclear and LCH.Clearnet
(systems used by Euronext)
Retail Payment chain
Payment products
Other roles (excl. clearing and settlement)
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Oversight in NL (general)
Organization at DNB
Oversight and operations organisational
located within the same division Multidisciplinary staff (11, including head of
department): lawyers, risk management
experts, (IT) auditors, economists
De Nederlandsche Bank Eurosysteem
Oversight in NL (general)
Approach / tools (1)
Determination of objects
Prioritisation / risk analyses
Assessments
Monitoring / continuous oversight
Oversight standards / frameworks
De Nederlandsche Bank Eurosysteem
Oversight in NL (general)
Approach / tools (2) Authority to set up minimum standards for the
objects of oversight (oversight framework) Assessment of a system, product or a role
prior approval for system or product to ensure adherence to the Oversight Framework
periodical reports on key elements for regular examination
De Nederlandsche Bank Eurosysteem
Oversight in NL (general)
Approach / tools (3) Payments become more and more international.
Securities are international
consequences: International co-operation with other NCB's, ECB,
BIS, CPSS/IOSCO, ESCB CESR Oversight on Target arranged within ESCB For other systems a common oversight approach is
still missing so case by case MoU’s are drafted/amended
De Nederlandsche Bank Eurosysteem
Oversight standards
By using standards the level of playing field is guaranteed
Wholesale Core principles for systemically important payments
systems (SIPS) (BIS, January 2001)
Terms of Reference (ToR) for the assessment of
Large Value Payment Systems (LVPS) (ECB)
standards and best practices (ROC of DNB, agreements in
context of NVB and ESCB)
technical standards (ISO, ECBS, NVB,...)
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Oversight on securities
Trade (Authority Financial Markets (AFM))
EuronextClearing (DNB/AFM)
LCH.ClearnetSettlement (DNB/AFM)
Euroclear DNB / TOP (DVP-settlement)
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Oversight standards
SecuritiesSSSs
CPSS/IOSCO RecommendationsCCPs
CPSS/IOSCO RecommendationsOversight Framework CSE (Dutch)
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Trends / developments
Consolidation / concentration European consolidation underway
TARGET2 Single European Payment Area (SEPA) EuroNext (mergers) Euroclear (CSD acquisitions) EC legal initiatives:
Payment Service Directive Code of Conduct
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Trends / developments
Specialisation multiple operators/owners: card schemes, transaction
networks, imaging and clearing new providers of payment products/ payments services
telecom providers network providers public transport non bank ATM’s acceptant payment service providers
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Trends / developments
Implications Few critical systems (operators) will remain
Retail area with local, fragmented functions
Increasing (need for) cooperation between providers
(scaling-up, new markets)
Cross-border oversight will become standard
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Trends / developments
Consequences Standardisation increasingly important
Increasing (need for) co-operation between overseers
(criteria, standards, approach)
Legal and oversight frameworks need to be harmonised
(MoU’s)
Increasing (need for) co-operation with other regulators
(e.g. supervisors, securities regulators, etc.)
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Trends / developments
Overseer needs to find balance Security – efficiency
National – international
Supplier – consumer
Regulation – market
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QUESTIONS?
De Nederlandsche Bank Eurosysteem
Time’s up………
Thank you for your attention
P.W. Osse RE RA CISADe Nederlandsche Bank N.V.+31 20 - 524 [email protected]
