TARGET2-BE User Group · Central Bank Services ... ISO 20022 migration related to the future ... • Upon completion of the end-of-day in TARGET2 (Algo 2,3), TIPS

TARGET2-BE User Group5 April 2017

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Agenda

► Future RTGS● High level business domains● CLM and accounts● Central bank operations● Payments● Liquidity transfers● Reference data● Management minimum reserves

► Eurosystem Single Market InfrastructureGateway (ESMIG)

► Messaging and ISO20022

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Agenda

► TIPS● Market consultation TARGET2 adaptations● Outcome consultation on URD● Outcome questionnaire on volumes● pricing structure

► Miscellaneous● Fax procedure for contingency● AOB

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High level business domains

Operational Monitoring Business Monitoring

Eurosystem Single Market Infrastructure Gateway (ESMIG)

Central Liquidity Management

RTGS SettlementHigh Value Payments and

Ancillary Systems

Reference Data Management

Data Warehouse

PT LT

Service Interface: Technical Validation, Information and Reporting

LT

Busin

ess D

ay

Multi‐curren

cy

Billing

T2S

PT – Payment Transaction; LT – Liquidity Transfer; SI – Settlement Instruction; CL – Credit Lines

ECMSSI

SI

CLTIPS

PT

LT Contingency Settlement (*)

(*) Contingency settlement to be addressed i.a. under the umbrella of cyber resilience

Central Bank Services

Focus for Task Force

In scope for T2/T2S Consolidation

Out of scope for T2/T2S Consolidation, but interfaces are in scope

Transversal Topic

Legend

A2A U2A

System Operators

Non‐Euro RTGSDirect Participants

Central BanksNetwork

SI

Usi

ng a

ltern

ative

Gat

eway

PT

PT

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Shared functional modules

Central Liquidity Management

HVP

AS

Credit line

Static Data

SecuritiesSettlement

InstantPayments

Eurosystem Single Market Infrastructure Gateway

Data Warehouse

GUI

Common Reference Data

Future RTGS Services

T2S TIPS

HVP, AS

Service-related Reference Data

InstantPayments

Shared Billing



Securities Settlement

GUI GUI

Central Bank Operations Dashboard(GUI)

Auto-Collat

RM

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Basic model CLM and main account

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CLM and Multi country banks

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Accounts

► Main account● Central Bank operations (CBO)● Credit line● Standing facilities● Highest priority

► DCAs for specific purposes● High Value Payments● AS● TIPS● T2S

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Functionalities

► Liquidity transfers● Via main account

► Overview liquidity on all accounts► No obligation for main account/DCAs

● Technical direct participants only main account● Mandatory to link DCA with main account

► U2A and A2A

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Reference data

► Common reference data● For all modules

E.g. calendar, country codes, …

► Specific reference data● TIPS, T2S, …

E.g. routing rules, message types, …

► Updates● Real time for certain actions

E.g. blocking accounts

● On specific date● 24/7/365 or “regular” opening hours

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Management minimum reserves

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Business day schedule0:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00

18:00 Cut‐off Interbank PaymentsServices 17:00 Cut‐off Customer Payments 18:45 Change of business day

HVP (incl. warehouse payments) Maintenance Window EoD SoDAmend / revoke warehouse payments

AS Maintenance Window EoD SoD

CLM / CBS Maintenance Window EoD

SF* SoD * +15 min. at last day of reverve maintenance period

Reference Data Maintenance Window EoDSoD

T2S Maintenance Window EoD SoD

18:00 Change of business day after closure of RTGSTIPS

ECMS (MW to by confirmed) Maintenance Window EoDSoD

LegendCut‐off Customer PaymentsCut‐off Interbank PaymentsChange of business dayEnd of DayStart of DayMaintenance WindowAmend / revoke warehouse paymentsReference Data on best effort basis

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Eurosystem Single Market InfrastructureGateway (ESMIG)

► Technical layer● Common entrance interface for all modules● Network agnostic● Single log on● Authentication user● Access rights modules

► Separate GUIs modules will remain

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ISO 20022 migration related to the future RTGS services

► Fully fledged approach instead of ‘like for like’:● Redesign of T2● Network vendor agnostic● V-shape instead of Y-copy

► HVPS+ task force provides guidelines on harmonisation:● Same approach as other market infrastructures● Reduce messages to workable format

► As much re-use of T2S as possible► Request new T2 ISO20022 compliant

messages if needed

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Possible future message flow

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Possible future message flow (2)► Technical transport header:

● Sender signs with certificate provided by the NSP● Receiver checks validity by using associated public

key sender► Business application header:

● Global trend in market infrastructures● From Bank A to MI -/- From MI to Bank B

RTGS service is middleman In line with recommendation ISO 20022 standards, HVP+

and other MI’s Can be enriched with additional information ( MI system

ref, booking time,..)

► ISO 20022 message: forwarded unchanged

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ISO-20022 message types processed by future RTGS in V-shape mode:

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Future RTGS service Payment Message flow

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Miscellaneous

► Consultation on when participants can be ready forISO 20022 will follow

► Big-bang only solution: 1 migration weekend for allcountries

► No conversion features at level future RTGS

► Possibility to restrict temporarely some fields to allowconversion in local systems

Consultation

on

TARGET2 Adaptation to TIPS

deadline 13 April

ECB-RESTRICTED

Rubric

www.ecb.europa.eu ©

Overview

TARGET2 change request

Overview

TARGET2 adaptation to TIPS

End of day procedure and reserve management

Liquidity transfers between TARGET2 and TIPS

ECB-RESTRICTED

Rubric


Overview• The Eurosystem is currently investigating the opportunity of

developing a service for the settlement of instant payments incentral bank money – TARGET instant payment settlement (TIPS)

• If the development of that service is finally confirmed (decision ofthe Governing Council expected towards mid 2017), TARGET2 willhave to be upgraded in order to properly interact with TIPS fromNovember 2018 onwards.

• Several areas of TARGET2 would be affected:– Liquidity transfers between TARGET2 and TIPS– End of day procedure alignment between TARGET2 and TIPS– Reserve Management (RM) Module– ICM screens

• The go-live of TIPS would not affect the operating times ofTARGET2, which remain unchanged.

TARGET2 adaptation to TIPS ECB-RESTRICTED

Rubric


TARGET2 change request

• A draft Change Request (CR) for adapting TARGET2 to TIPS isunder preparation.

• As much as possible, the features already developed for adaptingTARGET2 to T2S would be reused. This approach allows limitingcosts, adaptations and testing efforts on the Central Banks’ andparticipants’ side.

• The upgrade of TARGET2 will also consider the ongoinginvestigations on the TARGET2/T2S consolidation so that thesolution, which is put in place, complies with the medium/long termstrategy envisaged for the Eurosystem’s Market Infrastructures.


Rubric


Liquidity transfers between TARGET2 and TIPS• TIPS account will hold Central Bank money and will be fueled by

liquidity transfers from PM accounts.

• TARGET2 will need to be upgraded to be able to send/receiveliquidity transfers to/from TIPS accounts.

• TIPS account holders do not need to hold a PM account inTARGET2. Nevertheless, each TIPS account has to will be linkedto a PM account (“LM link”) for the purpose of liquidity monitoringon the ICM, potential pulling of funds from the TIPS account andbilling. Cross-border LM links are allowed.

• Any TIPS account may receive funds from and send back funds toany PM account (not applicable for Internet Based Participants).

• It is foreseen that TARGET2 participants use similar instruments toinstruct liquidity transfers to/form TIPS accounts as those alreadyin place for T2S DCAs.


Rubric


Liquidity transfers between TARGET2 and TIPS

• Similarities with TARGET2/T2S interactions:– A2A liquidity transfers using camt.050 (push)– U2A instructions entered via the ICM (push and potentially pull)– Liquidity transfers also possible during the Night-Time Settlement phase– ICM screens offering a consolidated view, including TIPS account balance(s)– Highly urgent priority.

• Differences with TARGET2/T2S interactions– TIPS accounts will not be squared at the end of the day

Reason: not compatible with the business model of instant payments.

– No possibility to instruct liquidity transfers via MT202Reason: anticipating the exclusive use of the ISO 20022 standard in the future RTGS system.

– No possibility to instruct liquidity transfer using standing ordersReason: TIPS accounts are not squared, liquidity adjustments can be carried out before the end ofthe day, liquidity on TIPS is taken on board in the fulfilment of minimum reserves.

– No distinction between adaptation to core services and value-added servicesReason: simplification of the adaptations, more in line with the approach envisaged for themedium/long term.


Rubric


End of day procedures

• To avoid liquidity traps, liquidity transfers from TIPS to TARGET2will be disabled when TARGET2 is closed (e.g. end-of-day phase,technical maintenance, weekends).

• Upon completion of the end-of-day in TARGET2 (Algo 2,3), TIPStakes a snapshot of all accounts, sends the balances to TARGET2and changes its value date.

• Both systems will always operate under the same value date.• Overnight balances in TIPS will be taken on board for the fulfilment

of minimum reserves.• [for Central Banks using the RM module] The RM module will also be

adapted. Each TIPS account will be linked to one TARGET2participant registered in the same NCB (“RM link”) in order forTARGET2 to allocate additional minimum reserves/excess liquidity.


Rubric


Timeline of EoD procedures in TARGET2 and TIPS and calculation in RM module

18:00Cut-off for liquidity

transfers from TARGET2 to TIPS

18:05Completion of last

Algorithms in TARGET2 (Algo 2,3)

Minimum reserves/excess

liquidity calculations in RM module

18:45Start of new

business day in TARGET2

19:30Start of liquidity transfers from

TARGET2 to TIPS

Blocking of outbound liquidity (Liquidity transfers from TIPS to TARGET2)

Snapshot of current liquidity balances on TIPS

accounts and generation of EoD files (General Ledger);

Start of new day in TIPS

Unblocking of outbound liquidity transfers (Liquidity

transfers from TIPS to TARGET2)

Delivery of General Ledger to TARGET2

TARGET2

TIPS


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TIPS – Updates from URD market solution

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Scope changes to URD

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TIPS Market consultation on volumes

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TIPS Pricing structure

► First indication by Eurosystem● 0,5 – 1 euro cents● Based on 2 to 4 millions/day

► Principles● No entry fees● No fixed fees● Full cost recovery

Mainly via transaction fee Charged to originator (some exceptions e.g. time-outs)

● Account and information services fees Set to zero

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► No volume discounts● Annual review and rebate process

► Connectivity costs● To be negotiated with service provider

► Expectation● By end April indication on the amount for the

transaction fee

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Contingency Procedures « FAX »

► In the event that a Target2 participant has an issue and wants to switch to the contingency procedure, he is obliged to provide the Central Bank with the proper forms.● https://www.nbb.be/en/payments-and-

securities/target2/target2/contingency

► Until now the duly signed forms had to be sent by fax (02/221 50 00)● The technical support of the fax machine is not longer

guaranteed in certain financial institutions.

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► Participants can decide themselves whether they use a fax to send the forms or use e-mail instead (duly signed forms as PDF as attachment)

► In any case the demand to switch to the contingency procedure has to be preceded by a call to the new general telephone 02/2215200

► This number is only known by the direct particpants and can only be used for contingency purposes.

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► All incoming calls for “5200” are recorded.● Recordings will only be used in case of any dispute

between the participant in question and the Central Bank.

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Documents

TARGET2-BE User Group · Central Bank Services ... ISO 20022 migration related to the future ... • Upon completion of the end-of-day in TARGET2 (Algo 2,3), TIPS