TARGET2 The RTGS system for the euro
Jan 25, 2015
TARGET2
The RTGS system for the euro
2
TARGET2
• Three years of operations
• Getting ready for T2S
• Strategic developments
3
TARGET2Three years of operations
100%
125%
150%
175%
200%
225%
250%
275%
300%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
100%
125%
150%
175%
200%
225%
250%
275%
300%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Volume
Value
In 2010…
•€593 trillion settled (€2.3 trillion daily)
•88.6 million transactions (343,000 daily)
TARGET2 traffic taking 1999 as a reference
In 2010…
•One of the biggest LVPS in the world
•90% market share in euro LVPS
Comparison with other LVPSdaily turnover in € billion equivalentCLS
TARGET
Fedwire
Euro 1
BoJNet
CHIPS
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CLS
TARGET
Fedwire
Euro 1
BoJNet
CHIPS
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
4
TARGET2Three years of operations
In 2010…
•24 banking communities connected
•60,000 reachable institutions worldwide
70
24
52
21
961
783
0 200 400 600 800 1000 1200
RTGS accounts
Ancillarysystems
Central Banks
70
24
52
21
961
783
0 200 400 600 800 1000 1200
RTGS accounts
Ancillarysystems
Central Banks
0
20
40
60
80
100
120
140
160
180
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
99.0%
99.2%
99.4%
99.6%
99.8%
100%
0
20
40
60
80
100
120
140
160
180
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
99.0%
99.2%
99.4%
99.6%
99.8%
100%
Incidents
Availability
In 2010…
•100 % technical availability
•99.74% of payments settled < 5 min
May-08
Dec-10
Participation
System’s performance
5
After three years of operations…
• Smooth functioning of the system
• High level of customer satisfaction
• Regular dialogue with the users on system’s enhancement
… time to think about strategic developments
TARGET2Three years of operations
6
TARGET2
• Three years of operations
• Getting ready for T2S
• Strategic developments
7
RTGSDCA
CSD1
CSD2
CSDn
CSD3
CSD1
CSD2
CSDn
sub a/c 1
RTGS
sub a/c 2
RTGS
CSD3 sub a/c 3
TARGET2Getting ready for T2S
Changes triggered by T2S (cash side)
8
Changes triggered by T2S (cash side)
TARGET2Getting ready for T2S
• Fragmentation of participants’liquidity due to the multiplicity ofsub-accounts.
• Auto-collateralisation in few CSDsand with RTGS account openedwith the ‘local’ NCB.
• Multiplicity of the settlementprocedures.
• Strong operational dependencebetween CSDs andTARGET2.
• Rationalisation of banks’ liquiditymanagement (possibility to have onesingle DCA for settling in all CSDs).
• Auto-collateralisation available withall CSDs where the eligible securitiesare held.
• One single interface for all CSDshosted byT2S.
• Large operational autonomy thanksto auto-collateralisation.
+
9
Banks’ challenge (cash side)
• Monitor and consolidate their cash position in real time
• Shift liquidity quickly wherever it is needed
• Use the same technical interface for managing both their DCA and their RTGS accounts
• T2S is exclusively based on ISO20022
• TARGET2 is not yet using ISO20022
• Not all TARGET2 participants will be ready to move to ISO20022 for cash management
TARGET2Getting ready for T2S
CentralBankMoney
RTGSDCA
Banks wish to…
… while
BANK
10
Alternative interface (legacy standards)
•Access to the main DCA features via TARGET2:�Intraday balance on the DCA�Liquidity shift (push and pull)�End of day statement for the DCA
•Eased access to the T2S GUI for other features
Converted by TARGET2
Op
tio
nal o
ffe
r
Legacy stan
dard
sConversion by TARGET2
CentralBankMoney
TARGET2Getting ready for T2S
Eurosystem’s offer for TARGET2 (cash side)
RTGSDCA
ISO20022 compliant interface• Access to RTGS related features via TARGET2 using a new ISO20022 compliant interface.
• Access to DCA related features via the regular T2S ISO20022 compliant interface.S
tan
dard
off
er
ISO20022
11
TARGET2
• Three years of operations
• Getting ready for T2S
• Strategic developments
12
TARGET2Strategic developments
Migration to ISO20022
• Cornerstone in the development of TARGET2
• Benefits in terms of efficiency and interoperability.
• Synergies with other projects in Europe and worldwide.
• Step-by-step implementation of ISO20022 in TARGET2.
• Flexible coexistence of legacy and ISO20022 standards.
• Discussions with users’ community.
WHY ?
HOW ?
WHEN ?
Market consultation
Dec.2010 Nov.2013
Step1Step1: adaptations to T2S
Step2Step2: customer payments
Nov.2014 Nov.2015
Step3Step3: large value & reporting
Market consultation
Dec.2010 Nov.2013
Step1Step1: adaptations to T2S
Step2Step2: customer payments
Nov.2014 Nov.2015
Step3Step3: large value & reporting
TARGET2
The RTGS system for the euro