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TARGET2 The RTGS system for the euro
13

Sibos 2011 TARGET2 the RTGS system for the Euro

Jan 25, 2015

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Economy & Finance

Marty Hermsen

Sibos 2011 - TARGET2 the RTGS system for the EURO
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Page 1: Sibos 2011 TARGET2 the RTGS system for the Euro

TARGET2

The RTGS system for the euro

Page 2: Sibos 2011 TARGET2 the RTGS system for the Euro

2

TARGET2

• Three years of operations

• Getting ready for T2S

• Strategic developments

Page 3: Sibos 2011 TARGET2 the RTGS system for the Euro

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

Page 4: Sibos 2011 TARGET2 the RTGS system for the Euro

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

Page 5: Sibos 2011 TARGET2 the RTGS system for the Euro

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

Page 6: Sibos 2011 TARGET2 the RTGS system for the Euro

6

TARGET2

• Three years of operations

• Getting ready for T2S

• Strategic developments

Page 7: Sibos 2011 TARGET2 the RTGS system for the Euro

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)

Page 8: Sibos 2011 TARGET2 the RTGS system for the Euro

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.

+

Page 9: Sibos 2011 TARGET2 the RTGS system for the Euro

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

Page 10: Sibos 2011 TARGET2 the RTGS system for the Euro

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

Page 11: Sibos 2011 TARGET2 the RTGS system for the Euro

11

TARGET2

• Three years of operations

• Getting ready for T2S

• Strategic developments

Page 12: Sibos 2011 TARGET2 the RTGS system for the Euro

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

Page 13: Sibos 2011 TARGET2 the RTGS system for the Euro

TARGET2

The RTGS system for the euro