Target Services, ESMIG and ECMS

Target Services, ESMIG and ECMS

François Maigre

Senior Payment Expert

SWIFT

Thomas Redelberger

Senior Manager Securities Initiatives

SWIFT

Operations Forum 2021

TARGET Services - Main milestones and phases

2020 2021 2022 2023

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Migration

to ESMIG

contractual

framew ork

TIPS

T2S

T2

ECMS*

31/03

Functional Testing

NSP selection and contracts

preparation completed

30/06

NSP procurement

completed

T2 – 21 NovTIPS – 21 Nov T2S – 11 Jun ECMS – Nov

Functional Testing

User Connectivity Testing

NCB Connectivity Testing

Pre-Mig.PROD Connectivity Testing

Connectivity Testing


User Connectivity Testing Functional Testing

NCB and CSD Connectivity Testing

*To be confirmed

Functional Testing

Functional Testing

Functional Testing

PROD Connectivity Testing Pre.Mig.

TIPS customers successfully migrated to the ESMIG framework


2020 2021 2022 2023



Migration

to ESMIG

contractual

framew ork

TIPS

T2S

T2

ECMS*

31/03

Functional Testing



30/06

NSP procurement

completed


Functional Testing








*To be confirmed

Functional Testing

Functional Testing

Functional Testing

PROD Connectivity Testing Pre.Mig.w

e a

re h

ere



2020 2021 2022 2023



Migration

to ESMIG

contractual

framew ork

TIPS

T2S

T2

ECMS*

31/03



30/06

NSP procurement

completed



*To be confirmed

Functional Testing

we a

re h

ere


T2 – 21 NovT2S – 11 Jun ECMS – Nov Automated migration of existing TIPS customers to ESMIG is

completed (CERT + PROD environments)


2020 2021 2022 2023



Migration

to ESMIG

contractual

framew ork

TIPS

T2S

T2

ECMS*

31/03



30/06

NSP procurement

completed





*To be confirmed

Functional Testing

Functional Testing

Functional Testing

we a

re h

ere



Automated migration of existing T2S

customers to ESMIG is completed (UTEST)

TARGET Services, ESMIG and ECMS - SOF 1st December 2021

Have you already analysed the technical

impacts of the migration of T2S to ESMIG ?

A: Yes

B: No

C: I am not a T2S user

Polling question


2020 2021 2022 2023



Migration

to ESMIG

contractual

framew ork

TIPS

T2S

T2

ECMS*

31/03

Functional Testing



30/06

NSP procurement

completed


Functional Testing







*To be confirmed

Functional Testing

Functional Testing

Functional Testing

we a

re h

ere


Completion of User



Have you finalised your T2 connectivity tests?

A: Yes

B: No

C: I don’t know

Polling question

Some area of attention

• T2 registration form requested by the National Central Banks

Additional documentation published by SWIFT to clarify Technical Address for A2A and U2A Administrators to be used in the T2 registration form

• Setup U2A connectivity

Webinar to guide you through the key characteristics of the ESMIG U2A channel and how to successfully implement it recording available

Q&A


More help required ?1. SWIFT Customer Support teams are on hand 24/7 to answer specific queries if you do not find the

information resources you are looking for2. SWIFT engineers can guide you through the U2A implementation end-to-end, which can be requested

via your SWIFT account manager (until end of December 2021)

Eurosystem Collateral Management System (ECMS)

Functional aspects


How high is awareness of the ECMS in your

institution?

A: High

B: Fair

C: Low

Polling question

What is the "Eurosystem Collateral Management System" (ECMS)?

• The Eurosystem1) provides credit in central bank money only against "quality" collateral

(e.g. intra-day credit lines for T2, monetary policy operations).

• Today most Eurosystem NCBs have their own system to manage assets used as collateral

(19 different collateral management systems managed by European NCBs).

ECMS is a TARGET Service and will replace these 19 individual collateral management

systems


Counterparty pool

Collateral Position

CreditPosition

Credit line

• ECMS will:

Keep track of the collateral value provided by the

counterparty bank, its usage (i.e. credit position) and the

available credit line

Interact with T2/CLM for the cash-related information (e.g.

credit line update)

Interact with T2S for the underlying securities settlement

(mobilization, de-mobilization)

1) the system of central banks of countries who adopted the Euro.

After go-live, the ECMS will replace the individual collateral management systems currently in use by NCBs.

Remark: Some NCBs will continue to make use of their national systems for

the management of some or all of their credit claims.

Source: ECB Business Description Document for the ECMS


ECMS Interactions

ECMS

Counterparty pool

T2S

T2/CLM

Counterparty*

CSD

TPA

Settlement Inx

Payments

Credit Line

updates

Marketable

asset Inx,

Position details

Corporate

Actions

Triparty Inx

ES

MIG

*Counterparties = banks that are Eurosystem NCB customers and are eligible to participate in monetary policy operations

Nota bene: The existing legal relationships between the NCBs and their communities,

i.e. counterparties and external actors, remain unchanged


Internal to

Eurosystem

ISO 20022 messages used for ECMS


Securities Settlement

Sese

Mobilisation / demobilisation

Collateral & Ref.Data

colr & reda

Margin calls, pool positions, tri-party

messages

Payment C&S & Cash Management

pacs & camt

Securities Management

Semt

Statement of holdings &

transactions

FI CT, DD, status reports

Securities Events

seev

Corporate Actions notification,

instructions, confirmationNEW

SWIFT Professional Services staff can help you analyse the

impact on your processes and systems

ECMS User Connectivity Options

• A counterparty / bank that wants to continue to do monetary operations or get T2

intra day credit line has to connect to ECMS:

Either using A2A and U2A, or U2A only

Banking groups need to check which legal entities shall use ECMS and register with the respective

National Central Bank (NCB) and the Network Service Provider (NSP) for ESMIG access

• For the securities leg a Counterparty/bank has the following options:

Connect directly to T2S (DCP)

Connect indirectly via a CSD (ICP)

Use an account operator - i.e. another bank - which manages the securities account(s) (at a CSD),

using power of attorney

• TPAs and CSDs have to implement the A2A channel (U2A only channel is not

possible for these players)


Operational aspects

ECMS approach for SWIFT customers

• Access to ECMS if achieved via the Eurosystem Market Infrastructure Gateway (ESMIG)

ESMIG covers T2, T2S, TIPS and ECMS (so called "Target Services")

Access rights to Target Services are granted by a national central bank (for T2, ECMS, TIPS) or a central securities depository (for T2S)

• If a SWIFT customer has concluded an ESMIG contract with SWIFT - for example to

access the new T2 - then ECMS is covered by this contract as well

However, the ESMIG contract is per legal entity, hence customers need to check whether ECMS - which is often used by treasury departments - is done by the same legal entity or another legal entity in a group

• The technical SWIFT infrastructure for ESMIG can be re-used for ECMS as well

SWIFT software is multi-tenant. Adding another legal entity is only a matter of adding a software license and suitable configuration (unless running the software has been out-sourced)


Customer Infrastructure

User to

Application

A customer can connect to all of

the Target Services via SWIFT ESMIG


Application to

Application

Eurosystem

T2S

T2

TIPS

ECMS

Customer's

SWIFT

infrastructure

ISO 20022

How to Order SWIFT ESMIG Connectivity for ECMS

Same procedure as the other TARGET

Services:

1) General Contract (Service Levels, Cost) Subscribe to SWIFT's Solution for ESMIG for one or

more legal entities

2) To access the messaging channels for

the TARGET Services (just operational

orders) The ESMIG ECMS configuration form will be

available in time for connectivity testing, which starts 20 Feb. 2023

See also SWIFT document esmig_subscription_and_service_configuration_steps.pdf, July 2021Note: For existing TIPS and T2S customers, this step is not required if no changes are needed in the current configuration.

Subscribe to

SWIFT’s Solution for

ESMIG

(T2 EAC*) T2 UTEST

STEP 1

Select SWIFT as NSP

STEP 2

Configure the access to TARGET service

(T2S EAC*) T2S UTEST

TIPS CERT TIPS PROD

ECMS

UTEST

ECMS

PROD

T2 PROD

T2 PROD

(TIPS

EAC*)

(ECMS

EAC*)


Source: https://www.ecb.europa.eu/paym/target/ecms/profuse/shared/pdf/ecb.targetecms210111_17_milestones_and_readiness.en.pdf

https://www.ecb.europa.eu/paym/target/ecms/profuse/shared/pdf/ecb.targetecms210111_17_milestones_and_readiness.en.pdf


Source: https://www.ecb.europa.eu/paym/target/ecms/profuse/shared/pdf/ecb.targetecms210111_17_milestones_and_readiness.en.pdf


TARGET Services - Eurosystem's Main Connectivity Milestones and Phases

2020 2021 2022 2023



Migration

to ESMIG

contractual

framew ork

TIPS

T2S

T2

ECMS*)

31/03

Functional Testing



30/06

NSP procurement

completed

T2 – 21 Nov.TIPS – 21 Nov. T2S – 11 Jun. ECMS – 20 Nov.

Functional Testing








*) Source: https://www.ecb.europa.eu/paym/target/ecms/profuse/shared/pdf/ecb.targetecms210111_17_milestones_and_readiness.en.pdf

Functional Testing

Functional Testing

Functional Testing

PROD Connectivity Testing Pre.Mig.



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Target Services, ESMIG and ECMS

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