TARGET2 The RTGS system for the euro. 2 TARGET2 Three years of operations Getting ready for T2S Strategic developments.

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 equivalent

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

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 of sub-accounts.

• Auto-collateralisation in few CSDs and with RTGS account opened with the ‘local’ NCB.

• Multiplicity of the settlement procedures.

• Strong operational dependence between CSDs and TARGET2.

• Rationalisation of banks’ liquidity management (possibility to have one single DCA for settling in all CSDs).

• Auto-collateralisation available with all CSDs where the eligible securities are held.

• One single interface for all CSDs hosted by T2S.

• Large operational autonomy thanks to 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

CentralBank

MoneyRTGSDCA

Banks wish to…

… while

BANK

10

Alternative interface (legacy standards)

•Access to the main DCA features via TARGET2:

Intraday balance on the DCALiquidity shift (push and pull)End of day statement for the DCA

•Eased access to the T2S GUI for other features

Converted by TARGET2

Op

tion

al off

er

Legacy sta

nd

ard

sConversion by TARGET2

CentralBank

Money

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.

Sta

nd

ard

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