TARGET2

Interconnection with T2S

• The need to adapt TARGET2 to T2S

• System to system connection

• Mandatory amendments to core services

• Value added services

• Interactions between the banks and TARGET2 / T2S

Overview

2

TARGET2 adaptations to T2SThe need to adapt TARGET2 to T2S

• The intensive discussions between the Eurosystem, the 3CB and the banks lead to the following conclusion:

– The connection of T2S to TARGET2 will be considered and built as anew interface specially designed for T2S

– The same technical interface (with the same message standard) shouldbe used for the management of both T2 cash accounts and T2SDedicated Cash Accounts

– There is a need of monitoring and consolidating liquidity posted in T2accounts and T2S Dedicated Cash Accounts in real time

– Shifts of liquidity (Liquidity Transfers – LT) in both directions (from T2 to T2S and T2S to T2) to be made available

– Data consistency between both systems to be ensured (i.e. for reference data)

3

• The need to adapt TARGET2 to T2S

• System to system connection

• Mandatory amendments to core services

• Value added services

• Interactions between the banks and TARGET2 / T2S

Overview

4

ISO 20022

TARGET2 adaptations to T2SSystem to system connection

RTGS RTGS

RTGS

T

2

S

I

Securities

Securities

DCA

DCA

• Use of ISO 20022 compliant standard including Business Application Header

• Creation of a dedicated T2S interface in TARGET2

• Management of liquidity transfers in both directions

5

• The need to adapt TARGET2 to T2S

• System to system connection

• Mandatory amendments to core services

• Value added services

• Interactions between the banks and TARGET2 / T2S

Overview

6

• Implementation of camt5 (without Business Application Header) (camt5 is the only valid standard for T2S related A2A customer interaction in

T2)• Development of new messages (in addition to proprietary messages)

In release 5.0 (Nov 2011) In release 7.0 (Nov 2013)

CAMT 3

CAMT 4

CAMT 3

CAMT 4

CAMT 5

TARGET2 adaptations to T2SMandatory amendments to core services

7

Only for

non-T2S

related

business

For T2S and non-

T2S related

business

TARGET2 adaptations to T2SMandatory amendments to core services

8

ISO 20022

RTGS RTGS

RTGS

Securities

Securities

DCA

DCARTGS

Bank

• Event-oriented standing orders for liquidity transfers from TARGET2 to T2S (setting up via U2A and A2A)

• Optional debit notifications in MX (camt.054)• Credit notifications in MX (camt.050)• Current order for liquidity transfers from TARGET2 to T2S via U2A or A2A (camt. 050)

Standing/current order

liquidity transfer

(U2A or A2A camt5)

Credit notifications

optional debit notifications (camt5)

• The need to adapt TARGET2 to T2S

• System to system connection

• Mandatory amendments to core services

• Value added services

• Interactions between the banks and TARGET2 / T2S

Overview

9

Some TARGET2 participants may not be ready by the time T2S goes live to properly interact with T2S

Several optional services are proposed by the Eurosystem

to manage their cash across TARGET2 and T2S

ButThese optional services will be developed only if TARGET2 participants confirm their needs on the basis of the pricing that will be decided. A tentative pricing will be announced towards the

end of the year.

TARGET2 adaptations to T2SValue added services

10

• Intraday balance of DCA (=> cash integration) in U2A / A2A (camt.003)

• Liquidity transfers from TARGET2 to T2S via MT202

• Liquidity transfer from T2S to TARGET2 via MT202, U2A or A2A (camt.050)

• Credit notifications via MT202 and optional debit notifications via MT900

• DCA end of day statements (MT940/MT950 or camt.053 without BAH)

• Access to T2S GUI via the ICM (to be confirmed)

TARGET2 adaptations to T2SValue added services

11

ISO 20022

RTGS RTGS

RTGS

Securities

Securities

DCA

DCARTGS

Bank

Liquidity transfer (MT202)

Liquidity transfer (U2A/A2A camt5)

Access to T2S GUI via the ICM

Optional debit notifications (MT900)

DCA intraday balance (U2A/A2A camt5)

DCA end of day statement (MT940/MT950 or camt5 without BAH)

Cash related information flows

Credit notifications (MT202)

• The need to adapt TARGET2 to T2S

• System to system connection

• Mandatory amendments to core services

• Value added services

• Interactions between the banks and TARGET2 / T2S

Overview

12

Eurosystem’s offer for TARGET2 (cash side)

13

CentralBankMoney

TARGET2 adaptations to T2SInteractions between the banks and TARGET2 / T2S

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

tandard offer

Converted by TARGET2

Optional offer

•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

Alternative interface (legacy standards)

ISO20022

Legacy standards

Conversion by TARGET2

14

RTGS RTGS

RTGS

Securities

Securities

DCA

DCAISO

RTGS

Bank

Securities related information flows

Cash related information flows

CSD

ISO

U2A/camt5/MTISO

TARGET2 adaptations to T2SInteractions between the banks and TARGET2 / T2S