De Nederlandsche Bank TARGET 2 Nynke Doornbos 3

De Nederlandsche Bank TARGET 2 Nynke Doornbos 3 rd Macedonian Financial Sector Conference on Payments and Securities Settlement Systems 29 June 2010 De Nederlandsche Bank Eurosysteem

Agenda TARGET 2 TARGET l Scope and framework TARGET 2 l TARGET 2 operational day l Single Shared Platform l De Nederlandsche Bank Eurosysteem

TARGET l Trans-European l Automated l Real-time l Gross settlement l Express l Transfer system De Nederlandsche Bank Eurosysteem

History: the ESCB payment system European Central Bank NCB-A NCB-B Interlinking bank A bank B bank C bank D De Nederlandsche Bank Eurosysteem

History: TARGET(1) NCB ECB ILC NCBILC • Expensive NCB • Inflexible • Different pricing NCB • Different products / NCB services • Different standards NCB ILC TARGET Interlinking Network ILC NCBILC ILC ILC NCB NCB NCB De Nederlandsche Bank Eurosysteem

From TARGET to TARGET 2 Swift Net Services Bank A Bank B Interlinking via FIN NCBs Ancillary systems De Nederlandsche Bank Eurosysteem

TARGET 2 Platform One central platform for NCBs for the real time gross settlement of large value payments The central TARGET 2 platform, called Single Shared Platfom (SSP), is built by 3 NCB´s (3 CB): Bundesbank, Banque de France and Banca d´Italia The platform offers some mandatory and some optional modules. Operational per 19 November 2007 (in 3 groups) De Nederlandsche Bank Eurosysteem

TARGET 2 in Europe Countries on TARGET 2 ---- of which € Other EU-countries De Nederlandsche Bank Eurosysteem

Functionalities in T 2 De Nederlandsche Bank Eurosysteem

TARGET 2 offers: l High availability l Uniform pricing l Uniform functionality l Harmonisation l Advanced tools for liquidity management l Ready for new countries De Nederlandsche Bank Eurosysteem

TARGET 2: Operations l All RTGS operations may be processed in TARGET 2 l l All types of operations l l individual operations settled in real-time and in central bank money no exclusion according to amount or type of operations Wholesale payments are a main goal for TARGET 2 credit transfers direct debits (limited usage) mandated payments All types of business l l l payments between market participants central bank operations settlement operations of ancillary systems De Nederlandsche Bank Eurosysteem

TARGET 2 Operational day 18: 45 19: 30 01: 00 22: 00 06: 45 17: 00 07: 00 18: 45 18: 00 business day (d+1) TARGET business day (d) Calendar day (d-1) Calendar day (d) 9 1 2 3 4 3 5 6 7 8 1 De Nederlandsche Bank Eurosysteem

TARGET 2 Operational day Purpose of the different phases: l l l l Start-of-day (1 & 2) Night-time processing (3) Technical maintenance window (4) Preparation for day trade phase (5) Day trade phase I (6) Day trade phase II (7) End-of-day (8 & 9) De Nederlandsche Bank Eurosysteem

Payment interface - FIN Copy SWIFTNet FIN Bank A MT 103(+) / 202 / 204 Participant Interface (Y-copy) mandatory either / or optional Booking instruction Bank B SSP country MT 097 MT 096 SSP country MT 011 MT 012 MT 103(+) / 202/204 MT 019 PM Acknowledgement Payment Processing De Nederlandsche Bank Eurosysteem

Single Shared Platform Centralized solution: single platform, no interlinking l central payments processing: DE, IT (workload distribution between regions) l central datawarehouse and customer services: FR Region 1 Region 2 Region 3 SITE A SITE C SITE E SITE B SITE D SITE F payments and accounting services customer related services De Nederlandsche Bank Eurosysteem

Single Shared Platform REGION 1 Live SITE A SITE B Test & Training (T&T) P P Asynchronous remote copy Synchronous remote copy Hot back-up Periodic Region Rotation S REGION 2 SITE C Synchronous remote copy S SITE D Hot back-up De Nederlandsche Bank Eurosysteem

Ancillary systems settlement For integrated model: liquidity transfer SSS For interfaced model: real-time settlement SSS Securities accounts Other NCB Cash settlement accounts RTGS Securities accounts NCB environ ment RTGS NCB environ ment De Nederlandsche Bank Eurosysteem

Stakeholders TARGET 2 De Nederlandsche Bank Eurosysteem

TARGET 2 user testing Objective Check readiness from business, operational and procedural viewpoints Implementation Usage of a separate user test environment Several testing phases with different purposes Connectivity testing Interoperability testing Country testing Business Day testing Changeover Go live User Testing De Nederlandsche Bank Eurosysteem

Pricing l Objectives: cost recovery, competitiveness and broad access l Pricing of transactions: pricing scheme with a monthly fee (100 euro or 1. 250 euro) plus transaction fee between EUR 0. 80 and 0. 125. l Optional services (e. g. liquidity pooling and services related to ancillary systems) are priced separately De Nederlandsche Bank Eurosysteem

Liquidity pooling - Virtual account Credit institution e. g. Bank A 1 Credit institution e. g. Bank A 2 Credit institution Bank A 3 Group account l l Virtual balance : balance on (single) accounts + credit lines Possibility to „use“ this position by each group account holder Booking on the single accounts (not on the virtual account) Only intra-day: „levelling“ off at the end of day mandatory De Nederlandsche Bank Eurosysteem

Volume and value turnover T 2 De Nederlandsche Bank Eurosysteem

Actual volume and value turnover T 2 De Nederlandsche Bank Eurosysteem

Main indicators in 2009 De Nederlandsche Bank Eurosysteem

Summary NL Commercial banks directly benefit of a technically centralized platform (legally it is a decentralized system) l One pool of liquidity, one window for info on all TARGET payments l De Nederlandsche Bank Eurosysteem