TARGET 2 De Nederlandsche Bank Richard Derksen 2

TARGET 2 De Nederlandsche Bank Richard Derksen 2 nd Conference Financial Sector of Macedonia on Payments and Securities Settlement Systems Ohrid 30 June 2009 De Nederlandsche Bank Eurosysteem

Contents TARGET l Scope and framework TARGET 2 l Single Shared Platform l Project planning l Migration 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

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

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 NL 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 (group 1) De Nederlandsche Bank Eurosysteem

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

TARGET 2 NL 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

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

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

Migration groups l. Group composition aimed at minimising project risk, reducing effect on level playing field and limiting the costs for central banks and users l Data migration: 19 November 2007, 18 February 2008, 19 May 2008 Group 1 Austria Cyprus Germany Latvia Lithuania Luxembourg Malta Slovenia Group 2 Belgium Finland France Ireland Netherlands Portugal Spain Group 3 Denmark Estonia ECB Greece Italy Poland Group 4 Not needed Reserved for contingency 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 of between EUR 0. 125 and 0. 80 l Optional services (e. g. liquidity pooling and services related to ancillary systems) are priced separately De Nederlandsche Bank Eurosysteem

Some statistics NL De Nederlandsche Bank Eurosysteem

Summing up l l NL TARGET 2 is a sort of 3 rd wave of Euro Impact for national markets is big, but provides them (and foreign banks) directly with all benefits of a technically centralized platform ( legally it is a decentralized system) One pot of liquidity, one window for info on all TARGET payments Migration will be challenging and require a lot of testing and hard work De Nederlandsche Bank Eurosysteem

De Nederlandsche Bank Eurosysteem