Decision of the European Central Bank of 24 July 2007 concerning the terms and conditions of TARGET2-ECB (ECB/2007/7) (2007/601/EC)

TITLE I GENERAL PROVISIONS

Article 1 Definitions

For the purposes of these Terms and Conditions (hereinafter the ‘Conditions’), the following definitions apply:

• ‘addressable BIC holder’ means an entity which: (a) holds a Bank Identifier Code (BIC); (b) is not recognised as an indirect participant; and (c) is a correspondent or customer of a direct participant or a branch of a direct or indirect participant, and is able to submit payment orders to and receive payments from a TARGET2 component system via the direct participant,

• ‘ancillary system (AS)’ means a system managed by an entity that is subject to supervision and/or oversight by a competent authority, in which payments and/or financial instruments are exchanged and/or cleared while the resulting monetary obligations are settled in TARGET2 in accordance with Guideline ECB/2007/2 and a bilateral arrangement between the ancillary system and the relevant CB,

• ‘ancillary system central bank (ASCB)’ means the Eurosystem CB with which the relevant AS has a bilateral arrangement for the settlement of AS payment instructions in the PM,

• ‘Ancillary System Interface (ASI)’ means the technical device allowing an AS to use a range of special, predefined services for the submission and settlement of AS payment instructions,

• ‘available liquidity’ (or ‘liquidity’) means a credit balance on a TARGET2 participant's PM account and, if applicable, any intraday credit line granted by the relevant CB in relation to such account,

• ‘Banking Directive’ means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast)(1);

• ‘Bank Identifier Code (BIC)’ means a code as defined by ISO Standard No 9362,

• ‘branch’ means a branch within the meaning of § 24a of the Gesetz über das Kreditwesen (KWG, German Law on banking),

• ‘business day’ means any day on which TARGET2 is open for the settlement of payment orders, as set out in Appendix V,

• ‘capacity opinion’ means a participant-specific opinion that contains an assessment of a participant's legal capacity to enter into and carry out its obligations under these Conditions,

• ‘central banks (CBs)’ means the Eurosystem CBs and the connected CBs,

• ‘connected CB’ means a national central bank (NCB), other than a Eurosystem CB, which is connected to TARGET2 pursuant to a specific agreement,

• ‘Contingency Module’ means the SSP module enabling the processing of critical and very critical payments in contingency situations,

• ‘credit institution’ means a credit institution within the meaning of § 1(1) of the KWG,

• ‘credit instruction’ means a payment instruction submitted by an AS and addressed to the ASCB to debit one of the accounts kept and/or managed by the AS in the PM, and to credit a settlement bank's PM account or sub-account by the amount specified therein,

• ‘credit transfer order’ means an instruction by a payer to make funds available to a payee by means of a book entry on a PM account,

• ‘debit instruction’ means a payment instruction addressed to the SCB and submitted by an AS to debit a settlement bank's PM account or sub-account by the amount specified therein, on the basis of a debit mandate, and to credit either one of the AS's accounts in the PM or another settlement bank's PM account or sub-account,

• ‘direct debit authorisation’ means a general instruction by a payer to its CB entitling and obliging that CB to debit the payer's account upon a direct debit instruction from a payee,

• ‘direct debit instruction’ means an instruction from a payee submitted to its CB pursuant to which the CB of the payer debits the payer's account by the amount specified in the instruction, on the basis of a direct debit authorization,

• ‘debit mandate’ means an authorisation by a settlement bank in the form provided by the Eurosystem CBs in the static data forms addressed to both its AS and its SCB, entitling the AS to submit debit instructions, and instructing the SCB to debit the settlement bank's PM account or sub-account as a result of debit instructions,

• ‘entry disposition’ means a payment processing phase during which TARGET2-ECB attempts to settle a payment order which has been accepted pursuant to Article 12, by means of specific procedures, as described in Article 18,

• ‘Eurosystem CB’ means the ECB or the NCB of a Member State that has adopted the euro,

• ‘event of default’ means any impending or existing event, the occurrence of which may threaten the performance by a participant of its obligations under these Conditions or any other rules applying to the relationship between that participant and the ECB or any other CB, including:

  (a)

  where the participant no longer meets the access criteria laid down in Article 4 or the requirements laid down in Article 6(1)(i);

  (b)

  the opening of insolvency proceedings in relation to the participant;

  (c)

  the submission of an application relating to the proceedings referred to in subparagraph (b);

  (d)

  the issue by the participant of a written declaration of its inability to pay all or any part of its debts or to meet its obligations arising in relation to intraday credit;

  (e)

  the entry of the participant into a voluntary general agreement or arrangement with its creditors;

  (f)

  where the participant is, or is deemed by its CB to be, insolvent or unable to pay its debts;

  (g)

  where the participant's credit balance on its PM account or all or a substantial part of the participant's assets are subject to a freezing order, attachment, seizure or any other procedure that is intended to protect the public interest or the rights of the participant's creditors;

  (h)

  where participation of the participant in another TARGET2 component system and/or in an ancillary system has been suspended or terminated;

  (i)

  where any material representation or pre-contractual statement made by the participant or which is implied to have been made by the participant under the applicable law is incorrect or untrue; or

  (j)

  the assignment of all or a substantial part of the participant's assets;

• ‘Information and Control Module (ICM)’ means the SSP module that allows participants to obtain on-line information and gives them the possibility to submit liquidity transfer orders, manage liquidity and initiate backup payment orders in contingency situations,

• ‘ICM broadcast message’ means information made simultaneously available to all or a selected group of TARGET2 participants via the ICM,

• ‘indirect participant’ means a credit institution established in the European Economic Area (EEA), which has entered into an agreement with a direct participant to submit payment orders and receive payments via such direct participant's PM account, and which has been recognised by a TARGET2 component system as an indirect participant,

• ‘insolvency proceedings’ means insolvency proceedings within the meaning of Article 2(j) of the Settlement Finality Directive,

• ‘instructing participant’ means a TARGET2 participant that has initiated a payment order,

• ‘intraday credit’ means credit extended for a period of less than one business day,

• ‘liquidity transfer order’ means a payment order, the main purpose of which is to transfer liquidity between different accounts of the same participant,

• ‘marginal lending facility’ means a Eurosystem standing facility which counterparties may use to receive overnight credit from a Eurosystem CB at the pre-specified marginal lending rate,

• ‘marginal lending rate’ means the interest rate applicable to the marginal lending facility,

• ‘multi-addressee access’ means the facility by which branches or credit institutions established in the EEA can access the relevant TARGET2 component system by submitting payment orders and/or receiving payments directly to and from the TARGET2 component system; this facility authorises these entities to submit their payment orders through the direct participant's PM account without that participant's involvement,

• ‘network service provider’ means the undertaking appointed by the ECB's Governing Council to provide computerised network connections for the purpose of submitting payment messages in TARGET2,

• ‘non-settled payment order’ means a payment order that is not settled on the same business day as that on which it is accepted,

• ‘participant’ (or ‘direct participant’) means an entity that holds at least one PM account with the ECB,

• ‘Participant Interface (PI)’ means the technical device allowing direct participants to submit and settle payment orders via the services offered in the PM,

• ‘payee’ means a TARGET2 participant whose PM account will be credited as a result of a payment order being settled,

• ‘payer’ means a TARGET2 participant whose PM account will be debited as a result of a payment order being settled,

• ‘payment instruction’ or ‘AS payment instruction’ means a credit instruction or a debit instruction,

• ‘payment order’ means a credit transfer order, a liquidity transfer order or a direct debit instruction,

• ‘Payments Module (PM)’ means an SSP module in which payments of TARGET2 participants are settled on PM accounts,

• ‘PM account’ means an account held by a TARGET2 participant in the PM with a CB which is necessary for such TARGET2 participant to:

  (a)

  submit payment orders or receive payments via TARGET2; and

  (b)

  settle such payments with such CB;

• ‘public sector body’ means an entity within the ‘public sector’, the latter term as defined in Article 3 of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty(2) (now Articles 101 and 103(1)),

• ‘settlement bank’ means a participant whose PM account or sub-account is used to settle AS payment instructions,

• ‘settlement central bank (SCB)’ means a Eurosystem CB holding a settlement bank's PM account,

• ‘Settlement Finality Directive’ means Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems(3);

• ‘Single Shared Platform (SSP)’ means the single technical platform infrastructure provided by the SSP-providing CBs,

• ‘SSP-providing CBs’ means the Deutsche Bundesbank, the Banque de France and the Banca d'Italia in their capacity as the CBs building and operating the SSP for the Eurosystem's benefit,

• ‘static data collection form’ means a form developed by the ECB for the purpose of registering applicants for TARGET2-ECB services and registering any changes in relation to the provision of such services,

• ‘suspension’ means the temporary freezing of the rights and obligations of a participant for a period of time to be determined by the ECB,

• ‘TARGET2-ECB’ means the TARGET2 component system of the ECB,

• ‘TARGET2’ means the entirety resulting from all TARGET2 component systems of the CBs,

• ‘TARGET2 component system’ means any of the CBs' real-time gross settlement (RTGS) systems that form part of TARGET2,

• ‘TARGET2 CUG’ means a subset of the network service provider's customers grouped for the purpose of their use of the relevant services and products of the network service provider when accessing the PM,

• ‘TARGET2 participant’ means any participant in any TARGET2 component system,

• ‘technical malfunction of TARGET2’ means any difficulty, defect or failure in the technical infrastructure and/or the computer systems used by TARGET2-ECB, or any other event that makes it impossible to execute and complete the same-day processing of payments in TARGET2-ECB or, during the migration period, payments from national RTGS systems that have not yet migrated to TARGET2 and vice versa.

Article 2 Appendices

1. The following Appendices form an integral part of these Conditions:

Appendix I

:

Technical specifications for the processing of payment orders

Appendix II

:

TARGET2 compensation scheme

Appendix III

:

Terms of reference for capacity and country opinions

Appendix IV

:

Business continuity and contingency procedures

Appendix V

:

Operating schedule

Appendix VI

:

Fee schedule and invoicing

2. In the event of any conflict or inconsistency between the content of any appendix and the content of any other provision in these Conditions, the latter shall prevail.

Article 3 General description of TARGET2-ECB and TARGET2

1. TARGET2 provides real-time gross settlement for payments in euro, with settlement in central bank money.

2. The following payment orders are processed in TARGET2-ECB:

(a) payment orders directly resulting from or made in connection with Eurosystem monetary policy operations;

(b) settlement of the euro leg of foreign exchange operations involving the Eurosystem;

(c) settlement of euro transfers resulting from transactions in cross-border large-value netting systems;

(d) settlement of euro transfers resulting from transactions in euro retail payment systems of systemic importance; and

(e) any other payment orders in euro addressed to TARGET2 participants.

3. TARGET2 is established and functions on the basis of the SSP. The Eurosystem specifies the SSP's technical configuration and features. The SSP services are provided by the SSP-providing CBs for the benefit of the Eurosystem CBs, pursuant to separate agreements.

4. The ECB is the provider of services under these Conditions. Acts and omissions of the SSP-providing CBs shall be considered acts and omissions of the ECB, for which it shall assume liability in accordance with Article 25 below. Participation pursuant to these Conditions shall not create a contractual relationship between participants and the SSP-providing CBs when the latter act in that capacity. Instructions, messages or information which a participant receives from, or sends to, the SSP in relation to the services provided under these Conditions are deemed to be received from, or sent to, the ECB.

5. TARGET2 is legally structured as a multiplicity of payment systems composed of all the TARGET2 component systems, which are designated as ‘systems’ under the national laws implementing the Settlement Finality Directive. TARGET2-ECB is designated as a ‘system’ under § 1(16) of the KWG.

6. Participation in TARGET2 takes effect via participation in a TARGET2 component system. These Conditions describe the mutual rights and obligations of participants in TARGET2-ECB and the ECB. The rules on the processing of payment orders (Title IV) refer to all payment orders submitted or payments received by any TARGET2 participant.

7. No intraday credit is provided to participants in TARGET2-ECB.

(1)

OJ L 177, 30.6.2006, p. 1.

(2)

OJ L 332, 31.12.1993, p. 1.

(3)

OJ L 166, 11.6.1998, p. 45.