Payment, clearing and settlement systems in the euro area ...

Payment, clearing and

settlement systems in

the euro area

CPSS ¨C Red Book ¨C 2012

59

Euro area

Contents

Introduction .......................................................................................................................... 67

1.

Institutional aspects .................................................................................................... 69

1.1

The general institutional background ................................................................. 69

1.1.1 The Eurosystem ....................................................................................... 69

1.1.2 The Council of the European Union and the European Parliament ........... 69

1.1.3 The European Commission ...................................................................... 69

1.1.4 The European Systemic Risk Board ......................................................... 70

1.1.5 The European Supervisory Authorities ..................................................... 70

1.2

Major payment system-related legal acts ........................................................... 71

1.2.1 The Settlement Finality Directive .............................................................. 71

1.2.2 The Financial Collateral Directive ............................................................. 72

1.2.3 The Markets in Financial Instruments Directive ........................................ 72

1.2.4 The Winding-up Directive ......................................................................... 72

1.2.5 The Payment Services Directive ............................................................... 73

1.2.6 The Regulation on cross-border payments in the Community ................... 73

1.2.7 Regulation on information on the payer accompanying transfer of funds .. 74

1.2.8 The E-Money Directive ............................................................................. 74

1.2.9 Legislative initiatives ................................................................................. 75

1.3

The role of the Eurosystem ................................................................................ 75

1.3.1 The Eurosystem¡¯s operational role ........................................................... 76

1.3.2 The Eurosystem¡¯s oversight role............................................................... 76

1.3.3 The Eurosystem¡¯s catalyst role ................................................................. 78

1.3.4 Cooperation with other institutions ............................................................ 80

1.3.5 The role of other private and public sector bodies..................................... 82

2.

Payment media used by non-banks ............................................................................ 83

2.1

Cash payments.................................................................................................. 83

2.2

Non-cash payments ........................................................................................... 83

2.2.1 Non-cash payment instruments ................................................................ 83

2.2.2 The migration to SEPA instruments .......................................................... 85

2.2.3 Future developments ................................................................................ 88

2.2.4 Multilateral interchange fees ..................................................................... 89

3.

Payment systems ....................................................................................................... 89

3.1

General overview ............................................................................................... 89

3.1.1 Large-value payments .............................................................................. 89

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3.1.2 Retail payments: Single Euro Payments Area for infrastructure,

processors and links ................................................................................. 90

3.1.3 Card schemes .......................................................................................... 91

3.1.4 Correspondent banking and group networks ............................................ 93

3.2

Large-value payment systems ........................................................................... 93

3.2.1 TARGET2: the real-time gross settlement system .................................... 93

3.2.2 The EURO1 system .................................................................................. 98

3.2.3 Continuous Linked Settlement ................................................................ 103

3.3

Retail payment systems ................................................................................... 104

3.3.1 The STEP1 system ................................................................................. 104

3.3.2 The STEP2 system ................................................................................. 105

4.

Systems for post-trade processing, clearing and settlement of securities and

derivatives ................................................................................................................ 108

4.1

General overview ............................................................................................. 108

4.1.1 Towards more integration ....................................................................... 108

4.1.2 Trading and post-trade processing ......................................................... 109

4.1.3 The clearing landscape........................................................................... 110

4.1.4 Securities settlement .............................................................................. 111

4.2

The REGIS-TR trade repository ....................................................................... 111

4.2.1 Institutional framework ............................................................................ 111

4.2.2 REGIS-TR participation and types of transaction .................................... 111

4.2.3 Operation of the system .......................................................................... 112

4.3

Central counterparties and clearing systems ................................................... 112

4.3.1 LCH.Clearnet SA .................................................................................... 112

4.3.2 Eurex Clearing ........................................................................................ 115

4.3.3 European Multilateral Clearing Facility .................................................... 116

4.3.4 European Commodity Clearing AG ......................................................... 116

4.4

Securities settlement ....................................................................................... 117

4.4.1 Euroclear Group ..................................................................................... 117

4.4.2 ESES securities settlement systems ....................................................... 120

4.4.3 Clearstream Group ................................................................................. 122

4.4.4 The correspondent central banking model (CCBM) ................................ 123

4.4.5 Major project: TARGET2-Securities ........................................................ 127

4.5

Use of the securities infrastructure by the Eurosystem..................................... 132

4.5.1 General information ................................................................................ 132

4.5.2 User assessments of SSSs and links by the Eurosystem ....................... 132

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Euro area

List of abbreviations

ACH

automated clearing house

ATM

automated teller machine

BaFin

Bundesanstalt f¨¹r Finanzdienstleistungsaufsicht ¨C Federal Financial

Supervisory Authority (Germany)

BIC

Business Identifier Code

CCB

correspondent central bank

CCBM

correspondent central banking model

CCP

central counterparty

CESR

Committee of European Securities Regulators

CET

Central European Time

CLS

Continuous Linked Settlement

COGEPS

Contact Group on Euro Payments Strategy

COGESI

Contact Group on Euro Securities Infrastructures

CPSS

Committee on Payment and Settlement Systems

CSD

central securities depository

CSM

clearing and settlement mechanism

DVP

delivery versus payment

EACB

European Association of Co-operative Banks

EACH

European Association of Central Counterparty Clearing Houses

EACHA

European Automated Clearing House Association

EBA

Euro Banking Association

EBF

European Banking Federation

ECB

European Central Bank

ECC

European Commodity Clearing AG

ECSDA

European Central Securities Depositories Association

EEA

European Economic Area

EMCF

European Multilateral Clearing Facility NV

EMIR

European Market Infrastructure Regulation

EMU

Economic and Monetary Union

EMV

Europay/MasterCard/Visa integrated circuit card standard

EPC

European Payments Council

ESAs

European Supervisory Authorities

ESBG

European Savings Bank Group

ESCB

European System of Central Banks

ESES

Euroclear Settlement of Euronext-zone Securities

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