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THE USE OF CENTRAL FOR SETTLING SECURITIES TRANSACTIONS MAY 2004

CURRENT MODELS AND PRACTICES THE USE OF MONEY FOR SETTLING SECURITIES TRANSACTIONS MAY 2004

CURRENT MODELS AND PRACTICES

In 2004 all ECB publications will feature a motif taken from the €100 . © , 2004

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ISBN 92-9181-507-1 (print) ISBN 92-9181-508-X (online) CONTENTS

1 INTRODUCTION: AN OVERVIEW OF CURRENT MODELS 3

2 WHERE? – LOCATION OF ACCOUNTS USED FOR LEG SETTLEMENT 4

3 WHO? – GENERATING PAYMENT INSTRUCTIONS AND OPERATION ACCOUNTS ENTRIES 7

4 HOW? – FREQUENCY AND TYPE OF DVP INTERACTION: GROSS VERSUS DVP SETTLEMENT 8

5 WHEN? – TIMING OF INTERACTION: MODELS VARIANTS FOR PRE-OPENING/ NIGHT-TIME PROCESSING OF NEXT DATE 9

6 THE COMPOSITION OF THE BALANCE AVAILABLE FOR CASH SETTLEMENT 14

ANNEX 1: REPLIES PROVIDED BY THE NATIONAL CENTRAL OF THE ESCB 16

c ECB The use of Central bank money for settling securities transactions May 2004 3 1 INTRODUCTION: AN OVERVIEW OF CURRENT MODELS

A securities typically results in an The models presented here summarise the main obligation for the seller to deliver securities characteristics of the various national solutions, (securities leg) and a corresponding obligation and do not claim to reproduce in detail all the for the buyer to deliver cash funds (cash leg). surveyed systems. The analysis is based on the Central bank money settlement facilities enable answers provided by the national central banks settlement of the cash leg of the trade in the (NCBs) of the European System of Central books of the central bank. The balances of these Banks (ESCB) to an ad hoc questionnaire in cash settlement accounts therefore represent an March and April 2003. The European Central account holder’s claim on the national central Securities Depositories Association (ECSDA) bank. also commented on the results of this survey. The ECB considers the survey a useful piece of There are various ways of organising the information for interested parties, e.g. interaction of securities settlement systems practitioners in the field of payment and (SSS) and payment systems (PS) to provide settlement systems, infrastructures, other central bank money settlement facilities. In the providers, and therefore decided to European Union Member States ad hoc make it publicly available. A table summarising solutions have been developed that suit the the answers from the NCBs is annexed to this specific preferences of participants and document. meet the needs deriving from the design and organisation of the settlement infrastructures. This note describes the various models in place in the European Union in 2003 taking account of five main aspects:

1. The (technical) location of the cash accounts used for cash leg settlement, and the entity that operates the accounts or makes the entries in the accounts of the central bank (these may be the same or different entities).

2. The entity that produces the funds transfer instructions on behalf of participants (normally the SSS; but, in some cases, a previous transfer of liquidity on the initiative of participants may be required).

3. The type and frequency of SSS-PS interaction (for each ).

4. The different operating hours of SSS and PS, and thus the timing of SSS-PS interaction (daylight versus night-time or early morning pre-opening processes).

5. The composition of the funds balance available for cash settlement (which is sometimes different in case of night-time/ early morning processing compared to standard daylight processing).

ECB c The use of Central bank money for settling securities transactions 4 May 2004 2 WHERE? – LOCATION OF ACCOUNTS USED FOR CASH LEG SETTLEMENT 2 There are three main types of model, business day. At the end of the cycle, the Where? – location categorised according to the technical1 location final balances are moved back to the NCB of accounts used for cash leg of the participants’ cash accounts. accounts. Normally the SSS internal settlement accounting is not considered an account 1. In the first model – the interfaced model – for central bank money, and accounts the settlement accounts of the participants work only as “memorandum or shadow are their respective Real-time Gross accounts”. The actual movement of settlement systems (RTGS) accounts. This is central bank money will always take the case in Spain, Greece, Italy, the place in the accounts of the central bank2 Netherlands and Portugal. A variant of the at the end of the cycle. An example of this interfaced model is provided in Belgium interaction model is the one adopted for where the participants’ accounts are part of a the overnight net cycle of Monte Titoli’s separate system (outside the RTGS Express II3 in Italy (see Section 4 and environment), which in turn may interact Figure 7 below). with the RTGS system. Also in this case, the final settlement of the cash leg takes place in ii. A legal arrangement links the settlement the central bank’s environment. in the accounts of the SSS with the balances in central bank money (at the 2. In the second model – the integrated model – central bank), ensuring that finality is the participants’ settlement accounts are held already achieved at the time of transfers at the SSS. The SSS can operate the entries in the SSS settlement accounts. This is directly in dedicated accounts on the books the case both with the German system4 of the national central bank. In other words: and in the . For instance, while, from a legal perspective, balances are in the case of Crest (United Kingdom), claims on the central bank, the NCB for each settlement cycle, the SSS outsources all the related processing receives new information on central bank activities to the SSS, which operates directly money balances “earmarked” (i.e. on behalf of the central bank. This is “blocked”) on each SSS settlement bank currently the case in France and Sweden. account at the NCB. These amounts are reflected in the liquidity memorandum 3. In the third model – the memorandum, pre- accounts in the SSS. Settlement in central funded account – the participants use their bank money takes place in the accounts own cash settlement accounts at the SSS. located in, and managed/controlled by, This model can be considered a variant of the central bank. But finality is legally both the interfaced and integrated models, achieved in the SSS because movements depending on whether finality is achieved in across SSS members’ cash memorandum the central bank or in the SSS environment. accounts create an irrevocable At least three variants of the model are undertaking on the part of the NCB to possible: make the corresponding debit/ entries in the accounts of the settlement i. The participants’ SSS settlement

accounts need to interact with NCBs’ 1 From a legal perspective, central bank money settlement always accounts for the provision of the occurs in the books of the central bank. necessary liquidity. This is done through 2 This is required to qualify settlement as central bank money when the SSS operator would normally have a banking licence and special facilities called liquidity bridges -taking activities (otherwise, in such cases settlement would (normally at the start of the cycle) which take place in money). 3 There is no exchange of liquidity flows on a continuous basis. aim to make the necessary balances Express II does not perform any operation modifying available in the SSS environment where intermediaries’ cash accounts. transactions are settled during the 4 Introduced in November 2003.

c ECB The use of Central bank money for settling securities transactions May 2004 5 banks of the buying and selling account balances to the RTGS accounts members5. The interaction with the cash of the SSS participants. accounts located at the NCB through liquidity bridges (initial, on demand, and The various solutions are described in Figures 1 at end-of-day) is similar (but not to 3. The list of the features does not claim to be necessarily identical) to that described exhaustive, and some simplifications in under point (i).6 presenting the main typology of interaction/ models were necessary for the sake of clarity. iii. Another variant of the pre-funded model As a result, the figures represent general is the autonomous central bank money models rather than specific SSS. model, which is in place in Finland. In this model, the SSS participates in the RTGS system, and its account is used for cash settlement of its participants. Participants in the SSS need to pre-fund the SSS settlement by transferring the required funds from their own RTGS account to the SSS’s RTGS account. The SSS keeps a sub-accounting record of securities-related cash transfers among its participants. In practice these transfers are internal (sub-) transfers taking place inside the RTGS account of the SSS. However, the SSS’s sub- accounting is not considered central bank accounting, and there is no effective contract outsourcing. Central bank money provision is made through liquidity transfers (credit transfer by each participant) to the SSS’s RTGS account. The main difference with other cases is that the central securities depository (CSD) operating the SSS is strictly speaking a non-risk-taking entity, without any kind of banking licence. The SSS is a “hermetically sealed” system with no other injection or leakage points apart from the RTGS account. The overall balance of the SSS’s RTGS account 5 The Crest system, as well as several other systems, has a two-tier membership structure. Although this is not reported in detail in matches the total of funds in SSS sub- the note, it is sufficient to that the United Kingdom model accounting. Unrestricted use of the provides central bank money settlement accounts to settlement banks, and not to all SSS members. In other systems, although SSS RTGS account balance is the irrevocable members have central bank money settlement accounts, many guarantee, as it is for all the other RTGS investors only have access to the SSS through these members. accounts. A liquidity bridge “on demand” 6 For instance, in the German system, the SSS debits and the “home (NCB) accounts” of participants, and not the RTGSplus complements the initial provision of accounts (which start and end the day with a zero-balance). Also liquidity to make additional funds the reservation of balances for night-time processing, and the subsequent debiting, are done on these “home accounts”. The available whenever needed. At the end of proceeds of securities settlement can be used in the liquidity the day, the SSS transfers back the sub- bridge to the RTGSplus system.

ECB c The use of Central bank money for settling securities transactions 6 May 2004 2

Figure 1 Interfaced model Where? – location of accounts used for cash leg settlement SSS Securities accounts SSS Securities accounts

Other NCB Cash settlement accounts

RTGS RTGS

NCB environment

(a) interaction SSS-RTGS system (b) Models that use non RTGS but still NCB’s accounts:

The accounts used for settlement of the cash leg of The accounts used for settlement of the cash leg of securities transactions are the RTGS accounts of SSS’s securities transactions are NCB’s accounts located outside participants the RTGS system.

Figure 2 Integrated models

SSS Securities accounts

Technical and operational integration

The accounts used for settlement of the cash leg of securities transactions are legally in the books of the NCB. Their management is fully outsourced to the SSS, which Other NCB Cash settlement accounts makes entries in the NCB’s accounts on behalf, and as if it were the NCB. Regular interaction with RTGS system is therefore not strictly necessary.

RTGS

NCB environment

c ECB The use of Central bank money for settling securities transactions May 2004 7 Figure 3 Model with Memorandum/pre-funded accounts

SSS Securities accounts SSS Securities accounts

SSS

2. settlement in the SSS sub-accounting

SSS Cash settlement accounts

1. Information about 3. Final cash settlement “reserved amount”. takes place in RTGS*

SSS Cash settlement Participants’ (sub) accounts RTGS accounts

RTGS RTGS

Interfaced variant Autonomous central bank variant

The accounts used for settlement of the cash leg of The SSS has an account in the RTGS system, which is securities transactions are in the SSS environments. SSS’s pre-founded by SSS’s participants with transfers from their accounts movements are pre-funded or guaranteed by funds respective RTGS accounts. The SSS keeps an internal “reserved” (earmarked or blocked) in the RTGS system, accounting reflecting the movements related to securities where final cash settlement takes place. The SSS uses the settlement. This internal accounting is not considered information about the reserved balance available in the central bank accounting. The participants can fund and RTGS system. withdraw cash whenever necessary. At the end of the day the outstanding balances of the sub accounts are returned to the * Alternatively, cash settlement finalty may be achieved in participants’ RTGS accounts. the SSS according to the variant described under 3 (ii).

ECB c The use of Central bank money for settling securities transactions 8 May 2004 3 WHO? – GENERATING PAYMENT INSTRUCTIONS AND OPERATION ACCOUNTS ENTRIES 3 The SSS is normally in a better than its Who? – generating participants to calculate their respective payment instructions and operation obligations within the settlement process. accounts entries Therefore it is the SSS that typically initiates the interaction with the payment system: in practice, at the beginning and/or end of its settlement cycle, the SSS sends a request for cash settlement to the funds transfer system. It is therefore the SSS that produces the required cash settlement instructions on behalf of its participants7.

In this context, the payment instruction required to transfer the funds can take three main forms:

– credit8 or debit transfer9, where the payment instructions are given, for each transfer, respectively, by the payer or the payee (i.e. by one of the SSS participants);

– direct debit ( i.e. the possibility of a pre- authorised debit on the payer’s account, upon instruction of the payee)10;

– mandated payment, i.e. a payment made on behalf of a participant (securities buyer) upon instruction issued by a third party (in this case the SSS). In practice, the SSS or the central bank is authorised to produce the required transfer instructions on behalf of the account holders and to address them to the relevant cash accounts manager/system. The system receiving the mandated payment 7 In memorandum, pre-funded models, there may be a need for a instructions can recognise that the sending previous transfer of liquidity, on the initiative of the SSS participant, of the required liquidity from the RTGS accounts to party is not the account holder; therefore, the the SSS cash settlement accounts (e.g. Finland). Once funds have account manager must be at least (i) aware of been recorded in the SSS sub-accounting system, settlement of the agreement between the sending party takes place automatically, i.e. the system credits and debits cash and securities on its own. In the Finnish case, also (SSS) and the account holder (securities repatriation of liquidity from the SSS takes place on the initiative buyer) and (ii) able to validate the message11. of the account holder (participants) using the SSS interface. 8 A credit transfer is an order by the part that has the obligation to pay addressed to the manager of its account to debit its account and transfer the funds in favour of the beneficiary. 9 A debit transfer is an order by the part that has the claim on the funds addressed to its account manager to collect funds in its favour from the account manager of the part with the obligation to pay. 10 Direct debit is not allowed in the current TARGET system, which is based on credit transfers. 11 In the case of the Netherlands, the scheme is based on a tripartite agreement between commercial bank, the SSS and the NCB. The Dutch SSS (interfaced model) sends the payment instruction to the NCB to pay out to the securities seller. The sender of the message is not the ordering institution.

c ECB The use of Central bank money for settling securities transactions May 2004 9 4 HOW? – FREQUENCY AND TYPE OF DVP INTERACTION: GROSS VERSUS NET DVP SETTLEMENT

Delivery-versus-payment (DVP) can be defined the cash instructions before and after its as a link between a securities transfer system numerous batches (between ten and to and a funds transfer systems that ensures that a hundreds per business day): individual delivery occurs if, and only if, another delivery transactions in each batch are settled one-by- occurs and vice versa. It can be conceived as a one (or, if securities or cash are unavailable, three-step procedure: (1) reserving/blocking postponed to the following batch). When the securities in the securities accounts, and number of batches is sufficiently high, the sending cash instructions to the central bank interaction with the funds transfer systems is money cash accounts; (2) settling, with finality, almost continuous and therefore effectively the required funds in the central bank money real-time gross settlement (e.g. Crest). cash account of the seller, and (3) settling, with 12 For a detailed description of DVP models, see the report finality, the securities in the securities account “Delivery-versus-payment in securities settlement systems”, by of the buyer. the Committee on Payment and Settlement Systems (CPSS) of the central banks of the Group of Ten countries, BIS, Basle, September 1992. The frequency and type of interaction (sending of cash instructions from SSS to PS and their settlement) may follow different modalities Figure 4 depending on the organisation of the settlement process. securities settlement Three main models12 are used (see Figure 4):

1) In the case of the real-time gross settlement of securities, there is a trade-by-trade settlement cycle, and interaction is therefore continuous when operating times of systems settling in Cash leg settlement securities and cash accounts overlap. This Continuous SSS-PS interaction type of interaction produces one cash settlement request for each settled transaction, SSS net settlement (example with 3 netting cycles) and it can be used in both integrated (e.g. Euroclear France and the Swedish system) and interfaced models (e.g. Iberclear’s platform CADE in Spain, the ’s RTGS procedure for operations, Monte Titoli’s Express I DVP gross procedure in

Italy, Euroclear Netherlands and SITEME in Cash leg settlement Portugal). SSS-PS interaction at the end of each SSS netting cycle

2) In the case of securities leg net settlement, SSS settlement with multi-batches interaction takes place at the end of each (quasi real-time systems) netting cycle, when the SSS sends a batch of requests for cash settlement to the PS (e.g. BOGS’ procedure for commercial transactions in Greece, Monte Titoli’s Express II daylight DVP net cycle in Italy). Cash leg settlement 3) In the case of the multi-batch gross SSS-PS interaction at the end of each SSS batch, but so settlement of securities (“quasi-real-time” frequent that may be virtually continuous systems), interaction takes place by sending

ECB c The use of Central bank money for settling securities transactions 10 May 2004 5 WHEN? – TIMING OF INTERACTION: MODELS VARIANTS FOR PRE-OPENING/NIGHT-TIME PROCESSING OF NEXT VALUE DATE 5 Since settlement cycles for securities are to settle other domestic transactions, such When? – timing normally longer than T+0, participants may send as batch transactions channelled by NCBs of interaction: models variants for securities settlement instructions to the SSS into RTGS systems during the night); or (ii) pre-opening/night-time before the settlement date. This also makes it for ESCB-related reasons (e.g. on days processing of next possible to pre-match securities instructions at an when exceptional payment volumes are value date early stage, thus both helping to reduce the expected, or in order to reduce foreign incidence of settlement failures and reducing part exchange settlement risk when processing of the participants’ and liquidity the leg of foreign exchange deals in the SSS. Some SSSs that know about involving Asian )”. transactions before the settlement date find it convenient to operate (gross or net) batch This option has been followed by the processing cycles overnight in addition to during Netherlands where there is continuous daytime opening hours. The countries with night- interaction of the SSS and RTGS systems time pre-opening processes are Germany, France, during the pre-opening of the RTGS system. the Netherlands, Spain and Italy. In practice, the systems simply bring forward to the early 2) to reserve funds in the following value day morning – or even to the late afternoon or the opening balances of the RTGS accounts (or night of the previous calendar day – a part of the other central bank settlement account). In processing for a certain value date. However, this practice these balances are “blocked” and are is not the standard organisation of large-value only made available for settlement of payment systems, which typically follow daytime securities transactions. This means that the opening hours. Night-time DVP settlement owner of these funds cannot use them for cannot therefore be achieved using the purposes different from paying the cash standard daytime processes in those models obligations stemming from the securities (e.g. the interfaced models) which require settlement process. Thus, the RTGS balances contemporaneous availability of RTGS or other reserved for SSS settlement secure the NCBs’ accounts. In the models with pre-funded/ securities settlement process. The amounts memorandum accounts night-time DVP requires will then be actually debited in RTGS cash pre-funding for the next value date. system/other NCBs’ accounts when the payment systems open (e.g. as in Italy and Different solutions have been adopted to bypass Germany). This time may be the normal the inconvenient unavailability of the cash opening time (7:00 a.m., as in Italy) or an accounts located in the payment systems: earlier time if the NCB has opted for the early opening possibility under the TARGET 1) to extend the opening hours of the payment Guideline (e.g. as in Germany), as described systems, usually by pre-opening them for an in the previous point. early morning slot overlapping with the SSS operating hours, usually for activity limited Where central banks books are accessible to facilitating the settlement of securities directly by the SSS in both technical and settlement systems (or other operational terms (as in the French technical systems, e.g. retail payments). This integrated model), or when the central bank is possibility is explicitly envisaged by the the owner/manager of the SSS, the TARGET Guideline, Annex V, 3 (i), which contemporaneous availability of the RTGS states that “(RTGS) early opening, before system outside its normal operating hours is not 7.00 a.m., may take place after prior necessary. For instance, after the closing time notification has been sent to the ECB: (i) for of 5:15 p.m., the French system is able to pre- domestic reason (e.g. in order to facilitate open the following value date at 8:00 p.m. with settlement of securities transactions, to all the required (dedicated) accounts available settle balances of net settlement systems, or for final settlement.

c ECB The use of Central bank money for settling securities transactions May 2004 11 Figure 5 Night-time processing in Spain (Interfaced model)

Pre-opening of S value date (on S-1) Settlement date

RTGS 6:00 p.m 7:00 a.m 6:00 p.m

SSS 6:45 p.m 5:30 p.m

After the closure of the RTGS system, and once the calculation for the reserve requirements is finalised, the opening balance of the next value date is taken. This pre-opening is done after closing the previous accounting date, so there is no impact on the balance used to calculate the reserves.

Figures 5 to 9 provide a schematic representation of the night-time interactions models in place in the above-mentioned countries.

ECB c The use of Central bank money for settling securities transactions 12 May 2004 5

Figure 6 Night-time processing in The Netherlands (Interfaced model) When? – timing of interaction: models variants for pre-opening/night-time Pre-opening of S value date (on S-1) Settlement date processing of next value date RTGS 7:30 p.m 10:00 p.m 7:00 a.m 6:00 p.m

1) Pre-opening of RTGS system, 2. Overnight according to TARGET Guideline continuous Annex V interaction SSS 7:30 p.m 10:00 p.m

Continuous interaction with RTGS accounts, during operating time of RTGS. Available balance is calculated with the same methodology for both day-time and nigh-time pre-opening: for some accounts only cash, for other accounts cash plus collateral

Figure 7 Night-time processing in Italy (Interfaced model with balance reservation procedure)

Pre-opening of S value date (on S-1) Settlement date

RTGS 7:00 a.m 6:00 p.m

3) Actual settlement 1) Information on amounts reserved in of multilateral the following day’s opening balance 2. Overnight netting cycle balances at the opening of the RTGS SSS 10:00 p.m (indicative time) 7:00 a.m

The overnight net cycle runs during the night before the settlement day (S). The multilateral cash balances of the overnight cycle are settled through the Italian RTGS system BIREL at the start of the business day, drawing on funds set aside on the participants’ cash account (called “liquidity reserve”). Accordingly, the evening before the settlement date (S-1), Monte Titoli receives from the Banca d’Italia notification of the cash “blocked” by participants for securities settlement purposes; in addition, at the start of the settlement date, the “liquidity reserve” is increased of: a) cash amounts regarding coupons and redemption payments of Government securities, credited to BIREL accounts by Monte Titoli; b) the countervalue of the intra-day credit obtainable through additional collateral automatically transferred by Monte Titoli on behalf of BIREL participants. Such an additional intra-day credit is actually granted by the Banca d’Italia at the start of the operational day according to the normal procedures but is dedicated only to the completion of the overnight netting cycle.

c ECB The use of Central bank money for settling securities transactions May 2004 13 Figure 8 Night-time processing in Germany (Integrated model with reservation/ blocking of balances for night-time processing)

Pre-opening of S value date (on S-1) Settlement date

HOME ACCOUNTS 6:30 p.m 6:30 a.m 7:00 a.m 6:00 p.m

1) Pre-opening of “home” accounts, 2) Pre-opening of “home” accounts, and blocking/reservation procedure for early-morning booking.

SSS 7:00 p.m 9:00 p.m

Available balances for night-time cycle: blocking/reservation procedure taking into account: current balance on home account (including minimum reserve balances) and available collateral (balances on facility are not used). The reservation of funds for the night-time processes is made on the home accounts. The debiting of results of the overnight process is also made on the home accounts. Following that, the proceeds of securities settlement can be used in the bridge to the RTGSplus system.

Figure 9 Night-time processing in France (Integrated model with technical and operational outsourcing to the SSS)

Pre-opening of S value date (on S-1) Settlement date

RGV ACCOUNTS 5:15 p.m 8:00 p.m 5:15 p.m

SSS 8:00 p.m 5:15 p.m

Complete overlapping with SSS operating time (one continuous settlement cycle for value date S, from 8:00 p.m. S-1 to 5.15 p.m. S ). No batch process. In this model the kind of interaction is the same for day-time and night-time processing . However, the cash balance available is different in the two cases: for day time the balance available on the dedicated account (RGV cash position), can be fed by: (1) transfers from the main RTGS account; (2) automatic provision of intraday credit collateralised by securities in stock or under process. During the night, the cash balance available is given only by the automatic provision of intraday credit collateralised by securities in stock or under process.

ECB c The use of Central bank money for settling securities transactions 14 May 2004 6 THE COMPOSITION OF THE BALANCE AVAILABLE FOR CASH SETTLEMENT 6 As described in Section 4, in the DVP three- in fact the opening balance of the following The composition step procedure, securities are finally delivered business day. This may include funds that of the balance available for cash only after checks have been made to ensure that have been “released” by the central bank settlement the cash transfer is possible, i.e. that the after the closing of the previous day account has the required amount “available” and accounting date, for example the balances blocked for the settlement of the securities that may have been “blocked” for the transaction. fulfilment of the , and that have therefore become free for The term “available amount” encompasses at mobilisation at the opening of the following least two items: business day (e.g. in Germany, Italy and Spain). In principle, the same reasoning 1. The current balance of the account used for could be applied to the funds for which the SSS settlement based on instructions counterparty has requested the activation of forwarded by participants, i.e. (i) the RTGS the deposit facility, which are automatically account balance in interfaced models, (ii) the “returned” to the account holder on the balance of another central following morning. According to the survey, (where the RTGS is not directly used), or however, none of the responding NCBs (iii) the balance of the participant’s (sub) follows this practice. accounts in the SSS environment pre-funded with central bank money, or assisted by – The RTGS current balance may not be central bank money balances guarantee13, available as such (because the RTGS system depending on the model used. is closed). Therefore, in the computation of the RTGS balance (available for SSS 2. Intraday credit available (when managed settlement) it is possible that only the amount separately from the RTGS account balance), explicitly devoted by RTGS participants is which in turn depends on the amount of entered for the purpose of SSS night-time available eligible collateral. settlement (e.g. Italy14).

Two aspects are worth noting: – Alternatively, SSS cash accounts may have been adequately pre-funded via a liquidity (i) Current balance is the cash balance at the bridge. time of interaction with SSS. – Intraday refinancing possibilities for value (ii) In some systems, the amount of available next day could be counted as well, in a sort collateral for the purpose of intraday-credit of night-time/early-morning provision of is calculated by also including in the collateralised intraday credit. In the French computation the securities that the SSS is system, this facility is the only one available trying to deliver to the buyer in the same during the night-time processing. settlement cycle for which the check of the available intraday credit is done.

The computation may be different in the case of night-time pre-opening of the following business day for the following reasons:

– It takes place after the payment systems and accounting system end-of-day 13 In this case the settlement may not be in central bank money. “housekeeping” procedures, therefore the 14 Monte Titoli works on the basis of the information received from current RTGS or “home account” balance is the Banca d’Italia based, in turn, on participants’ instructions.

c ECB The use of Central bank money for settling securities transactions May 2004 15 ANNEX

Replies provided by the national central banks of the ESCB

WHERE WHO WHERE WHO

Country System or procedure 1. Where are the cash 2. Who generates payment Country System or procedure 1. Where are the cash 2. Who generates payment (for SSS operating accounts used for SSS instructions and operation (for SSS operating accounts used for SSS instructions and operation different procedures) settlement located? account entries? different procedures) settlement located? account entries?

INTERFACED Belgium CIK system RTGS system (“interfaced The SSS, on behalf of its INTEGRATED Belgium NBB SSS SSS (“integrated model”). In In this case the NCB is the SSS, MODELS system”). In Belgium there are participants (CIK has been MODELS Belgium there are no RTGS the initiative is taken by the no RTGS accounts; only NBB’s mandated by the participants to accounts, only NBB’s cash SSS software. cash accounts (also used for debit their NBB cash account). accounts (also used for RTGS RTGS payments). First the securities are blocked payments). in CIK, then a payment is issued to NBB via SWIFT Belgium Euroclear Bank SSS (“integrated model”). The SSS, on behalf of its message, upon confirmation of Legally, accounts are located on participants. payment the securities are the books of the NCB, but are released. technically operated by the SSS. Spain CADE RTGS system The SSS, on behalf of its Germany Frankfurt SSS (“integrated model”), plus The SSS, on behalf of its (“interfaced system”) participants. other central bank funds transfer participants. system (outside the RTGS SLCV RTGS system The SSS, on behalf of its system, but within the central (“interfaced system”) participants. bank). Greece BOGS RTGS system The SSS, on behalf of its France Euroclear FR (RGV) SSS (“integrated model”). The SSS operates the cash (“interfaced system”) participants. Legally, accounts are located on accounts. A bridge between the books of the NCB, but are their dedicated cash accounts Italy Monte Titoli – DVP gross RTGS system The SSS, on behalf of its technically operated by the SSS. and their TBF accounts enables procedure (Express I), and (“interfaced system”) participants. participants to credit/debit Monte Titoli – daylight directly their dedicated accounts DVP Net cycle of Express II during the operating hours of Monte Titoli – night-time RTGS system The SSS, on behalf of its the RTGS. pre-opening DVP Net (“interfaced system”) participants. Sweden Current system (adopted SSS (“integrated model”). The SSS operates the cash cycle of Express II in November 2003) Legally, accounts are located on accounts on behalf of its The Euroclear NL RTGS system The SSS, on behalf of its the books of the NCB, but are participants. A bridge between Netherlands (“interfaced system”). participants. technically operated by the SSS. their dedicated cash accounts and their RTGS-accounts Portugal SITEME RTGS system (“interfaced The SSS, on behalf of its (RIX-accounts) enables the system”). There is also a sub- participants. participants to credit/debit system (SLOD) outside the RTGS directly their dedicated account system but still in a system of the during the operating hours of NCB, for other depositors not the RTGS system. participating in the RTGS system. United Crest SSS (“integrated model”), which The NCB is responsible for INTERBOLSA RTGS system (“interfaced The SSS, on behalf of its Kingdom works with shadow/memorandum debiting/crediting RTGS system”). There is also a sub- participants. 1) liquidity accounts for SSS settlement accounts. system (SLOD) outside the RTGS settlement banks (UK 2-tier system but still in a system of the AUTONOMOUS model). NCB, for other depositors not CB MODEL participating in the RTGS system. Finland APK has a separate account The SSS participants, directly for each of its SSSs on the (the owners of the accounts). In Denmark Vaerdipapircentralen RTGS system (“interfaced The SSS participants transfer BoF-RTGS through which the sense that the participants A/S – VP system”). There is also a funds to the dedicated participants fund their cash fund the SSSs account on BoF- sub-system within the central settlement accounts for daylight positions dedicated to the RTGS through credit transfers. bank interacting with the settlement during the opening relevant system. Internal The SSS only operates its Nationalbanken’s RTGS hours of the RTGS system and accounting of the APK is not internal accounting based on payment system KRONOS to the night settlement through considered as central bank which trades are settled in DVP (RTGS system) where the a pre-opening facility. accounting. mode. participants can dedicate funds to the settlement in the VP- system.

1) CREST(UK) is also the SSS for Irish equities.

ECB c c ECB The use of Central bank money for settling securities transactions The use of Central bank money for settling securities transactions 16 May 2004 May 2004 17 Replies provided by the national central banks of the ESCB (cont’)

WHEN WHEN

System or 3. Operating times 4. Availability of 5. If applicable: System or 3. Operating times 4. Availability of 5. If applicable: Countryprocedure of SSS settlement RTGS system for availability of cash Countryprocedure of SSS settlement RTGS system for availability of cash (for SSS domestic activity accounts used for SSS (for SSS domestic activity accounts used for SSS operating (extra-time compared settlement (other than operating (extra-time compared settlement (other than different to TARGET operating RTGS accounts) different to TARGET operating RTGS accounts) procedures) times, according to procedures) times, according to TARGET Guideline, TARGET Guideline, Annex V, 3 (i)) Annex V, 3 (i))

INTERFACED Belgium CIK system From 6:00 a.m. to TARGET operating TARGET operating INTERFACED Portugal INTERBOLSA Eurosystem credit SSS, on behalf of its N/A. MODELS 4:00 p.m. times. times. MODELS operations: from 7:00 participants a.m. to 6:30 p.m. Spain CADE Pre-opening: 6:45 (CET); transactions p.m. on S-1. Day-time settled under the 7:00 a.m.-5:30 p.m. General settlement SLCV Only Day-time: system: at 11:30 a.m.; 3 batches a day: 9:30 transactions settled a.m. / 12:30 p.m. / under the SL plus 2:00 p.m. system: 5 settlement cycles daily – 9:30 Greece BOGS Only Day-time Specific payment a.m., 11:00 a.m., 1:00 Eurosystem operations: accounts are maintained p.m., 2:15 p.m. and RTGS facility during in the Bank of Greece, 5:00 p.m. will be TARGET operating but outside the Greek discontinued in the near times. Commercial RTGS (HERMES), by future; transactions transactions: end-of- certain participants of settled under the SLrt day netting cycle BOGS. These accounts system (real-time (finalised at 3:30 p.m.) are available for SSS settlement system), and instructions during that require financial BOGS operating hours settlement at the Banco (7:00 a.m.-4:00 p.m. de Portugal, such as CET) for commercial DVP transactions from transactions. (These 9:30 a.m. to 5:30 p.m. accounts are held by FOP transactions: from institutions which are 9.30 a.m. to 7.00 p.m. not eligible to operations). Denmark Vaerdipapircentralen Night-time settlement: All night-time From 4:30 p.m. on S-1 A/S – VP contains 3 batches settlement is in DKK and until 3.30 p.m. Italy Monte Titoli – Only Day-time TARGET operating N/A. taking place at 6:00 including trades in on S. DVP gross 7:00 a.m.-6:00 p.m. times. p.m./11:45 p.m./ euro, which are procedure (Express 6:00 a.m. Day-time swapped from DKK to I), and settlement contains 2 euro in a PvP batch 9:30 a.m. to 12:30 TARGET operating N/A. batches taking place at during the opening Monte Titoli – p.m. times. 10:30 a.m. and 1:35 hours of TARGET. daylight DVP Net p.m., the latter in Thus the pre-opening cycle of Express II 1 batch from 10:00 TARGET operating N/A. Euro. There is also a facility regards only Monte Titoli -– p.m. (S-1) to 7:00 times. VP - RTGS facility DKK and is operating night-time pre- a.m. S during the opening from 4:00 p.m. to 4.30 opening DVP Net hours of the RTGS p.m.. The monetary- cycle of Express II system (8:00 a.m.- policy day in Denmark The Continuous interaction INTEGRATED 3:00 p.m.). closes at 3.30 p.m. Netherlands Euroclear NL with RTGS accounts, MODELS during operating time Belgium Euroclear Bank From 6:30 a.m. to TARGET operating TARGET operating of SSS. 2:30 p.m. times. times. Portugal Only Day-time: N/A. N/A. Belgium NBB SSS At the end of each TARGET operating TARGET operating SITEME 7:00 a.m. - 6:30 p.m. DVP settlement cycle times. times. every hour, from 10:00 a.m. to 4:00 p.m.

ECB c c ECB The use of Central bank money for settling securities transactions The use of Central bank money for settling securities transactions 18 May 2004 19May 2004 Replies provided by the national central banks of the ESCB (cont’)

WHEN

System or 3. Operating times 4. Availability of 5. If applicable: Countryprocedure of SSS settlement RTGS system for availability of cash (for SSS domestic activity accounts used for SSS operating (extra-time compared settlement (other than different to TARGET operating RTGS accounts) procedures) times, according to TARGET Guideline, Annex V, 3 (i))

INTEGRATED Germany Clearstream Night-time pre-opening: Day-time: equal to MODELS Frankfurt Standard settlement TARGET operating from 7:00 p.m. to 9:00 times Note: new p.m. Day-time: Same- German settlement day-settlement 1: from model which went live 6:00 a.m. to 9:45 a.m. on November 2003 has Same day settlement 2: also the following from 10:45 a.m. to Night-time pre-opening 12:30 p.m. Real time from 6:30 p.m. to 7:00 settlement fop: from p.m. of S-1, and early 6:00 a.m. to 6.00 p.m. morning booking on Real time settlement “home account”: from dvp from 7:00 a.m. to 6:30 a.m. to 7:00 a.m. 4:30 p.m. France Euroclear FR Night-time/early Complete overlapping (RGV) morning pre-opening: not relevant of the availability of from 8:00 p.m. S-1 to cash accounts with 7:00 a.m. S Day-time: SSS operating time: 7:00 a.m. to 5:15 p.m. continuous settlement. [distinction between No batch process. night and day-time processing only for the purpose of the questionnaire as there is no interruption between the two, but a single window from 8:00 p.m. S-1 until 5:15 p.m. S] Sweden Current system Only Day-time from From 7:00 a.m. to (adopted in 7:00 a.m. to 5:00 p.m. not applicable 2:00 p.m. November 2003) United Crest Day-time: from 7:00 not applicable Kingdom a.m. to 4.40 p.m. not applicable 2) (times are for DVP transactions. Different deadlines exist for AUTONOMOUS FOP transactions) CB MODEL Finland Day-time RM System not applicable operates according to not applicable TARGET operating days and times. OM System settles through a single daily batch at about 10:00 a.m. CET and observes domestic bank holidays.

1) The end of day on RGV (FR) is 5:15 p.m. for “standard” operations. However, in case the French Central Bank would decide to add a late operation (mainly an overnight repo between the Central Bank and a participant in order to cover its cash position on the RTGS (impacted by the reimbursement of the “intraday repo” with the NCB) – there is still the possibility to settle this type of operations on RGV from 5:15 p.m. to 6:00 p.m. In this case, this new settlement has good (S – same day) value date. This procedure can be activated only at the request of the French Central Bank, and has no impact on the beginning of the next accounting day (8:00 p.m., for value S+1). 2) CREST(UK) is also the SSS for Irish equities.

ECB c c ECB The use of Central bank money for settling securities transactions The use of Central bank money for settling securities transactions 20 May 2004 21May 2004 Replies provided by the national central banks of the ESCB (cont’)

HOW ADDITIONAL HOW ADDITIONAL COMMENTS COMMENTS

System or 6. How are the cash 7. What balances enter 8. Any other information/ System or 6. How are the cash 7. What balances enter 8. Any other information/ Countryprocedure accounts used for in the calculation of comment that is deemed Countryprocedure accounts used for in the calculation of comment that is deemed (for SSS SSS settlement liquidity considered useful to understand the (for SSS SSS settlement liquidity considered useful to understand operating funded/covered available in the cash functioning of the operating funded/covered available in the cash the functioning of the model different accounts used for SSS model different accounts used for SSS procedures) settlement procedures) settlement

INTERFACED Belgium CIK system Continuous Day-time: available CIK system (OTC and stock INTERFACED Italy Monte Titoli – The multilateral cash “Liquidity reserve” + The new Italian DVP net MODELS interaction with RTGS cash balance and exchange transactions – no MODELS night-time balances stemming payments and procedure (Express II): The accounts. intraday credit. Early eligible paper for monetary pre-opening from the night cycle of redemption of net system is composed of an morning pre-opening of policy); the CIK has been DVP Net cycle Express II are settled Government Bonds + overnight cycle, ending at 7:00 RTGS: no settlement bought by Euroclear Group of Express II on RTGS account cash deriving from the a.m. and a daylight cycle, but the available and will be integrated on using amounts collateralization of ending at 12.30 p.m. The first amounts are the same. their new Single Settlement previously “blocked” securities held on the one runs during the night Engine (SSE) planned for (the so called property accounts before the settlement day (S) 2005. “liquidity reserve”) by and from the self- and settles participants’ RTGS’s participants. collateralization of multilateral balances at 7:00 Spain CADE Continuous interaction Pre-opening: after the [See “Additional securities resulting a.m. on the basis of the with RTGS accounts. closure of the RTGS comments” for a from the settlement settlement instructions sent by and once the calculation description of the process. The sources of participants until the late for the reserve mechanism to set the “liquidity reserve” afternoon of S-1. The requirements is done, aside funds for the for the settlement of multilateral cash balances of the opening balance of settlement of SSS (the the overnight cash the overnight cycle are settled next value day is taken. so-called “liquidity balance of Express II through the Italian RTGS This pre-opening is reserve”]. are: (1) the current system BIREL at the start of done after closing the balance of RTGS the business day, drawing on previous accounting account, included the funds set aside on the date, so there is no compulsory reserve, participants’ settlement impact on the balance (2) the balances in account (called “liquidity used to calculate the excess of the reserve”). Accordingly, the reserves. Day-time: fulfilment of the evening before the settlement current balance of reserve requirement, date (S-1), Monte Titoli RTGS account. and (3) the intraday receives from the Banca d’Italia Spain SLCV Through 3 batches on credit available. notification of the cash the RTGS accounts. “blocked” by participants for securities settlement Greece BOGS There are no specific Current balance of the purposes; in addition, at the SSS-designated cash RTGS account. start of the settlement date, settlement accounts in the “liquidity reserve” is the RTGS. Participants increased of: a) cash amounts maintain general cash regarding coupons and settlement accounts in redemption payments of HERMES. These Government securities, accounts are used for all credited to BIREL accounts payment obligations by Monte Such an additional generated in the intra-day credit is actually System, including granted by the Banca d’Italia those of the Bank of at the start of the operational Greece’s SSS (BOGS). day according to the normal procedures but is dedicated Italy Monte Titoli – Continuous interaction Current balance of the only to the completion of the DVP gross with RTGS accounts. RTGS account (= Cash overnight netting cycle. The procedure + intraday liquidity). second netting cycle will run (Express I), in the morning of the and settlement day (S). No Monte Titoli – End of net-cycle, Current balance of the “liquidity reserve” daylight DVP 12.30 p.m. RTGS account (= Cash mechanism is foreseen for Net cycle of + intraday liquidity). the settlement of the cash Express II balances of this cycle, which will rely only on ordinary BIREL facilities (queue, intra-day credit and ordinary collateralisation procedure).

ECB c c ECB The use of Central bank money for settling securities transactions The use of Central bank money for settling securities transactions 22 May 2004 23May 2004 Replies provided by the national central banks of the ESCB (cont’)

HOW ADDITIONAL HOW ADDITIONAL COMMENTS COMMENTS

System or 6. How are the cash 7. What balances enter 8. Any other System or 6. How are the cash 7. What balances enter in 8. Any other Countryprocedure accounts used for SSS in the calculation of information/comment Countryprocedure accounts used for the calculation of liquidityinformation/comment (for SSS settlement funded/covered liquidity considered that is deemed useful (for SSS SSS settlement considered available in the that is deemed useful operating available in the cash to understand the operating funded/covered cash accounts used for SSS to understand the different accounts used for SSS functioning of the the different settlement functioning of the procedures) settlement model procedures) model

INTERFACED The Euroclear NL Both day-time and The evening processing INTERFACED Portugal INTERBOLSA See reply given for MODELS Netherlands night-time pre-opening: (t-1) from 7:30 p.m. MODELS SITEME. for some accounts only till 10:00 p.m. should cash, for other accounts be considered as early Denmark VaerdipapircentralenThrough transfers from Current balance of the RTGS cash + collateral. morning processing A/S – VP the RTGS accounts to the accounts as well as credit because the value-date dedicated settlement limit based on a pool of Portugal SITEME Every institution participating The current balance of is t. accounts. Concerning the pledged collateral and the into the Portuguese RTGS the RTGS accounts are night-time settlement, the holdings of certificates of (SPGT) holds a single considered fully amounts available for the deposits at the time of settlement account with the available for SSS first batch are updated transfer to the settlement , the debit settlement. automatically after the accounts. With regard to the balance of which cannot exceed bookkeeping of each accounts connected to the the standby collateralised credit batch. With regard to day- Automatic Collateralisation ceiling previously agreed with time settlement, the funds system, the amount of the central bank. Orders that are transferred and re- securities in stock and under exceed the predefined credit transferred in connection process in dedicated VP ceiling are held in a queue. Any with each batch. There is securities accounts. operation entering the queue also an Automatic must be covered by sufficient Collateralisation system funds and/or collateral within where VP administrates 90 minutes (a system another type of dedicated parameter) and always before settlement accounts on an integrated basis. the time at which the queuing INTEGRATED mechanism normally closes (6 MODELS p.m.), otherwise it is cancelled. Belgium Euroclear Bank Liquidity bridge when Available cash amount + The ordering participant may liquidity is needed (“on intraday credit The Euroclear system ask the system to cancel a demand”) during period of for which NBB has set queuing operation. Every overlapping of SSS and up a central bank institution participating into funds transfer system money facility in SLOD holds a single settlement operating times. The December 2001: this account with the Banco de participants transfer facility is 100% Portugal and is integrated into liquidity from their NBB operational but has not this gross settlement system, main accounts to their NBB been used yet; the main less sophisticated and governed sub-accounts (on the SSS) reason being the fact by more restrictive rules at the start of the day, they that there is no need to (e.g. participants have no access can send/repatriate use such a facility for to the Interbank Services liquidity when needed; at monetary policy Company – SIBS, transfer the EOD the liquidity will transactions as NBB channel and therefore use automatically be transferred operates a pool of pre- SWIFT and fax, and cannot be back (4:30 p.m.) deposited pledged granted intraday credit), collateral. Belgium NBB SSS At the end of each DVP Day-time: available cash although settlement does occur settlement cycle (one balance + intraday credit Early within the settlement platform NBB SSS is where all every hour from 10:00 morning pre-opening of RTGS: of SPGT. In the case of the governmental a.m. to 4:00 p.m.) the No settlement but the available of funds, debit orders are paper is issued and SSS interact with the amounts are the same (We considered null for 90 minutes. settled and hence is cash account system operate a pool of pre-deposited During that time, if the used for monetary (RECOUR) to settle each pledge collateral, the part of the participant’s account is policy operations, transaction on a gross pool which remains available provisioned, the original this CSD is operated basis. If the funds are not after collateralisation of operation will be cancelled and by NBB and located available, the transaction monetary policy operations is a new instruction will be on our computers. is postponed to the next automatically and dynamically resubmitted to payment. If the settlement batch. assigned to intraday credit. The participant’s account is not intraday credit is given under provisioned during the 90 the form of a credit line which is minutes, the original operation automatically used by the will be cancelled due to lack of account holders when their cash provision. balance is not sufficient.)

ECB c c ECB The use of Central bank money for settling securities transactions The use of Central bank money for settling securities transactions 24 May 2004 25May 2004 Replies provided by the national central banks of the ESCB (cont’)

HOW ADDITIONAL HOW ADDITIONAL COMMENTS COMMENTS

System or 6. How are the cash 7. What balances enter 8. Any other information/ System or 6. How are the cash 7. What balances enter 8. Any other information/ Countryprocedure accounts used for in the calculation of comment that is deemed Countryprocedure accounts used for in the calculation of comment that is deemed (for SSS SSS settlement liquidity considered useful to understand the (for SSS SSS settlement liquidity considered useful to understand the operating funded/covered available in the cash functioning of the model operating funded/covered available in the cash functioning of the model different accounts used for SSS different accounts used for SSS procedures) settlement procedures) settlement

INTEGRATED Germany Clearstream Liquidity bridge when Night-time: blocking/ The Bundesbank payment INTEGRATED United Crest1) Liquidity bridge when For each SSS In the UK model, although MODELS Frankfurt liquidity is needed reservation procedure system RTGSplus has its own MODELS Kingdom liquidity is needed settlement cycle, the finality is legally achieved in (“on demand”) during taking into account: accounts which are linked to (“on demand”) during SSS receives new the SSS (i.e. when SSS period of overlapping current balance on the main accounts (“home period of overlapping information on central members’ securities and cash of SSS and funds home account accounts”) of participants of SSS and funds bank money balances memorandum accounts are transfer system (including minimum with a real-time liquidity transfer system ‘earmarked’ (i.e. debited/credited), central operating times reserve balances) + bridge. The RTGSplus operating times. NB ‘blocked’) on each SSS bank money settlement takes available collateral accounts start the business there is a full overlap settlement banks’ place on accounts located in (balances on deposit day with a zero balance and of operating times. account at the NCB. and managed/controlled by facility are not used). end the business day with a Liquidity bridge These ‘earmarked’ the NCB. In addition, Early morning pre- zero balance. The SSSs provides ‘virtual amounts (as represented because of its two-tier nature, opening of “home debits and credits the “home single pot’: two-way by balances on liquidity the UK model only provides accounts”: current accounts” of SSS participants transfers between each memorandum accounts central bank money balance on home (and not the RTGSplus SSS settlement cycle in the SSS) form part of settlement accounts to the account + available accounts) during the day-time (200-300 per day). the checks that are used SSS settlement banks and collateral Day-time: (current system of day-time to determine which not to the SSS members. The current balance on settlement). Also, the transactions will settle movements across SSS home account + reservation of funds for the in a particular cycle. members’ cash memorandum available collateral. night-time processes is made accounts create an irrevocable on the home accounts. The undertaking on the part of the debiting of results of the NCB to debit the settlement overnight process is also account of the settlement made on the home accounts. bank of the buying member Following that, the proceeds and to credit the settlement of securities settlement can be account of the settlement used in the bridge to the bank of the selling member. RTGSplus system. AUTONOMOUS CB MODEL Finland Liquidity bridge when Current balance of the The Finnish systems are France Euroclear FR Liquidity bridge when Night-time pre-opening: Complete overlapping of liquidity is needed RTGS account, which based on (1) an autonomous (RGV) liquidity is needed only automatic the availability of cash (“on demand”) during in our case includes all central bank money model (“on demand”) during provision of intraday accounts with SSS period of overlapping holdings and facilities and (2) credit transfers. The period of overlapping credit collateralised by operating time: continuous of SSS and funds of each participant. Finnish SSSs function on of SSS and funds securities in stock or settlement. No batch transfer system the basis of autonomous transfer system under process. Day- process. operating times. central bank money model, operating times time: balance available Accounts are funded. i.e. CSD’s account on the on the dedicated account APK participants fund RTGS is funded by its (RGC cash position). their positions on the participants from their own This can be fed by: real-time RM system RTGS accounts (resembling (1) transfers from the at their will during the CHIPS modalities). The main RTGS account; day. They can also central bank money (2) automatic provision withdraw funds from liquidity is then used of intraday credit the system at their own internally within the SSS. collateralised by initiative. The RM There is no other way to securities in stock or system functions fund the SSS nor are there under process. autonomously during any leakage of liquidity. It Sweden Current Liquidity bridge when Value of funds There are two ways of the day settling should be noted that the system liquidity is needed transferred from the accessing CBM in this transaction in central APK operates two (adopted in (“on demand”) during regular RTGS system system: for regular bank money. Funds technically separate SSSs. November period of overlapping to the accounts in the settlement special accounts can be withdrawn only 2003) of SSS and funds SSS + the credit with credit rights located through BoF-RTGS. transfer system limited allowed based in the SSS. For RTGS Same applies to the operating times. on the securities (manual immediate OM system with the Subsequent transfer pledged specifically for procedure) through exception that it is the back of liquidity at securities settlement mandated payments SSS operator that 14:00 or automatically initiated by the SSS. initiates any pay-out collateralised during after the daily netting settlement. run.

1) CREST(UK) is also the SSS for Irish equities. ECB c c ECB The use of Central bank money for settling securities transactions The use of Central bank money for settling securities transactions 26 May 2004 27May 2004