Report on Activities 2012 Practitioners creating Europe-wide payment infrastructures March 2013 Photography The photos in this report were taken in the Paris and Brussels offices of EBA CLEARING and show both EBA CLEARING staff members and members of the Opera- tions and Technical Committee (OTC). The photos of the OTC members were taken during their meeting on 13th March 2013. The OTC is an EBA CLEARING Board Committee that recommends enhancements to the operational, pro- cedural, functional and technical aspects of EURO1, STEP1 and (where relevant) STEP2. The OTC is com- posed of operations and technical experts from the EBA CLEARING Shareholder Banks, who are appointed by the EURO1 Participants in their respective national com- munities; it also includes observers from the STEP1 community and SWIFT. The OTC is currently chaired by EBA CLEARING Board member Hays Littlejohn (UBS) with Ludy Limburg (RBS) serving as Deputy Chairman. We would like to thank everyone who contributed to this photo project. 2 EBA CLEARING Report on Activities 2012 Report on Activities 2012 EBA CLEARING 4 Overview 2012 5 EURO1 Service 6 STEP1 Service 10 STEP2 Platform 12 STEP2 SCT Service 16 STEP2 SDD Core and B2B Services 18 STEP2 ICT Service 20 STEP2 IET Service 20 MyBank solution 21 System performance, maintenance 23 and enhancements Internal audit, information security and 25 business continuity management Risk management 26 Customer support 27 Outlook 2013 28 Board Committees, User Groups, Steering Groups 30 and other expert fora The Board and the Management 32 Country Representatives 34 3 EBA CLEARING Report on Activities 2012 EBA CLEARING Cost-saving infrastructure solutions for an integrated euro payments environment EBA CLEARING is a bank-owned provider of pan-Euro- The Company is also committed to delivering pan- pean payment infrastructure solutions. Established in Europe an solutions in the e-payment area. MyBank, 1998 by 52 banks, the Company had 64 shareholders by an e-authorisation solution enabling Internet shoppers March 2013. The mission of EBA CLEARING is to offer across Europe to pay via online or mobile banking, was efficient and cost-effective solutions in the co-operative launched on 25th March 2013. space, which generate savings within its user banks. Through regular user group meetings and informa- EBA CLEARING is the leading private sector provider tion sessions, both at European and country level, EBA of pan-European payment services in euro. It owns and CLEARING entertains a direct and intensive exchange operates EURO1, a large-value payment system with with its user and stakeholder community. This user-cen- an RTGS-equivalent net settlement arrangement, and tred approach has forged the Company’s unique market STEP1, a single payment system for small and medium- responsiveness as a co-operative and country-neutral sized banks, as well as STEP2, a Pan-European Auto- undertaking in a fast changing environment. mated Clearing House (PE-ACH) processing retail credit transfers and direct debits. By March 2013, close to 270 In co-operation with the Euro Banking Association, EBA banks across Europe were directly connected to the ser- CLEARING plays an important role in the banking in- vices offered by EBA CLEARING. dustry’s efforts to create, maintain and evolve an inte- grated pan-European payments environment meeting the needs of the banks and their customers in the Single Euro Payments Area (SEPA). 4 EBA CLEARING Report on Activities 2012 Overview 2012 In 2012, the pan-European payment systems of EBA • The STEP2 SEPA Business Working Group, com- CLEARING provided financial institutions across the con- posed of 34 members representing the STEP2 SEPA tinent with efficient and cost-effective euro infrastructure Services community, was consulted on all STEP2 en- services and affirmed its position as a strategic choice for hancements banks in SEPA. • A group of committed large volume exchange users helped to define the functional and resilience enhance- The Company kept pursuing its activities geared at ments needed to support the upcoming volume in- reviewing and further improving its services in line with crease on the platform. user demands. Important deliveries of the EURO1 Review and Reform Program were implemented through- Throughout 2012, the Company undertook a number of out 2012 and early 2013, namely in the areas of risk measures to deal with the turbulences in the financial mitigation, liquidity management and processing effi- market, which inevitably had an effect on payment sys- ciency. As a highlight of these deliverables, the EURO1 tems. In line with these measures, the Company initiated Participants’ mandatory credit risk exposure towards a Risk Managers’ Forum to establish a standing dialogue their counterparties was reduced by 80 percent. with expert user representatives on risk assessment and management issues. With regard to the STEP2 platform, the Company en- gaged in a major enhancement program geared at At the level of the organisation of the Company, addition- preparing the platform for SEPA. The roadmap for al steps were taken to strengthen the resourcing in order 2012 – 2013 comprised a number of improvements re- to prepare for the expected growing role of the organi- lated to the functionality, performance and operational sation in the future SEPA environment and to cope with robustness of the STEP2 SEPA Services. increased regulatory requirements. Corporate develop- ments were made in order to further standardise and im- These enhancements notably included the introduction prove EBA CLEARING’s organisational processes and of SCT batch processing services and preparations for controls. The Information Security Management System implementing a third processing site. They will reinforce of the Company was certified as ISO 27001-compliant at the positioning of STEP2 as a highly resilient and efficient the beginning of 2013. processing channel for both domestic and cross-border SEPA transactions providing pan-European reach to While most of the Company’s activities in 2012 and its users. The STEP2 platform is expected to capture a early 2013 focussed on reinforcing and evolving its ex- substantial volume increase in the run-up to the SEPA isting services, EBA CLEARING also invested important migration end-date. efforts into developing new solutions for e-SEPA. The pan-European e-authorisation solution MyBank supports The service enhancements taken forward over the past the initiation of SEPA transactions in an online payment year were defined and scheduled in close co-operation environment and is aimed at facilitating the growth of with the users of the services: e-commerce in Europe. MyBank was launched as • The Future Development Group, composed of mem- planned on 25th March 2013 and added another mile- bers of the Operations and Technical Committee as stone to EBA CLEARING’s track record of timely service well as of the Treasury and Liquidity Group, provided deliveries for the benefit of its users and their customers. important expert advice on the EURO1 Review and Reform Program 5 EBA CLEARING Report on Activities 2012 EURO1 Service KEY FACTS AND FIGURES PARTICIPATION (status: March 2013) 64 Participants / 50 Sub-Participants FUNCTION REACH RTGS-equivalent large-value payment system on a More than 8,000 participant BICs and over 18,000 multilateral net basis, for single euro transactions of additional BICs reachable via EURO1/STEP1 high priority and urgency, and primarily of large amount Participants as listed in the EURO1/STEP1 Directory LIVE DATE END-OF-DAY SETTLEMENT 4th January 1999 in TARGET2 via the Ancillary System Interface (ASI4) TECHNICAL OPERATOR SPECIAL FACTS OR FEATURES IN 2012/2013 SWIFT • Volume rise of 8.4 percent in 2012, including a new record month in April 2012 with 268,194 pay- AVERAGE DAILY VOLUME ments processed on average per day 246,324 transactions • New peak day on 10th April 2012 with 387,438 payments processed and settled in one day AVERAGE DAILY VALUE • EURO1 Review and Reform Program continues to EUR 208.5 billion improve risk controls and liquidity management for participants LEGAL BASIS • Single Obligation Structure (SOS) recognised and enforceable in every EU jurisdiction and OECD jurisdictions outside the EU where participants have their registered Head Offices • Fully compliant with the 10 Core Principles for Systemically Important Payment Systems (SIPS) • Overseen by the European Central Bank (ECB) EURO1: average daily volume of payments processed 300,000 250,000 200,000 150,000 100,000 2010 2011 2012 2013 6 EBA CLEARING Report on Activities 2012 A net settlement system with effective liquidity and • paved the way towards basing a participant’s loss risk management mechanisms share in case of more than three bank failures on the The EURO1 Service continued to be of particular value actual exposure the participant has towards the failing to its participants throughout 2012 and early 2013, as it banks instead of towards the system as a whole. allowed the banks to maximise their liquidity efficiency and minimise their risk exposure during a period of con- Additional improvements: strengthening relation- tinuing high liquidity costs and major risk concerns. The ships and organisational robustness popularity of this highly robust and stable platform was Furthermore, the Company strengthened the overall ro- reflected in the volume records it saw in 2012. bustness of the EURO1 system by taking forward the au- tomation of additional processes and by continuing its re-