Infosession TIPS: Target Instant Payments Settlement. 3 February Infosession TIPS: Target Instant Payments Settlement 3.02.

Transcription

1 Infosession : Target Instant Payments Settlement 3 February 2017 Infosession : Target Instant Payments Settlement

2 On the agenda for today 10:00-10:15 Introduction : Target Instant Payments Settlement Kristine De Lepeleire, Program Manager Instant Payments, Febelfin 10:15-11:30 Explaining and main points of the User Requirements Patrick Heyvaert, Payments & Securities Advisor, NBB 11:30-11:45 Coffee/Tea break & networking 11:45-12:15 The perspective of the banks Francis De Roeck, Global Cash Management, Head of SEPA offering, BNP Paribas 12:15-12:30 Wrap up & question time Event dd month yyyy 2

3 Introduction Kristine De Lepeleire Program Manager Instant Payments, Febelfin Event dd month yyyy 3

4 Instant Payments in Belgium In January 2016, a formal project covering instant payments was set up within Febelfin. The Belgian Banks, represented in/by Febelfin and members of the CEC mandated the CEC to sign a letter of intent with STET with the aim to develop instant payments for the CEC, the Belgian Clearing System. The solution will be fully compliant with the EPC SCT Instant Rulebook and will apply the conditions set forward by the Eurosystem regarding the settlement of instant payments. The system will be ready for testing in September The Belgian banking community has the intention to launch instant payments in the second half of 2018 (to be decided). Event dd month yyyy 4

5 Eurosystem conditions on clearing arrangements for pan-european instant payments in euro 1. A single model for settlement via Target 2 : TARGET2 ASI model6 real-time PSP s transfer liquidity to a technical account of the CSM within T2 to prefund payments. CSM will keep track of the positon of the PSP (based on position in technical account & settled instant payments). No squaring within T2, balances remain untouched,except in case of funding/defunding by a PSP. 2. A single risk management model: full prefunding in cash of clearing members positions but post-funding for inter CSM settlement 3. A common access policy: all CSM s should be able to exchange payment messages and settle directly between themselves without requiring an intermediary bank Event dd month yyyy 5

6 Pan-European reach Interoperability was one of the key requirements of the RFP procedure organised by Febelfin, so that Belgian banks only need to connect to 1 system to reach the whole SEPA area. Infosession Instant Payments

7 it shall be enough for a PSP to participate in one infrastructure only and be reachable at pan- European level Event dd month yyyy 7

8 Public Consultation on In January 2017, the ECB launched a market consultation on, the Target Instant Payments Settlement. Infosession Instant Payments

9 Explaining Patrick Heyvaert- Payments & Securities Advisor, NBB Event dd month yyyy 9

10 TARGET Instant Payments Settlement () Patrick Heyvaert National Bank of Belgium Friday 3 February 2017

11 Agenda Overview Why? Principles Liquidity Time plan Pricing Consultation User Requirements Document Questionnaire volumes 11 / 25

12 Why TARGET Instant Payments Settlement? The Eurosystem decided in September 2016 to launch an investigation phase for extends the availability of central bank money (CeBM) settlement to 24/7/365, to facilitate the emergence of instant payments The investigation phase will, among others: Elaborate the user requirements for Define the business case Objectives of the Eurosystem: Euro area not to lag behind in speed of payments Promote efficiency and ensure market integration in the settlement of instant payments 12 / 25

13 Principles: Foundation of the Service Same participation criteria as for TARGET2 Instant payments settlement in Central Bank Money 24/7/365 operating hours Operated on a full cost-recovery basis Supports participants to comply with the SCT Inst scheme Multi-currency technical capability 13 / 25

14 Additional Principles Technical solution for providing instant payments settlement services Offers final and irrevocable settlement Participation in is not mandatory To be developed and operated by the Eurosystem assuming full ownership Lean, harmonised and standardised pan- European service 14 / 25

15 Co-existence of Payment Services Access to RTGS Services PSPs Support for Instant Payments Through Clearing PSPs Support for Instant Payments Through Instant Settlement PSPs ACHs Settlement backed by CeBM ACHs Individual Instant Payment Instructions ASI 6 TARGET2 Funding / Defunding 15 / 25

16 Connecting to will be a network vendor agnostic service The intention is to let Participants decide the network vendor they each intend to use, as long as this network vendor adheres to the requirements Vendor 1 Vendor 2 Vendor 3 16 / 25

17 Pricing: how much will cost? Considering the principle of full cost recovery, we are assessing the possibilities of achieving full cost recovery with from 0.5 to 1 cent per instruction We want to gather the interest of market participants in using the service at this price This is not at this stage a commitment, but rather an exploration of market interest Consultation on volumes via questionnaire 17 / 25

18 Time Plan Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Investigation phase Realisation phase Early January 17 Submission of a draft User Requirements Document (URD) version to the Market January February 17 7 weeks of consultation with the Market on the draft URD June 17 Decision to develop the service based on the results of the Investigation phase May/June 18 Start of Eurosystem internal system testing August/September 18 Start of pilot testing involving users November 18 Go-live 18 / 25

19 Service Scope SCT Inst scheme compliant settlement service for participants to allow the transfer of funds instantly from an originator to a beneficiary In Scope Routing services to forward the SCT Inst instructions from the originator participant to the beneficiary participant Instant settlement of the SCT Inst instructions accepted by the beneficiary participant Immediate transmission of status messages after settlement Liquidity transfers between RTGS systems and using camt.050 messages Out of Scope Liquidity transfers between accounts Additional services (e.g. mapping of mobile numbers to IBANs) 19 / 25

20 Compliant with SCT Inst Scheme 1 Instructs 3 Forwards instruction Originator Participant / Instructing Party 6 Service confirms Service validates and 2 makes reservation 5 Service settles 4 Accepts instruction 7 Service confirms Beneficiary Participant / Instructing Party 1. receives an instant payments instruction 2. validates and reserves the amount (conditional settlement) 3. forwards the instruction for acceptance to the beneficiary participant or the party acting on its behalf 4. receives a positive confirmation 5. settles the payment 6. confirms the settlement to the originator participant or the party acting on its behalf 7. confirms the settlement to the beneficiary participant or the party acting on its behalf 20 / 25

21 Liquidity Management D-1 TARGET2 Business day D D+1 18:45 19:00 19:30 22:00 01:00 07:00 18:00 END OF DAY / START OF DAY NIGHT TIME PHASE 1 TECHNICAL MAINTENANCE NIGHT TIME PHASE 2 DAY TRADE PHASE END OF DAY / START OF DAY Transfers between TARGET2 and Only during operating hours TARGET2 no sweep at end of day; balances remain on account same value date as TARGET2 21 / 25

22 Outbound liquidity transfers (1/2) 22 / 25

23 Outbound liquidity transfers (2/2) 23 / 25

24 Inbound liquidity transfer 24 / 25

25 Liquidity management Balance account remains overnight No sweep back to TARGET2 at end-of-day account balances counted in minimum reserve computations Snapshot at closing TARGET2 Minimum reserve TARGET2 end of day balance balance at the time of TARGET2 end of day 25 / 25

26 Interfaces A2A interface Full scope U2A interface Limited number of functionalities e.g. static data Balances Critical functionalities available 24/7/365 Other functionalities only available during supporting hours 26 / 25

27 Volumetric assumptions architecture scalable to handle increasing volume Processing throughput Average of 500 incoming IP/sec Peak of up to 2,000 incoming IP/sec 1,8 millions/hour 43,2 millions/day Execution time Within 5 sec. for 99% 27 / 25

28 Non-Functional Highlights State of the art technology architecture scalable enough to support future pan-european instant payments volumes Meets timing and speed requirements of the SCT Inst scheme Operational 24/7/365, with 99.9% availability, measured on a quarterly basis Advanced disaster recovery objectives: Recovery Point Objective of zero data loss and Recovery Time Objective of 15 minutes Major failure or regional disaster Service is restored Unavailability Time Decision to restart RTO = 15 minutes 28 / 25 28

29 Eurosystem consultations User Requirements Document (URD) 9 January till 24 February Comments on requirements Market interest in a service and its expected usage 23 January till 24 February Questionnaire Documents, template for comments and questionnaire available on ECB website Answers 29 / 25

30 User requirements Document (URD) High-level description and architecture Settlement instant payments Liquidity management Management accounts and reference data Reports Queries Interfaces Other functions Non-functional requirements 30 / 25

31 User requirements Document (URD) Individual comments Via pre-formatted excel sheet URD enhanced based on comments New version March 2017 Comments will be published on internet If no objection by participant 31 / 25

32 Questionnaire Expected volumes Full cost recovery Price between 0,5 and 1 cent ( 0,005 and 0,01) Questionnaire Answers on individual basis or group level No commitment but evaluation potential market demand Answers questionnaire basis for decision to develop (June 2017) Only aggregated information will be published 32 / 25

33 Questionnaire Expected volumes Questionnaire Estimation in % of types of payment services which will be converted into instant payments By 2020 and 2023 Estimated daily average volume processed with breakdown of countries By 2020 and / 25

34 Questions? 34 / 25

35 The perspective of the banks Francis De Roeck - Global Cash Management, Head of SEPA offering, BNP Paribas Event dd month yyyy 35

36 Rubric What is? Co-existence of Payment Services Access to RTGS Services PSPs Support for Instant Payments Through Clearing PSPs Support for Instant Payments Through Instant Settlement PSPs ACHs Settlement backed by CeBM ACHs Individual Instant Payment Instructions ASI 6 TARGET2 Funding / Defunding Introduction to TARGET Instant Payments Settlement 36

37 Rubric Functional Overview Become a Participant? Participation rules same as those applied in TARGET2 You may open either one account or many accounts to service your clients You may let other parties (ACHs, technical service providers) instruct on your behalf Introduction to TARGET Instant Payments Settlement 37

38 Rubric Functional Overview Do not want to open a account? Be a Reachable Party in if you do not want to open a account You can assume the role of an Instructing Party and connect to directly You can have a contractual agreement with a Participant to use its account for settlement Participants may set limits for clients using the Credit Memorandum Balance functionality Introduction to TARGET Instant Payments Settlement 38

39 Rubric Functional Overview Credit Memorandum Balance (CMB) Limits CMBs allow Reachable Parties that do not have a cash account in, to send and receive payment instructions using a participant s account CMBs allow Participants to set maximum limits for Reachable Parties Participant Reachable Party 1 Participant Account Settlement in Central Bank money Efficient limit management without splitting of liquidity Reachable Party 2 CMB1 CMB2 Introduction to TARGET Instant Payments Settlement 39

40 Rubric Use Cases Case 1/2 Two Participants Payment Transaction Participant P1 Instructing Party IP for Participant P2 Participant P1 Account Structure ACC1 BIC-P1 Payment Transaction Originator BIC = BIC-P1 Beneficiary BIC = BIC-P2 Participant P2 Account Structure ACC2 BIC-P2 Situation: communicates with Participant P1 and Instructing Party IP on behalf of Participant P2 Both Participants use their own accounts Inference of accounts: BIC-P1 ACC1 BIC-P2 ACC2 Settlement process: 1. Debit ACC1 2. Credit ACC2 Introduction to TARGET Instant Payments Settlement 40

41 Rubric Use Cases Case 2/2 Reachable Party and Participant Payment Transaction Instructing Party IP for Reachable Party R1 Participant P1 Account Structure ACC1 BIC-P1 Payment Transaction Originator BIC = BIC-R1 Beneficiary BIC = BIC-P2 Participant P2 Participant P2 Account Structure ACC2 BIC-P2 CMB1 BIC-R1 CMB2 BIC-Rx Situation: communicates with one Instructing Party IP on behalf of the Reachable Party R1 and the Participant P2 R1 uses a CMB provided by Participant P1, P2 uses its own account Inference of accounts/cmbs: BIC-R1 CMB1 BIC-P2 ACC2 Introduction to TARGET Instant Payments Settlement 41 Settlement process: 1. Decrease CMB1 2. Debit ACC1 3. Credit ACC2

42 Rubric Reporting Reports Based on the actors needs in terms of time scope or nature of data (detailed or aggregated), several reports are available in to support business monitoring, reconciliation, as well as accounting requirements vis-à-vis the balance sheets. They contain information which is based on the data available for a specific actor according to their roles. actors subscribe to reports they want to receive from a predefined list according the roles. provides the reports only to those actors. Introduction to TARGET Instant Payments Settlement 42

43 Reporting Rubric Reports Statement of Account Turnover shall generate reports on the current account turnover for all accounts a Participant or an Instructing Party on behalf of a Participant is responsible for. Statement of Accounts IPS shall generate a Statement of Accounts report which includes information on all accounts a Participant or an Instructing Party on behalf of a Participant is responsible for. General Ledger IPS shall provide the RTGS with one General Ledger for each Central Bank after the end of the RTGS business day. Introduction to TARGET Instant Payments Settlement 43

44 Rubric Reporting Raw Data provides to actors a different set of raw data in order to fulfil their reconciliation and regulatory needs. shall also provide daily raw data to support archiving, billing and statistics Queries Queries allow actors to monitor and get information about, e.g. cash balances of accounts or payment transaction statuses. provides the flexibility to actors to send each query in A2A mode as well as in U2A mode. Introduction to TARGET Instant Payments Settlement 44

45 Rubric Reporting Queries Account Balance and Status Query shall provide a Participant or an Instructing Party on behalf of a Participant with the possibility to query the current balance and the status of one of their accounts. CMB Limit and Status Query shall provide a actor with the possibility to query the current limit and the status of one of their CMBs. Payment Transaction Status Query shall allow all actors to query the status of a payment transaction. Introduction to TARGET Instant Payments Settlement 45

46 Rubric Reporting Queries User to Application queries (GUI) -> URD p.72 p.73 Application to Application messages -> URD p. 74 p79 Introduction to TARGET Instant Payments Settlement 46

47 Rubric Account Value Date will work according to the calendar day and operate on a 24/7/365 basis; it will also provide reporting according to the value date in TARGET2. The value dating of instant payments on client bank accounts need to follow the rules of the payment service directive. PSD2 Article 87 Value date and availability of funds 1 Member States shall ensure that the credit value date for the payee s payment account is no later than the business day on which the amount of the payment transaction is credited to the payee s payment service provider s account.. 3. Member States shall ensure that the debit value date for the payer s payment account is no earlier than the time at which the amount of the payment transaction is debited to that payment account. Introduction to TARGET Instant Payments Settlement 47

48 Rubric Recall message Recall The service allows the transmission and answer of recalls of SCT Inst payment transactions In case an Originator Participant or Instructing Party wants to recall a payment transaction they have to send a recall message to ; this recall will then be forwarded to the Beneficiary Participant or Instructing Party without any additional processing. will validate whether the sending party is authorised to send recalls. does not check the timeframe of recalls. If a recall is rejected the negative answer will be forwarded back to the Originator In case the recall is answered positively by the Beneficiary Participant or Instructing Party creates a new payment transaction reversing the original cash flow; the used accounts or CMBs for this recall payment are derived from the BICs. A recall answer has to be provided after 10 business days after the recall has been received; however, but does not check this timeframe. Introduction to TARGET Instant Payments Settlement 48

49 Rubric Recall message Recall process Introduction to TARGET Instant Payments Settlement 49

50 Rubric Recall message Recall answer process Introduction to TARGET Instant Payments Settlement

51 Wrap up & Question Time Event dd month yyyy 51

52 Thank you for your presence! Infosession : Target Instant Payments Settlement