Status Update of Change Requests from the CSG s Task Force (TF) on Insolvency Proceedings

Transcription

1 Status Update of Change Requests from the CSG s Task Force (TF) on Insolvency Proceedings CRG meeting on 10 March 2016 T2S Programme Office European Central Bank 1

2 Background The CSG in the meeting on 10 December 2015 decided to send the three CRs from the Task Force on Insolvency Procedures to the CRG. The CRG immediately started the work on these CRs in their meeting on 15 December 2015 The aim of this presentation is to provide an update of the work these three CRs to the CSG 2

3 CSG TF s views on the CRs and their urgency 3 CRs were raised by the Task Force on Insolvency procedures: The Change Request T2S-0558-URD aims at implementing a tool, which can be quickly activated in the event of the insolvency of a DCA holder and which would result in the rejection of any new instructions (i.e. prevent them entering the system). The majority of the Task Force members consider that, without its implementation, they would not be in a position to confirm their satisfaction with the tools and procedures related to insolvency of participants, which would prevent the Collaborative Agreement from entering into force. 1 The Change Request T2S-0559-URD aims at preventing the successful matching of instructions when they have entered the system before the operator becomes aware of the insolvency but are not yet matched by then. The members of the Task Force do not view the implementation of this change as an absolute necessity before the entry into force of the Collective Agreement. However they consider that it is an operational risk, which should be covered in the longer run. 1 The Change Request T2S-0560-SYS aims at making the SF1 and SF2 time stamps (i.e. time of validation and time of matching) easily and automatically retrievable for the system operators. Different means are proposed for fulfilling this requirement and are reflected in the draft change request. Some members of the Task Force consider this change request as a pre-requisite for the entry into force of the Collaborative Agreement. 1 1 These are the excerpts from the letter from the CSG Task Force on Insolvency Procedures dated 29 October

4 Current Status Change Request T2S-0558-URD (Enhance functionality to prevent acceptance (i.e. reaching SF1) of new settlement instructions based on the DCA holder) Current status of the CR: Under detailed assessment The CRG identified the Change Request as a potential candidate for Release 1.2. Change Request T2S-0559-URD (Prevention of matching (moment of irrevocability) SF2 in case of insolvency of a CSD Participant or a DCA holder) Current status of the CR: On hold The CRG identified the Change Request as a potential candidate for Release 2.0 Change Request T2S-0560-SYS (T2S query/reporting functionality must be enhanced to allow the retrieval of the settlement instructions impacted by insolvency and their related SF1 (accepted) /SF2 (matched) timestamps in an efficient and standard way) Current status of the CR: On hold The CRG identified the Change Request as a potential candidate for Release 1.3 4

5 Change Request T2S-0558-URD T2S-0558-URD (Enhance functionality to prevent acceptance (i.e. reaching SF1) of new settlement instructions based on the DCA holder) The solution involves configuration of new restriction type at account (SAC and DCA) level for rejection of settlement instructions debiting account of insolvent party. The solution also requires a system parameter related to Insolvency flag needs to be activated by T2S Operator upon CSD/NCB s request The CRG agreed to inform the CSG on following i. a possible enhancement of the solution for an automatic flagging of the system parameter related to Insolvency flag ii. CSD may not be the only entity who will send instructions on behalf of the liquidator, at least in one market a CCP may also need to send instructions on behalf of the liquidator iii. the CR could also facilitate CSDs to manage the insolvency of indirect parties In addition to CR-558, a new Change Request T2S-0593-URD ((Prevent acceptance (i.e. reaching SF1) of new settlement instructions at the level of a T2S Party) is raised possibly for Release 1.3 to allow configuring rejection of settlement instruction at Party level 5

6 Change Request T2S-0559-URD Change Requests T2S-0559-URD (Prevention of matching (moment of irrevocability) SF2 in case of insolvency of a CSD Participant or a DCA holder) The Change Request aim to cover a business scenario where a settlement instruction is received after the opening of insolvency proceedings, and is unmatched by the time the CSD/CB system operator is made aware. This business scenario could be taken care of by bilaterally cancelling the instruction which got matched after the moment when the CSD/NCB is made aware of the insolvency 6

7 Change Request T2S-0560-SYS Change Requests T2S-0560-SYS (T2S query/reporting functionality must be enhanced to allow the retrieval of the settlement instructions impacted by insolvency and their related SF1 (accepted) /SF2 (matched) timestamps in an efficient and standard way) The solution involves new U2A query to provide SF1 and SF2 timestamps of settlement instructions because some CSDs do not use real time reporting A2A channel. This solution is not perfect but a tactical solution which brings value irrespective of the adaptation model of CSDs. The real time reporting in A2A solution would require an ISO change to follow message standardisation. The CRG members wanted to avoid a "dirty solution" without ISO change, and then thereafter "throw away" the change to implement a solution based on the ISO change. A new Change Request T2S-0600-SYS has been raised to include SF1 and SF2 timestamps in the sese.024 message (assuming an ISO change) as a longer term solution. The CRG noted that this CR may also become relevant in the context of CSDR requirements. 7

8 Thank you for your attention 8