----

            GUIDELINE OF THE EUROPEAN CENTRAL BANK         

of 30 December 2005         

on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET)

(ECB/2005/16)

(2006/21/EC)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

Having regard to the Treaty establishing the European Community and in particular to the first and fourth indents of Article 105(2) thereof and to Articles 3.1, 12.1, 14.3, 17, 18 and 22 of the Statute of the European System of Central Banks and of the European Central Bank,

Whereas:

HAS ADOPTED THIS GUIDELINE:

Article 1

Definitions

1.   For the purposes of this Guideline:

2.   The Annexes to this Guideline may be amended from time to time by the Governing Council of the ECB. Additional documents containing, inter alia, technical provisions and specifications for TARGET may be adopted by the Governing Council of the ECB, whereby such amendments and additional documents shall enter into force as an integral part of this Guideline on the date specified by the Governing Council of the ECB, after communication to the NCBs.

Article 2

Description of TARGET

1.   The Trans-European Automated Real-time Gross settlement Express Transfer system is a real-time gross settlement system for the euro. TARGET is composed of the national RTGS systems, the ECB payment mechanism and interlinking. RTGS systems may connect to TARGET via interlinking or through a bilateral link.

2.   The RTGS systems of non-participating Member States may connect to TARGET in so far as such RTGS systems comply with the minimum common features set out in Article 3 and are able to process the euro alongside their respective national currency. Any connection to TARGET of an RTGS system of a non-participating Member State is subject to an agreement whereby the national central banks concerned agree to adhere to the rules and procedures for TARGET referred to in this Guideline (with specifications and modifications, where appropriate, as referred to in such an agreement).

Article 3

Minimum common features of national RTGS systems

Each NCB shall ensure that its respective national RTGS system complies with the features set out below.

(a)   Access criteria

(b)   Currency unit

All cross-border payments shall be in euro.

(c)   Pricing rules

(d)   Time of operation

(e)   Payment rules

(f)   Intraday credit

Article 4

Arrangements for cross-border payments effected via interlinking

The provisions of this Article shall apply to the arrangements for cross-border payments effected or to be effected via interlinking.

(a)   Description of interlinking

The ECB and each of the NCBs shall operate an interlinking component to enable the processing of cross-border payments within TARGET. Such interlinking components shall comply with the technical provisions and specifications available on the ECB's website (www.ecb.int) and updated from time to time.

(b)   Opening and operation of inter-NCB accounts held at the NCBs and the ECB

(c)   Obligations of the sending NCB/ECB

(d)   Obligations of the receiving NCB/ECB

(e)   Transfer of responsibility for payment orders

Responsibility for the execution of a payment order shall pass to the receiving NCB/ECB upon receipt by the sending NCB/ECB of a positive acknowledgement from the receiving NCB/ECB.

(f)   Regime for errors

(g)   Relation to network service provider

Article 4a

Arrangements for cross-border payments effected through a service-providing NCB

The provisions of this Article shall apply to the arrangements for cross-border payments effected or to be effected through a bilateral link.

(a)   Description of the connection

When effecting a cross-border payment through a bilateral link:

(b)   Opening and operation of an account for the connected NCB

(c)   Obligations and liabilities of the service-providing NCB and the connected NCB

(d)   Regime for errors

The regime specified in Article 4(f) shall apply to connected NCBs.

(e)   Relation to the network service provider

The connected NCB shall be connected or have an entry point to the network service provider. It shall be the connected NCB's responsibility to claim compensation from the network service provider if the connected NCB suffers loss as a result of a breach of such rules and the connected NCB shall submit any claim directly to the network service provider.

(f)   Information to participants

All NCBs shall inform participants in their RTGS systems that a positive acknowledgement issued by a service-providing NCB in relation to cross-border payments to participants in a connected NCB's RTGS system certifies the crediting of the connected NCB's account with the service-providing NCB but does not certify the crediting of a receiving participant's account with the connected NCB. To the extent necessary, the NCBs shall amend their national RTGS rules accordingly.

Article 5

Security provisions

Each NCB shall comply with, and shall ensure that its respective national RTGS system complies with, the provisions of the security policy and security requirements and controls for TARGET. The ECB shall also ensure the same for the ECB payment mechanism.

Article 6

Audit rules

The internal auditors of the ECB and the NCBs shall assess compliance with the functional, technical and organisational features, including security provisions, as specified for the relevant TARGET components and arrangements referred to in this Guideline.

Article 7

Management of TARGET

1.   The direction, management and control of TARGET shall fall within the competence of the Governing Council of the ECB. The Governing Council may determine the terms and conditions under which cross-border payment systems other than the national RTGS systems may use the cross-border facilities of TARGET or be connected to TARGET.

2.   The Governing Council of the ECB shall be assisted by the Payment and Settlement Systems Committee (PSSC) and its sub-group composed of NCB representatives of the national RTGS systems, the TARGET Management Working Group (TMWG), in all matters relating to the TARGET system.

3.   The daily management of TARGET shall be entrusted to the ECB TARGET Coordinator and to the NCB Settlement Managers:

Article 8

TARGET Compensation Scheme

1.   General principles

2.   Conditions for compensation

3.   Calculation of compensation

4.   Procedural rules

Article 9

Force majeure

There shall be no liability on the part of the NCBs/ECB for non-compliance with this Guideline to the extent that, and for so long as, there is an inability to perform the obligations in question under the Guideline, or such obligations are subject to suspension or delay, owing to the occurrence of any event arising from any reason or cause beyond reasonable control (including, but not limited to, equipment failure or malfunction, acts of God, natural disasters, strikes or labour disputes), provided that the above shall not prejudice the responsibility to have in place the back-up facilities required by this Guideline, to carry out the error-handling procedures, referred to in Articles 4(f) and 4a(d), as far as possible despite the force majeure event, and to use all reasonable efforts to mitigate the effects of any such event while it is taking place.

Article 10

Resolution of operational or technical disputes

Without prejudice to the rights and prerogatives of the Governing Council of the ECB, any operational or technical disputes arising between NCBs or between any NCB and the ECB in connection with TARGET which cannot be settled by agreement between the parties involved in the dispute shall be notified to the Governing Council of the ECB and referred for conciliation to the PSSC.

Article 10a

Applicable law

In the event of any dispute arising between NCBs or between any NCB and the ECB in connection with TARGET, the respective rights and obligations to one another in relation to payment orders processed through TARGET and all other matters referred to in this Guideline shall be determined: (i) by the rules and procedures laid down in this Guideline; and (ii) as a supplementary source in disputes concerning cross-border payments via interlinking, by the law of the Member State where the seat of the receiving NCB/ECB is located.

Article 11

Final provisions

1.   This Guideline is addressed to the NCBs.

2.   Guideline ECB/2001/3 is hereby repealed and references to Guideline ECB/2001/3 shall be construed as references to this Guideline.

3.   This Guideline shall enter into force on 2 January 2006. It shall apply from 16 March 2006.

Done at Frankfurt am Main, 30 December 2005.

For the Governing Council of the ECB

The President of the ECB

Jean-Claude TRICHET            

----

(1)OJ L 140 24.5.2001, p. 72. Guideline as last amended by Guideline ECB/2005/1 (OJ L 30, 3.2.2005, p. 21).

(2)OJ L 1, 3.1.1994, p. 3.

(3)OJ L 332, 31.12.1993, p. 1.

(4)OJ L 145, 30.4.2004, p. 1.

(5)OJ L 126, 26.5.2000, p. 1. Directive as last amended by Directive 2005/1/EC (OJ L 79, 24.3.2005, p. 9).

----

ANNEX I

NATIONAL RTGS SYSTEMS

----

ANNEX II

DOMESTIC PAYMENT FEES

The price of domestic RTGS transfers in euro will continue to be determined at the national level, with reference to the principles of cost recovery, transparency and non-discrimination and taking into account the fact that the price for domestic and cross-border transfers in euro should be broadly in the same range so as not to affect the singleness of the money market.

National RTGS systems shall disclose their fee structure to the ECB, to all other participating NCBs, to participants in national RTGS systems, and to other interested parties.

Methodologies to determine the costs of national RTGS systems will be harmonised to an adequate level.

----

ANNEX III

CROSS-BORDER PAYMENT FEES

The fee (excluding VAT) to be charged for cross-border payments through TARGET between direct participants will be based on the number of transactions sent by a participant within a single RTGS system, according to a degressive scale.

The degressive scale is as follows:

For the purpose of the application of the degressive tariff, the payment volume to be considered is the number of transactions entered into by a same legal entity within a single RTGS system or the payment transactions entered by different entities for execution through the same settlement account.

The application of the above tariff scheme will be reviewed from time to time.

Fees are charged only by the sending NCB/ECB to the sending participants in the national RTGS system/ECB payment mechanism (EPM). No fees are charged by the receiving NCB/ECB to the receiving participant. There will be no charge for inter-NCB transfers, i.e. where the sending NCB/ECB is acting on its own behalf.

Fees will cover the queuing of the payment instruction (if applicable), the debiting of the sender, the crediting of the inter-NCB account of the receiving NCB/ECB on the books of the sending NCB/ECB, the sending of the payment settlement message request (PSMR) via the Interlinking network, the debiting of the inter-NCB account of the sending NCB/ECB on the books of the receiving NCB/ECB, the crediting of the RTGS participant, the sending of the payment settlement message notification (PSMN) via the interlinking network, the communication of the payment message to the RTGS participant/receiver and confirmation of settlement (if applicable).

The cross-border TARGET fee structure does not cover the costs of the telecommunications link between the sender and the national RTGS system in which the sender is a participant. The fee for this telecommunications link will continue to be paid according to the domestic rules.

National RTGS systems may not charge any fee for the conversion of transfer orders from national currency units into euro units or vice versa.

RTGS systems may charge extra fees for additional services they may provide (e.g. the entering of paper-based payment instructions).

The possibility of applying different fees according to the time of execution of the payment instructions will be considered on the basis of experience gained during the operation of the system.

----

ANNEX IV

TARGET HOURS OF OPERATION

TARGET and, therefore, NCBs and national RTGS systems participating in or connected to TARGET applies the following rules with respect to the time of operation.

1.   

The reference time for TARGET is ‘European Central Bank time’, defined as the local time at the seat of the ECB.

2.   

TARGET will have common operating hours from 07.00 to 18.00.

3.   
Early opening, before 07.00, may take place after prior notification has been sent to the ECB:

4.   

A cut-off time for customer payments (both domestic and cross-border (1) of one hour before the normal TARGET closing time will apply; the remaining time will be used only for interbank payments (both domestic and cross-border (2) to transfer liquidity between participants. Customer payments are defined as payment messages in the MT100 format, or equivalent national message format (which would use the MT100 format for cross-border transmission). The implementation of the 17.00 cut-off time for domestic payments is to be decided by each NCB in cooperation with its banking community. In addition, NCBs may continue to process domestic customer payments that were in a queue at 17.00.

----

(1)  The cut-off time for cross-border customer payments sent from a participant in a connected NCB's RTGS system via a service-providing NCB is 16.52:30.

(2)  The cut-off time for cross-border inter-bank payments sent from a participant in a connected NCB's RTGS system via a service-providing NCB is 17.52:30.

----