2007O0002 — EN — 22.11.2010 — 003.001

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

►B GUIDELINE OF THE EUROPEAN CENTRAL BANK of 26 April 2007 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2) (ECB/2007/2) (2007/600/EC) (OJ L 237, 8.9.2007, p.1)

Amended by:









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GUIDELINE OF THE EUROPEAN CENTRAL BANK

of 26 April 2007

on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2)

(ECB/2007/2)

(2007/600/EC)







THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK, Having regard to the Treaty establishing the European Community, and in particular the first and fourth indents of Article 105(2) thereof, Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 3.1 and Articles 17, 18 and 22 thereof, Whereas: (1) The existing Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET) has a decentralised structure linking together national real-time gross settlement (RTGS) systems and the ECB Payment Mechanism (EPM). Guideline ECB/2005/16 of 30 December 2005 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET) ( 1 ) is the main legal instrument governing TARGET. (2) From 19 November 2007 onwards, TARGET will be replaced by TARGET2, characterised by a single technical platform called the Single Shared Platform (SSP). Although TARGET2 will, like TARGET, be legally structured as a multiplicity of payment systems, the Governing Council has decided that the rules of the TARGET2 component systems will be harmonised to the greatest extent possible, with certain derogations in the event of national law constraints. (3) There are three separate levels of governance for both the establishment and the operational phases of TARGET2. Level 1 (Governing Council) has final competence in relation to TARGET2 and safeguards its public function. Level 2 (Eurosystem CBs) has subsidiary competence for TARGET2, while Level 3 (SSP-providing CBs) builds and operates the SSP for the Eurosystem's benefit. (4) Acting on the Eurosystem's behalf, the European Central Bank (ECB) will enter into a Framework Agreement, as well as a Confidentiality and Non-Disclosure Agreement, with the network service provider designated by the Governing Council, which stipulates the main elements relating to network provision to the participants, including pricing. (5) As was the case with TARGET, the establishment of TARGET2 is essential for the performance of certain basic Eurosystem tasks, i.e. implementing the Community's monetary policy and promoting the smooth operation of payment systems. (6) Migration from the national RTGS systems to the SSP will take place in stages and Guideline ECB/2005/16 will therefore continue to apply to such systems until the relevant central banks have migrated to the SSP. In order to cater for compensation claims if there is a technical malfunction before the end of migration to the SSP, it is necessary to make some minor amendments to Guideline ECB/2005/16, Whereas: HAS ADOPTED THIS GUIDELINE:







SECTION I

GENERAL PROVISIONS

Article 1

Subject matter and scope

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1. TARGET2 provides real-time gross settlement for payments in euro, with settlement in central bank money. It is established and functions on the basis of the SSP, through which all payment orders are submitted and processed and through which payments are ultimately received in the same technical manner.

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2. TARGET2 is legally structured as a multiplicity of RTGS systems.

Article 2

Definitions

For the purposes of this Guideline:

— ‘SSP-providing CBs’ means the Deutsche Bundesbank, the Banque de France and the Banca d'Italia in their capacity as the NCBs building and operating the SSP for the Eurosystem's benefit,

— ‘Single Shared Platform (SSP)’ means the single technical platform infrastructure provided by the SSP-providing CBs,

— ‘TARGET2 component system’ means any of the Eurosystem CBs’ RTGS systems that form part of TARGET2,

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— ‘participating NCB’ means the national central bank (NCB) of a Member State whose currency is the euro,

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— ‘Eurosystem’ means the ECB and the participating NCBs,

— ‘Eurosystem CB’ means the ECB or a participating NCB,

— ‘network service provider’ means the provider of computerised network connections for the purpose of submitting payment messages in TARGET2,

— ‘participant’ (or ‘direct participant’) means an entity that holds at least one PM account with a Eurosystem CB,

— ‘Payments Module (PM)’ means an SSP module in which payments of TARGET2 participants are settled on PM accounts,

— ‘PM account’ means an account held by a TARGET2 participant in the PM with a Eurosystem CB which is necessary for such TARGET2 participant to: — (a) submit payment orders or receive payments via TARGET2; and (b) settle such payments with such Eurosystem CB,

— ‘non-participating Member State’ means a Member State that has not adopted the euro,

— ‘connected CB’ means an NCB, other than a participating NCB, which is connected to TARGET2 pursuant to a specific agreement,

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— ‘Business Identifier Code (BIC)’ means a code as defined by ISO Standard No 9362,

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— ‘indirect participant’ means a credit institution established in the European Economic Area (EEA), which has entered into an agreement with a direct participant to submit payment orders and receive payments via such direct participant's PM account, and which has been recognised by a TARGET2 component system as an indirect participant,

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— ‘addressable BIC holder’ means an entity which: (a) holds a Business Identifier Code (BIC); (b) is not recognised as an indirect participant; and (c) is a correspondent or customer of a direct participant or a branch of a direct or indirect participant, and is able to submit payment orders to and receive payments from a TARGET2 component system via the direct participant,

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— ‘business day’ means any day on which TARGET2 is open for the settlement of payment orders, as set out in Appendix V of Annex II,

— ‘intraday credit’ means credit extended for a period of less than one business day,

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— ‘ancillary system (AS)’ means a system managed by an entity established in the EEA that is subject to supervision and/or oversight by a competent authority and complies with the oversight requirements for the location of infrastructures offering services in euro, as amended from time to time and published on the ECB website ( 2 ), in which payments and/or financial instruments are exchanged and/or cleared while the resulting monetary obligations are settled in TARGET2 in accordance with this Guideline and a bilateral arrangement between the ancillary system and the relevant Eurosystem CB,

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— ‘transition period’ means, in respect of each Eurosystem CB, the period of four years starting from the moment the Eurosystem CB migrates to the SSP,

— ‘Home Account’ means an account opened outside the PM by a participating NCB for an entity that is eligible to become an indirect participant,

— ‘Ancillary System Interface (ASI)’ means the technical device allowing an AS to use a range of special, predefined services for the submission and settlement of AS payment instructions; it may also be used by a participating NCB for the settlement of cash operations resulting from cash deposits and withdrawals,

— ‘Participant Interface (PI)’ means the technical device allowing direct participants to submit and settle payment orders via the services offered in the PM,

— ‘core TARGET2 services’ means the processing of payment orders in TARGET2 component systems, the settlement of ancillary system-related transactions, and liquidity pooling features,

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— ‘Internet-based access’ means that the participant has opted for a PM account that can only be accessed via the Internet and the participant submits payment messages or control messages to TARGET2 by means of the Internet,

— ‘certification authorities’ means one or more NCBs designated as such by the Governing Council to act on behalf of the Eurosystem to issue, manage, revoke and renew electronic certificates,

— ‘electronic certificates’ or ‘certificates’ means an electronic file, issued by the certification authorities, that binds a public key with an identity and which is used for the following: to verify that a public key belongs to an individual, to authenticate the holder, to check a signature from this individual or to encrypt a message addressed to this individual. Certificates are held on a physical device such as a smart card or USB stick, and references to certificates include such physical devices. The certificates are instrumental in the authentication process of the participants accessing TARGET2 through the Internet and submitting payment messages or control messages,

— ‘certificate holder’ means a named, individual person, identified and designated by a TARGET2 participant as authorised to have Internet-based access to the participant’s TARGET2 account. Their application for certificates will have been verified by the participant’s home NCB and transmitted to the certification authorities, which will in turn have delivered certificates binding the public key with the credentials that identify the participant,

— ‘Harmonised Conditions’ means the conditions that are laid down in Annexes II and V,

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Article 3

TARGET2 component systems

1. Each Eurosystem CB shall operate its own TARGET2 component system.

2. Each TARGET2 component system shall be a system designated as such under the relevant national legislation implementing Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems ( 3 ).

3. The names of the TARGET2 component systems shall only include ‘TARGET2’ and the name or abbreviation of the relevant Eurosystem CB or of the Member State of such Eurosystem CB. The ECB's TARGET2 component system shall be called TARGET2-ECB.

Article 4

Connection of NCBs of non-participating Member States

The NCBs of non-participating Member States may only connect to TARGET2 if they conclude an agreement with the Eurosystem CBs. Such agreement shall specify that the connected CBs will comply with this Guideline, subject to any mutually agreed appropriate specifications and modifications.







SECTION II

GOVERNANCE

Article 5

Governance levels

1. Without prejudice to Article 8 of the Statute, the management of TARGET2 shall be based on a three-level governance scheme. The tasks assigned to the Governing Council (Level 1), the Eurosystem CBs (Level 2) and the SSP-providing CBs (Level 3) are laid down in Annex I.

2. The Governing Council shall be responsible for the direction, management and control of TARGET2. The tasks assigned to Level 1 fall within the exclusive competence of the Governing Council. The ESCB's Payment and Settlement Systems Committee (PSSC) shall assist the Governing Council as an advisory body in all matters relating to TARGET2.

3. In accordance with the third paragraph of Article 12.1 of the Statute, the Eurosystem CBs shall be responsible for the tasks assigned to Level 2, within the general framework defined by the Governing Council. In addition to its advisory role, the PSSC shall conduct the execution of the tasks assigned to Level 2. The connected CBs shall participate without voting rights on Level 2-related issues. Member States’ NCBs that are neither Eurosystem CBs nor connected CBs shall have observer status only at Level 2.

4. The Eurosystem CBs organise themselves through the conclusion of appropriate agreements. Within the context of such agreements, decision-making shall be based on a simple majority, and each Eurosystem CB shall have one vote.

5. In accordance with the third paragraph of Article 12.1 of the Statute, the SSP-providing CBs shall be responsible for the tasks assigned to Level 3, within the general framework defined by the Governing Council.

6. The SSP-providing CBs shall conclude an agreement with the Eurosystem CBs governing the services to be provided by the former to the latter. Such agreement shall also include, where appropriate, the connected CBs.







SECTION III

OPERATION OF TARGET2

Article 6

Harmonised Conditions for participation in TARGET2

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1. Each participating NCB shall adopt arrangements implementing the Harmonised Conditions for participation in TARGET2 that are laid down in Annex II, and the Supplemental and Modified Harmonised Conditions for participation in TARGET2 using Internet-based access that are laid down in Annex V. These arrangements shall exclusively govern the relationship between the relevant participating NCB and its participants in respect of the processing of payments in the PM. A PM account can be accessed using either Internet-based access or via the network service provider. These two methods of accessing a PM account shall be mutually exclusive, although a participant may choose to have one or more PM accounts, each of which will be accessible by either the Internet or the network service provider.

2. The ECB shall adopt the terms and conditions of TARGET2-ECB by implementing Annex II except that TARGET2-ECB shall only provide services to clearing and settlement organisations, including entities established outside the EEA, provided that they are subject to oversight by a competent authority and their access to TARGET2-ECB has been approved by the Governing Council.

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3. The arrangements adopted by the Eurosystem CBs implementing the Harmonised Conditions shall be made public.

4. The Eurosystem CBs may request derogations from the Harmonised Conditions on the basis of national law constraints. The Governing Council shall consider such requests on a case-by-case basis and shall grant derogations where appropriate.

5. Subject to the relevant monetary agreement, the ECB may determine appropriate conditions for participation in TARGET2 of entities referred to in Article 4(2)(e) of Annex II.

6. The Eurosystem CBs shall not allow any entity to be an indirect participant or to be registered as an addressable BIC holder in their TARGET2 component system if this entity acts via a direct participant that is an NCB of an EU Member State but is neither a Eurosystem CB nor a connected CB.

Article 7

Intraday credit

1. The participating NCBs may grant intraday credit, provided that this is done in accordance with the arrangements implementing the rules on the provision of intraday credit laid down in Annex III.

2. The eligibility criteria for intraday credit of ECB counterparties are defined in Decision ECB/2003/NP2 of 28 January 2003 amending Decision ECB/1999/NP3 on the European Central Bank Payment Mechanism. Intraday credit granted by the ECB shall remain limited to the day in question with no possibility of an extension to overnight credit.

Article 8

Ancillary systems

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1. The Eurosystem CBs shall provide fund transfer services in central bank money to ancillary systems in the PM accessed through the network service provider or, during the transition period and if applicable, on Home Accounts. Such services shall be governed by bilateral arrangements between the Eurosystem CBs and the respective ancillary systems.

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2. Bilateral arrangements with ancillary systems that use the ASI shall be in conformity with Annex IV. In addition, the Eurosystem CBs shall ensure that in such bilateral arrangements the following provisions of Annex II apply mutatis mutandis:

— Article 8(1) (technical and legal requirements),

— Article 8(2) to (5) (application procedure), except that instead of being required to meet the access criteria in Article 4 the ancillary system shall be required to meet the access criteria in the definition of ‘ancillary system’ set out in Article 1 of Annex II,

— the operating schedule in Appendix V,

— Article 11 (requirements for cooperation and information exchange), except paragraph 8,

— Articles 27 and 28 (business continuity and contingency procedures and security requirements),

— Article 31 (liability regime),

— Article 32 (evidence rules),

— Articles 33 and 34 (duration, termination and suspension of participation), except Article 34(1)(b),

— Article 35, where relevant (closure of PM accounts),

— Article 38 (confidentiality rules),

— Article 39 (requirements for data protection, prevention of money laundering and related issues),

— Article 40 (requirements for notices),

— Article 41 (contractual relationship with the network service provider), and

— Article 44 (rules for governing law, jurisdiction and place of performance).

3. Bilateral arrangements with ancillary systems that use the PI shall be in conformity with:

(a) Annex II, with the exception of Title V and Appendices VI and VII; and

(b) Article 18 of Annex IV.

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4. By derogation from paragraph 3, bilateral arrangements with ancillary systems that use the PI, but only settle payments for the benefit of their customers, shall be in conformity with:

(a) Annex II, with the exception of Title V, Article 36 and Appendices VI and VII; and

(b) Article 18 of Annex IV.

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Article 9

Cost methodology

1. The Governing Council shall determine the rules applicable to the financing of the SSP. Any surplus or deficit resulting from the functioning of the SSP shall be distributed among the participating NCBs in accordance with the key for subscription to the ECB's capital, pursuant to Article 29 of the Statute.

2. The Governing Council shall determine a common cost methodology and pricing structure for core TARGET2 services.

Article 10

Security provisions

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1. The Governing Council shall specify the security policy and security requirements and controls for the SSP and, during the transition period, for the Home Account technical infrastructure. The Governing Council shall also specify the principles applicable to the security of certificates used for Internet-based access.

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2. The Eurosystem CBs shall comply with, and shall ensure that the SSP complies with, the measures referred to in paragraph 1.

Article 11

Audit rules

Audit assessments shall be performed in accordance with the principles and arrangements set out in the Governing Council's ESCB Audit Policy.







SECTION IV

TRANSITIONAL AND FINAL PROVISIONS

Article 12

Dispute resolution and applicable law

1. In the event of a dispute between Eurosystem CBs in relation to this Guideline, the affected parties shall seek to settle the dispute in accordance with the Memorandum of Understanding on an Intra-ESCB Dispute Settlement Procedure.

2. By derogation from paragraph 1, if a dispute relating to the division of the tasks between Level 2 and Level 3 cannot be settled by agreement between the affected parties, the Governing Council shall resolve the dispute.

3. In the event of a dispute of the type referred to in paragraph 1, the parties’ respective rights and obligations shall primarily be determined by the rules and procedures laid down in this Guideline. In disputes concerning payments between TARGET2 component systems, the law of the Member State where the seat of the Eurosystem CB of the payee is located shall apply in a supplementary manner, provided that it does not conflict with this Guideline.

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Article 14

Entry into force and application

1. This Guideline shall enter into force on 30 April 2007, subject to the transitional provisions laid down in Article 15.

2. Without prejudice to Article 15, Guidelines ECB/2005/16 and ECB/2006/11 shall be repealed with effect from 15 September 2008.

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Article 15

Miscellaneous and transitional provisions

1. Accounts opened outside the PM by a participating NCB for credit institutions and ancillary systems shall be governed by the rules of such participating NCB, subject to the provisions of this Guideline which relate to Home Accounts and other decisions of the Governing Council. Accounts opened outside the PM by a participating NCB for entities other than credit institutions and ancillary systems shall be governed by the rules of such participating NCB.

2. During its transition period, each Eurosystem CB may continue to settle payments and other transactions on its Home Accounts, including the following:

(a) payments between credit institutions;

(b) payments between credit institutions and ancillary systems; and

(c) payments in relation to Eurosystem open market operations.

3. On expiry of the transition period, the following shall cease:

(a) registration as an addressable BIC holder by a Eurosystem CB, in the case of entities referred to in Article 4(1)(a) and (b) of Annex II;

(b) indirect participation with a Eurosystem CB; and

(c) settlement on Home Accounts of all payments mentioned in paragraph 2(a) to (c).

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Article 16

Addressees, implementing measures and annual reports

1. This Guideline applies to all Eurosystem CBs.

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2. The participating NCBs shall by 31 July 2007 or respectively a date to be specified by the Governing Council send to the ECB the measures by which they intend to comply with this Guideline.

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3. The ECB shall prepare annual reports for review by the Governing Council on the overall functioning of TARGET2.









ANNEX I

TARGET2 GOVERNANCE ARRANGEMENTS







Level 1 — Governing Council Level 2 — Eurosystem CBs Level 3 — SSP-providing CBs 0. General provisions Level 1 has final competence in relation to domestic and cross-border TARGET2 issues and is responsible for safeguarding the public function of TARGET2 Level 2 has subsidiary competence in relation to issues left to its discretion by Level 1 Level 3 takes decisions on the daily running of the Single Shared Platform (SSP) on the basis of the service levels defined in the agreement referred to in Article 5(6) of this Guideline 1. Cost and pricing policy — Deciding on common cost methodology — Deciding on single price structure — Deciding on pricing of additional services and/or modules (Not applicable) 2. Service level — Deciding on core services — Deciding on additional services and/or modules — Delivering input according to Level 1/Level 2 needs 3. Risk management — Deciding on the general framework for risk management and acceptance of remaining risks — Conducting the actual risk management — Conducting risk analysis and follow-up — Providing the necessary information for risk analysis according to Level 1/Level 2 requests 4. Governance and financing — Defining rules for ownership, decision-making and financing of the SSP — Establishing and ensuring adequate implementation of the ESCB's legal framework for TARGET2 — Drawing up the rules on governance and financing decided at Level 1 — Drawing up the budget, its approval and implementation — Having ownership and/or control of the application — Collecting funds and remuneration of services — Providing cost figures to Level 2 for the service provision 5. Development — Being consulted by Level 2 on the location of the SSP — Approving the overall project plan — Deciding on the initial design and development of the SSP — Deciding on establishing from scratch against establishing on the basis of an existing platform — Deciding on the choice of the SSP operator — Establishing — in agreement with Level 3 — the service levels of the SSP — Deciding on the location of the SSP after consultation of Level 1 — Proposing the initial design of the SSP — Proposing whether to establish from scratch or establish on the basis of an existing platform — Proposing the location of the SSP — Drafting the general and the detailed functional specifications (internal detailed functional specifications and user detailed functional specifications) — Approving the specification process methodology and the ‘deliverables’ of Level 3 deemed appropriate in order to specify and, later on, test and accept the product (in particular general and detailed user specifications) — Establishing a milestone project plan — Evaluating and accepting the deliverables — Establishing test scenarios — Central banks' and users' test coordination, in close cooperation with Level 3 — Drafting the detailed technical specifications — Providing (initial and ongoing) input for milestone project planning and control — Technical and operational support for tests (performing tests on the SSP, input on SSP-related test scenarios, supporting Eurosystem CBs in their SSP test activities) 6. Implementation and migration — Deciding on the migration strategy — Preparing and coordinating migration to the SSP, in close cooperation with Level 3 — Providing input on migration issues in accordance with Level 2 requests — Performing SSP-related migration work; additional support for joining NCBs ▼M3 7. Operation — Managing severe crisis situations — Authorising establishment and operation of TARGET2 Simulator — Appointing certification authorities for Internet-based access — Specifying security policies, requirements and controls for the SSP — Specifying principles applicable to security of certificates used for Internet-based access — Management with regard to system-owner responsibilities — Maintaining contacts with users at European level (subject to the sole responsibility of Eurosystem CBs for the business relationship with their customers) and monitoring daily user activity from a business perspective (Eurosystem CB task) — Monitoring business developments — Budgeting, financing, invoicing (Eurosystem CB task) and other administrative tasks — Managing the system on the basis of the agreement referred to in Article 5(6) of this Guideline ▼B









ANNEX II

HARMONISED CONDITIONS FOR PART ICIPATION IN TARGET2

TITLE I

GENERAL PROVISIONS

Article 1

Definitions

For the purposes of these Harmonised Conditions (hereinafter the ‘Conditions’), the following definitions apply:

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— ‘addressable BIC holder’ means an entity which: (a) holds a Business Identifier Code (BIC); (b) is not recognised as an indirect participant; and (c) is a correspondent or customer of a direct participant or a branch of a direct or indirect participant, and is able to submit payment orders to and receive payments from a TARGET2 component system via the direct participant,

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— ‘AL agreement’ means the multilateral aggregated liquidity agreement entered into by the AL group members and their respective AL NCBs, for the purposes of the AL mode,

— ‘AL group’ means a group composed of AL group members that use the AL mode,

— ‘AL group manager’ means an AL group member appointed by the other AL group members to manage available liquidity within the AL group during the business day,

— ‘AL group member’ means a TARGET2 participant which has entered into an AL agreement,

— ‘AL mode’ means the aggregation of available liquidity on PM accounts,

— ‘AL NCB’ means a participating NCB that is party to an AL agreement and acts as the counterparty for the AL group members which participate in its TARGET2 component system,

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— ‘ancillary system (AS)’ means a system managed by an entity established in the European Economic Area (EEA) that is subject to supervision and/or oversight by a competent authority and complies with the oversight requirements for the location of infrastructures offering services in euro, as amended from time to time and published on the ECB website ( 4 ), in which payments and/or financial instruments are exchanged and/or cleared while the resulting monetary obligations are settled in TARGET2 in accordance with Guideline ECB/2007/2 and a bilateral arrangement between the ancillary system and the relevant CB,

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— ‘available liquidity’ (or ‘liquidity’) means a credit balance on a TARGET2 participant's PM account and, if applicable, any intraday credit line granted by the relevant CB in relation to such account,

— ‘Banking Directive’ means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) ( 5 ),

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— ‘Business Identifier Code (BIC)’ means a code as defined by ISO Standard No 9362,

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— ‘branch’ means a branch within the meaning of [insert national law provisions implementing Article 4(3) of the Banking Directive],

— ‘business day’ means any day on which TARGET2 is open for the settlement of payment orders, as set out in Appendix V,

— ‘CAI group’ means a group composed of TARGET2 participants that use the CAI mode,

— ‘CAI group manager’ means a CAI group member appointed by the other members of the CAI group to monitor and distribute the available liquidity within the CAI group during the business day,

— ‘CAI mode’ means the provision of consolidated account information in relation to PM accounts via the ICM,

— ‘capacity opinion’ means a participant-specific opinion that contains an assessment of a participant's legal capacity to enter into and carry out its obligations under these Conditions,

— ‘central banks (CBs)’ means the Eurosystem CBs and the connected CBs,

— ‘connected CB’ means a national central bank (NCB), other than a Eurosystem CB, which is connected to TARGET2 pursuant to a specific agreement,

— ‘Contingency Module’ means the SSP module enabling the processing of critical and very critical payments in contingency situations,

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— ‘credit institution’ means either: (a) a credit institution within the meaning of [insert national law provisions implementing Article 4(1)(a) and, if relevant, Article 2 of the Banking Directive] that is subject to supervision by a competent authority; or (b) another credit institution within the meaning of Article 123(2) of the Treaty on the Functioning of the European Union that is subject to scrutiny of a standard comparable to supervision by a competent authority,

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— ‘credit transfer order’ means an instruction by a payer to make funds available to a payee by means of a book entry on a PM account,

— ‘direct debit authorisation’ means a general instruction by a payer to its CB entitling and obliging that CB to debit the payer's account upon a direct debit instruction from a payee,

— ‘direct debit instruction’ means an instruction from a payee submitted to its CB pursuant to which the CB of the payer debits the payer's account by the amount specified in the instruction, on the basis of a direct debit authorisation,

— ‘enforcement event’ means, with regard to an AL group member: — (a) any event of default referred to in Article 34(1); (b) any other event of default or event referred to in Article 34(2) in relation to which the [insert name of CB] has decided, taking into account the seriousness of the event of default or event, [Insert if applicable: [a pledge should be enforced in accordance with Article 25b] [collateral should be enforced in accordance with Article 25c] and] a set-off of claims should be triggered in accordance with Article 26; or (c) any decision to suspend or terminate access to intraday credit;

— ‘entry disposition’ means a payment processing phase during which TARGET2-[insert CB/country reference] attempts to settle a payment order which has been accepted pursuant to Article 14, by means of specific procedures, as described in Article 20,

— ‘Eurosystem CB’ means the ECB or the NCB of a Member State that has adopted the euro,

— ‘event of default’ means any impending or existing event, the occurrence of which may threaten the performance by a participant of its obligations under these Conditions or any other rules applying to the relationship between that participant and the [insert name of CB] or any other CB, including: — (a) where the participant no longer meets the access criteria laid down in Article 4 or the requirements laid down in Article 8(1)(a)(i); (b) the opening of insolvency proceedings in relation to the participant; (c) the submission of an application relating to the proceedings referred to in subparagraph (b); (d) the issue by the participant of a written declaration of its inability to pay all or any part of its debts or to meet its obligations arising in relation to intraday credit; (e) the entry of the participant into a voluntary general agreement or arrangement with its creditors; (f) where the participant is, or is deemed by its CB to be, insolvent or unable to pay its debts; (g) where the participant's credit balance on its PM account or all or a substantial part of the participant's assets are subject to a freezing order, attachment, seizure or any other procedure that is intended to protect the public interest or the rights of the participant's creditors; (h) where participation of the participant in another TARGET2 component system and/or in an ancillary system has been suspended or terminated; (i) where any material representation or pre-contractual statement made by the participant or which is implied to have been made by the participant under the applicable law is incorrect or untrue; or (j) the assignment of all or a substantial part of the participant's assets,

— ‘group’ means: — (a) a composition of credit institutions included in the consolidated financial statements of a parent company where the parent company is obliged to present consolidated financial statements under International Accounting Standard 27 (IAS 27), adopted pursuant to Commission Regulation (EC) No 2238/2004 ( 6 ) and consisting of either: (i) a parent company and one or more subsidiaries; or (ii) two or more subsidiaries of a parent company; or (b) a composition of credit institutions as referred to in subparagraphs (a)(i) or (ii), where a parent company does not present consolidated financial statements in accordance with IAS 27, but may be able to satisfy the criteria defined in IAS 27 for inclusion in consolidated financial statements, subject to the verification of the CB of the direct participant or, in the case of an AL group, the managing NCB; or (c) a bilateral or multilateral network of credit institutions that is: (i) organised through a statutory framework determining the affiliation of credit institutions to such a network; or (ii) characterised by self-organised mechanisms of cooperation (promoting, supporting and representing the business interests of its members) and/or economic solidarity going beyond the ordinary cooperation usual between credit institutions whereby such cooperation and solidarity are permitted by credit institutions' by-laws or articles of incorporation or established by virtue of separate agreements; and in each case referred to in (c) the ECB's Governing Council has approved an application to be considered as constituting a group,

— ‘Home Account’ means an account opened outside the PM by a CB for an entity that is eligible to become an indirect participant,

— ‘Information and Control Module (ICM)’ means the SSP module that allows participants to obtain on-line information and gives them the possibility to submit liquidity transfer orders, manage liquidity and initiate backup payment orders in contingency situations,

— ‘ICM broadcast message’ means information made simultaneously available to all or a selected group of TARGET2 participants via the ICM,

— ‘indirect participant’ means a credit institution established in the EEA, which has entered into an agreement with a direct participant to submit payment orders and receive payments via such direct participant's PM account, and which has been recognised by a TARGET2 component system as an indirect participant,

— ‘insolvency proceedings’ means insolvency proceedings within the meaning of Article 2(j) of the Settlement Finality Directive,

— ‘instructing participant’ means a TARGET2 participant that has initiated a payment order,

— ‘intraday credit’ means credit extended for a period of less than one business day,

— ‘investment firm’ means an investment firm within the meaning of [insert national law provisions implementing Article 4(1)(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC ( 7 ) ], excluding the institutions specified in [insert national law provisions implementing Article 2(1) of Directive 2004/39/EC], provided that the investment firm in question is: — (a) authorised and supervised by a recognised competent authority, which has been designated as such under Directive 2004/39/EC; and (b) entitled to carry out the activities referred to under [insert national law provisions implementing items 2, 3, 6 and 7 of Section A of Annex I to Directive 2004/39/EC],

— ‘liquidity transfer order’ means a payment order, the main purpose of which is to transfer liquidity between different accounts of the same participant or within a CAI or AL group,

— ‘managing NCB’ means the AL NCB of the TARGET2 component system in which the AL group manager participates,

— ‘marginal lending facility’ means a Eurosystem standing facility which counterparties may use to receive overnight credit from a Eurosystem CB at the pre-specified marginal lending rate,

— ‘marginal lending rate’ means the interest rate applicable to the marginal lending facility,

— ‘multi-addressee access’ means the facility by which branches or credit institutions established in the EEA can access the relevant TARGET2 component system by submitting payment orders and/or receiving payments directly to and from the TARGET2 component system; this facility authorises these entities to submit their payment orders through the direct participant's PM account without that participant's involvement,

— ‘network service provider’ means the undertaking appointed by the ECB's Governing Council to provide computerised network connections for the purpose of submitting payment messages in TARGET2,

— ‘non-settled payment order’ means a payment order that is not settled on the same business day as that on which it is accepted,

— ‘participant’ (or ‘direct participant’) means an entity that holds at least one PM account with the [insert name of CB],

— ‘payee’ means a TARGET2 participant whose PM account will be credited as a result of a payment order being settled,

— ‘payer’ means a TARGET2 participant whose PM account will be debited as a result of a payment order being settled,

— ‘payment order’ means a credit transfer order, a liquidity transfer order or a direct debit instruction,

— ‘Payments Module (PM)’ means an SSP module in which payments of TARGET2 participants are settled on PM accounts,

— ‘PM account’ means an account held by a TARGET2 participant in the PM with a CB which is necessary for such TARGET2 participant to: — (a) submit payment orders or receive payments via TARGET2; and (b) settle such payments with such CB,

▼M3

— ‘public sector body’ means an entity within the ‘public sector’, the latter term as defined in Article 3 of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty ( 8 )

▼B

— ‘Settlement Finality Directive’ means Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems ( 9 ),

— ‘Single Shared Platform (SSP)’ means the single technical platform infrastructure provided by the SSP-providing CBs,

— ‘SSP-providing CBs’ means the Deutsche Bundesbank, the Banque de France and the Banca d'Italia in their capacity as the CBs building and operating the SSP for the Eurosystem's benefit,

— ‘static data collection form’ means a form developed by [insert name of CB] for the purpose of registering applicants for TARGET2-[insert CB/country reference] services and registering any changes in relation to the provision of such services,

— ‘suspension’ means the temporary freezing of the rights and obligations of a participant for a period of time to be determined by the [insert name of CB],

— ‘TARGET2-[insert CB/country reference]’ means the TARGET2 component system of [insert CB name],

— ‘TARGET2’ means the entirety resulting from all TARGET2 component systems of the CBs,

— ‘TARGET2 component system’ means any of the CBs' real-time gross settlement (RTGS) systems that form part of TARGET2,

— ‘TARGET2 CUG’ means a subset of the network service provider's customers grouped for the purpose of their use of the relevant services and products of the network service provider when accessing the PM,

— ‘TARGET2 participant’ means any participant in any TARGET2 component system,

▼M2

— ‘technical malfunction of TARGET2’ means any difficulty, defect or failure in the technical infrastructure and/or the computer systems used by TARGET2-[insert CB/country reference], or any other event that makes it impossible to execute and complete the same-day processing of payments in TARGET2-[insert CB/country reference],

▼M3

— ‘User Detailed Functional Specifications (UDFS)’ means the most up-to-date version of the UDFS, which is the technical documentation that details how a participant interacts with TARGET2.

▼B

Article 2

Appendices

1. The following Appendices form an integral part of these Conditions:

Appendix I: Technical specifications for the processing of payment orders

Appendix II: TARGET2 compensation scheme

Appendix III: Terms of reference for capacity and country opinions

Appendix IV: Business continuity and contingency procedures

Appendix V: Operating schedule

Appendix VI: Fee schedule and invoicing

Appendix VII: Aggregated liquidity agreement

2. In the event of any conflict or inconsistency between the content of any appendix and the content of any other provision in these Conditions, the latter shall prevail.

Article 3

General description of TARGET2-[insert CB/country reference] and TARGET2

1. TARGET2 provides real-time gross settlement for payments in euro, with settlement in central bank money.

2. The following payment orders are processed in TARGET2-[insert CB/country reference]:

(a) payment orders directly resulting from or made in connection with Eurosystem monetary policy operations;

(b) settlement of the euro leg of foreign exchange operations involving the Eurosystem;

(c) settlement of euro transfers resulting from transactions in cross-border large-value netting systems;

(d) settlement of euro transfers resulting from transactions in euro retail payment systems of systemic importance; and

(e) any other payment orders in euro addressed to TARGET2 participants.

3. TARGET2 is established and functions on the basis of the SSP. The Eurosystem specifies the SSP's technical configuration and features. The SSP services are provided by the SSP-providing CBs for the benefit of the Eurosystem CBs, pursuant to separate agreements.

4. The [insert name of CB] is the provider of services under these Conditions. Acts and omissions of the SSP-providing CBs shall be considered acts and omissions of [insert name of CB], for which it shall assume liability in accordance with Article 31 below. Participation pursuant to these Conditions shall not create a contractual relationship between participants and the SSP-providing CBs when the latter act in that capacity. Instructions, messages or information which a participant receives from, or sends to, the SSP in relation to the services provided under these Conditions are deemed to be received from, or sent to, [insert name of CB].

5. TARGET2 is legally structured as a multiplicity of payment systems composed of all the TARGET2 component systems, which are designated as ‘systems’ under the national laws implementing the Settlement Finality Directive. TARGET2-[insert CB/country reference] is designated as a ‘system’ under [insert the relevant legal provision implementing the Settlement Finality Directive].

6. Participation in TARGET2 takes effect via participation in a TARGET2 component system. These Conditions describe the mutual rights and obligations of participants in TARGET2-[insert CB/country reference] and the [insert name of CB]. The rules on the processing of payment orders (Title IV) refer to all payment orders submitted or payments received by any TARGET2 participant.

TITLE II

PARTICIPATION

Article 4

Access criteria

▼M3

1. The following types of entities are eligible for direct participation in TARGET2-[insert CB/country reference]:

(a) credit institutions established in the EEA, including when they act through a branch established in the EEA;

(b) credit institutions established outside the EEA, provided that they act through a branch established in the EEA; and

(c) NCBs of EU Member States and the ECB;

provided that the entities referred to in subparagraphs (a) and (b) are not subject to restrictive measures adopted by the Council of the European Union or Member States pursuant to Article 65(1)(b), Article 75 or Article 215 of the Treaty on the Functioning of the European Union, the implementation of which, in the view of [CB/country reference] after informing the ECB, is incompatible with the smooth functioning of TARGET2.

▼B

2. The [insert name of the CB] may, at its discretion, also admit the following entities as direct participants:

(a) treasury departments of central or regional governments of Member States active in the money markets;

(b) public sector bodies of Member States authorised to hold accounts for customers;

(c) investment firms established in the EEA;

▼M2

(d) entities managing ancillary systems and acting in that capacity; and

▼B

(e) credit institutions or any of the entities of the types listed under subparagraphs (a) to (d), in both cases where these are established in a country with which the ►M3 Union ◄ has entered into a monetary agreement allowing access by any of such entities to payment systems in the ►M3 Union ◄ , subject to the conditions set out in the monetary agreement and provided that the relevant legal regime applying in the country is equivalent to the relevant ►M3 Union ◄ legislation.

3. Electronic money institutions, within the meaning of [insert national law provisions implementing Article 1(3)(a) of Directive 2000/46/EC of the European Parliament and of the Council of 18 September 2000 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions ( 10 )], are not entitled to participate in TARGET2-[insert CB/country reference].

Article 5

Direct participants

1. Direct participants in TARGET2-[insert CB/country reference] shall comply with the requirements set out in Article 8(1) and (2). They shall have at least one PM account with the [insert name of CB].

2. Direct participants may designate addressable BIC holders, regardless of their place of establishment.

3. Direct participants may designate entities as indirect participants, provided that the conditions laid down in Article 6 are met.

4. Multi-addressee access through branches may be provided as follows:

(a) A credit institution within the meaning of Article 4(1)(a) or (b), which has been admitted as a direct participant, may grant access to its PM account to one or more of its branches established in the EEA in order to submit payment orders and/or receive payments directly, provided that [insert name of the CB] has been informed accordingly.

(b) Where a branch of a credit institution has been admitted as a direct participant, the other branches of the same legal entity and/or its head office, in both cases provided that they are established in the EEA, may access the branch's PM account, provided that it has informed the [insert name of CB].

Article 6

Indirect participants

1. Credit institutions established in the EEA may each enter into a contract with one direct participant that is either a credit institution within the meaning of Article 4(1)(a) or (b), or a CB, in order to submit payment orders and/or receive payments, and to settle them via the PM account of that direct participant. TARGET2-[insert CB/country reference] shall recognise indirect participants by registering such indirect participation in the TARGET2 directory, the latter as described in Article 9.

2. Where a direct participant, which is a credit institution within the meaning of Article 4(1)(a) or (b), and an indirect participant belong to the same group, the direct participant may expressly authorise the indirect participant to use the direct participant's PM account directly to submit payment orders and/or receive payments by way of group-related multi-addressee access.

Article 7

Direct participant's responsibility

1. For the avoidance of doubt, payment orders submitted or payments received by indirect participants pursuant to Article 6, and by branches under Article 5(4), shall be deemed to have been submitted or received by the direct participant itself.

2. The direct participant shall be bound by such payment orders, regardless of the content of, or any non-compliance with, the contractual or other arrangements between that participant and any of the entities referred to in paragraph 1.

Article 8

Application procedure

1. To join TARGET2-[insert CB/country reference], applicant participants shall:

(a) fulfil the following technical requirements: (i) install, manage, operate and monitor and ensure the security of the necessary IT infrastructure to connect to TARGET2-[insert CB/country reference] and submit payment orders to it. In doing so, applicant participants may involve third parties, but retain sole liability. In particular, applicant participants shall enter into an agreement with the network service provider to obtain the necessary connection and admissions, in accordance with the technical specifications in Appendix I; and (ii) have passed the tests required by the [insert name of CB]; and

(b) fulfil the following legal requirements: (i) provide a capacity opinion in the form specified in Appendix III, unless the information and representations to be provided in such capacity opinion have already been obtained by the [insert name of CB] in another context; and (ii) for the entities referred to in Article 4(1)(b), provide a country opinion in the form specified in Appendix III, unless the information and representations to be provided in such country opinion have already been obtained by the [insert name of CB] in another context.

2. Applicants shall apply in writing to the [insert name of CB], as a minimum enclosing the following documents/information:

(a) completed static data collection forms as provided by [insert name of CB],

(b) the capacity opinion, if required by the [insert name of CB], and

(c) the country opinion, if required by the [insert name of CB].

3. The [insert name of CB] may also request any additional information it deems necessary to decide on the application to participate.

4. The [insert name of CB] shall reject the application to participate if:

(a) access criteria referred to in Article 4 are not met;

(b) one or more of the participation criteria referred to in paragraph 1 are not met; and/or

(c) in the [insert name of CB]'s assessment, such participation would endanger the overall stability, soundness and safety of TARGET2-[insert CB/country reference] or of any other TARGET2 component system, or would jeopardise the [insert name of CB]'s performance of its tasks as described in [refer to relevant national law] and the Statute of the European System of Central Banks and of the European Central Bank.

5. The [insert name of CB] shall communicate its decision on the application to participate to the applicant within one month of the [insert name of CB]'s receipt of the application to participate. Where the [insert name of CB] requests additional information pursuant to paragraph 3, the decision shall be communicated within one month of the [insert name of CB]'s receipt of this information from the applicant. Any rejection decision shall contain reasons for the rejection.

Article 9

TARGET2 directory

1. The TARGET2 directory is the database of BICs used for the routing of payment orders addressed to:

(a) TARGET2 participants and their branches with multi-addressee access;

(b) indirect participants of TARGET2, including those with multi-addressee access; and

(c) addressable BIC holders of TARGET2.

It shall be updated weekly.

▼M2

2. Unless otherwise requested by the participant, its BIC(s) shall be published in the TARGET2 directory.

▼B

3. Participants may only distribute the TARGET2 directory to their branches and entities with multi-addressee access.

4. Entities specified in paragraph 1(b) and (c) shall only use their BIC in relation to one direct participant.

▼M2

5. Participants acknowledge that the [insert name of CB] and other CBs may publish participants’ names and BICs. In addition, names and BICs of indirect participants registered by participants may be published and participants shall ensure that indirect participants have agreed to such publication.

▼B

TITLE III

OBLIGATIONS OF THE PARTIES

Article 10

Obligations of the [insert name of CB] and the participants

1. The [insert name of CB] shall offer the services described in Title IV. Save where otherwise provided in these Conditions or required by law, the [insert name of CB] shall use all reasonable means within its power to perform its obligations under these Conditions, without guaranteeing a result.

2. Participants shall pay to the [insert name of CB] the fees laid down in Appendix VI.

3. Participants shall ensure that they are connected to TARGET2-[insert CB/country reference] on business days, in accordance with the operating schedule in Appendix V.

4. The participant represents and warrants to the [insert name of CB] that the performance of its obligations under these Conditions does not breach any law, regulation or by-law applicable to it or any agreement by which it is bound.

Article 11

Cooperation and information exchange

1. In performing their obligations and exercising their rights under these Conditions, the [insert name of CB] and participants shall cooperate closely to ensure the stability, soundness and safety of TARGET2-[insert CB/country reference]. They shall provide each other with any information or documents relevant for the performance of their respective obligations and the exercise of their respective rights under these Conditions, without prejudice to any banking secrecy obligations.

2. The [insert name of CB] shall establish and maintain a system support desk to assist participants in relation to difficulties arising in connection with system operations.

3. Up-to-date information on the SSP's operational status shall be available on the TARGET2 Information System (T2IS). The T2IS may be used to obtain information on any event affecting the normal operation of TARGET2.

4. The [insert name of CB] may either communicate messages to participants by means of an ICM broadcast or by any other means of communication.

5. Participants are responsible for the timely update of existing static data collection forms and the submission of new static data collection forms to the [insert name of CB]. Participants are responsible for verifying the accuracy of information relating to them that is entered into TARGET2-[insert CB/country reference] by the [insert name of CB].

6. The [insert name of CB] shall be deemed to be authorised to communicate to the SSP-providing CBs any information relating to participants which the SSP-providing CBs may need in their role as service administrators, in accordance with the contract entered into with the network service provider.

7. Participants shall inform the [insert name of CB] about any change in their legal capacity and relevant legislative changes affecting issues covered by the country opinion relating to them.

8. Participants shall inform the [insert name of CB] of:

(a) any new indirect participant, addressable BIC holder or entity with multi-addressee access which they register; and

(b) any changes to the entities listed in paragraph (a).

9. Participants shall immediately inform the [insert name of CB] if an event of default occurs in relation to them.

TITLE IV

MANAGEMENT OF PM ACCOUNTS AND PROCESSING OF PAYMENT ORDERS

Article 12

Opening and management of PM accounts

▼M2

1. The [insert name of CB] shall open and operate at least one PM account for each participant. Upon request by a participant acting as a settlement bank, the [insert name of CB] shall open one or more sub-accounts in TARGET2-[insert CB/country reference] to be used for dedicating liquidity.

▼B

2. [Insert if applicable: No debit balance shall be allowed on PM accounts].

3. [Insert if applicable: At the beginning and end of a business day, there shall be a zero balance on the PM accounts. Participants shall be deemed to have instructed the [insert name of CB] to transfer any balance at the end of a business day to the account designated by the participant].

4. [Insert if applicable: At the beginning of the next business day such balance shall be retransferred to the participant's PM account].

5. PM accounts and their sub-accounts shall be interest free, unless they are used to hold minimum reserves. In such a case, the calculation and payment of the remuneration of holdings of minimum reserves shall be governed by Council Regulation (EC) No 2531/98 of 23 November 1998 concerning the application of minimum reserves by the European Central Bank ( 11 ) and Regulation ECB/2003/9 of 12 September 2003 on the application of minimum reserves ( 12 ).

6. In addition to the settlement of payment orders in the Payments Module, a PM account may be used to settle payment orders to and from Home Accounts, according to the rules laid down by the [insert name of CB].

7. Participants shall use the ICM to obtain information on their liquidity position. The [insert name of CB] shall provide a daily statement of accounts to any participant that has opted for such service.

Article 13

Types of payment orders

The following are classified as payment orders for the purposes of TARGET2:

(a) credit transfer orders;

(b) direct debit instructions carried out under a direct debit authorisation; and

(c) liquidity transfer orders.

Article 14

Acceptance and rejection of payment orders

1. Payment orders submitted by participants are deemed accepted by the [insert name of CB] if:

(a) the payment message complies with the rules established by the network service provider;

(b) the payment message complies with the formatting rules and conditions of TARGET2-[insert CB/country reference] and passes the double-entry check described in Appendix I; and

(c) in cases where a payer or a payee has been suspended, the suspended participant's CB's explicit consent has been obtained.

2. The [insert name of CB] shall immediately reject any payment order that does not fulfil the conditions laid down in paragraph 1. The [insert name of CB] shall inform the participant of any rejection of a payment order, as specified in Appendix I.

▼M2

3. The SSP determines the timestamp for the processing of payment orders on the basis of the time when it receives and accepts the payment order.

▼M2

Article 15

Priority rules

1. Instructing participants shall designate every payment order as one of the following:

(a) normal payment order (priority class 2);

(b) urgent payment order (priority class 1); or

(c) highly urgent payment order (priority class 0).

If a payment order does not indicate the priority, it shall be treated as a normal payment order.

2. Highly urgent payment orders may only be designated by:

(a) CBs; and

(b) participants, in cases of payments to and from CLS International Bank and liquidity transfers in relation to ancillary system settlement using the Ancillary System Interface.

All payment instructions submitted by an ancillary system through the Ancillary System Interface to debit or credit the participants’ PM accounts shall be deemed to be highly urgent payment orders.

3. Liquidity transfer orders initiated via the ICM are urgent payment orders.

4. In the case of urgent and normal payment orders, the payer may change the priority via the ICM with immediate effect. It shall not be possible to change the priority of a highly urgent payment order.

▼B

Article 16

Liquidity limits

1. A participant may limit the use of available liquidity for payment orders in relation to other TARGET2 participants, except any of the CBs, by setting bilateral or multilateral limits. Such limits may only be set in relation to normal payment orders.

2. Limits may only be set by or in relation to an AL group in its entirety. Limits shall not be set in relation to either a single PM account of an AL group member or by AL group members in relation to each other.

3. By setting a bilateral limit, a participant instructs the [insert name of CB] that an accepted payment order shall not be settled if the sum of its outgoing normal payment orders to another TARGET2 participant's PM account minus the sum of all incoming urgent and normal payments from such TARGET2 participant's PM account would exceed this bilateral limit.

4. A participant may set a multilateral limit for any relationship that is not subject to a bilateral limit. A multilateral limit may only be set if the participant has set at least one bilateral limit. If a participant sets a multilateral limit, it instructs the [insert name of CB] that an accepted payment order shall not be settled if the sum of its outgoing normal payment orders to all TARGET2 participants' PM accounts in relation to which no bilateral limit has been set, minus the sum of all incoming urgent and normal payments from such PM accounts would exceed this multilateral limit.

5. The minimum amount of any of the limits shall be EUR 1 million. A bilateral or a multilateral limit with an amount of zero shall be treated as if no limit has been set. Limits between zero and EUR 1 million are not possible.

6. Limits may be changed in real time with immediate effect or with effect from the next business day via the ICM. If a limit is changed to zero, it shall not be possible to change it again on the same business day. The setting of a new bilateral or multilateral limit shall only be effective from the next business day.

Article 17

Liquidity reservation facilities

1. Participants may reserve liquidity for highly urgent or urgent payment orders via the ICM.

2. The AL group manager may only reserve liquidity for the AL group in its entirety. Liquidity shall not be reserved for single accounts within an AL group.

3. By requesting to reserve a certain amount of liquidity for highly urgent payment orders, a participant instructs the [insert name of CB] only to settle urgent and normal payment orders if there is available liquidity after the amount reserved for highly urgent payment orders has been deducted.

4. By requesting to reserve a certain amount of liquidity for urgent payment orders, a participant instructs the [insert name of CB] only to settle normal payment orders if there is available liquidity after the amount reserved for urgent and highly urgent payment orders has been deducted.

▼M2

5. After receipt of the reservation request the [insert name of CB] shall check whether the amount of liquidity on the participant’s PM account is sufficient for the reservation. If this is not the case, only the liquidity available on the PM account shall be reserved. The rest of the requested liquidity shall be reserved if additional liquidity becomes available.

▼B

6. The level of the liquidity reservation may be changed. Participants may make a request via the ICM to reserve new amounts with immediate effect or with effect from the next business day.

▼M2

Article 17a

Standing instructions for liquidity reservation and dedication of liquidity

1. Participants may predefine the default amount of liquidity reserved for highly urgent or urgent payment orders via the ICM. Such standing instruction or a change to such instruction shall take effect from the next business day.

2. Participants may predefine via the ICM the default amount of liquidity set aside for ancillary system settlement. Such standing instruction or a change to such instruction shall take effect from the next business day. Participants shall be deemed to have instructed the [insert name of CB] to dedicate liquidity on their behalf if the relevant ancillary system so requests.

▼B

Article 18

Predetermined settlement times

1. Instructing participants may predetermine the settlement time of the payment orders within a business day by using the Earliest Debit Time Indicator or the Latest Debit Time Indicator.

2. When the Earliest Debit Time Indicator is used, the accepted payment order is stored and only entered into the entry disposition at the indicated time.

3. When the Latest Debit Time Indicator is used, the accepted payment order shall be returned as non-settled if it cannot be settled by the indicated debit time. 15 minutes prior to the defined debit time, the instructing participant shall be sent an automatic notification via the ICM. Instructing participant may also use the Latest Debit Time Indicator solely as a warning indicator. In such cases, the payment order concerned shall not be returned.

4. Instructing participants can change the Earliest Debit Time Indicator and the Latest Debit Time Indicator via the ICM.

5. Further technical details are contained in Appendix I.

Article 19

Payment orders submitted in advance

1. Payment orders may be submitted up to five business days before the specified settlement date (warehoused payment orders).

2. Warehoused payment orders shall be accepted and entered into the entry disposition on the date specified by the instructing participant at the start of daytime processing, as referred to in Appendix V. They shall be placed in front of payment orders of the same priority.

3. Articles 15(3), 22(2) and 29(1)(a) shall apply mutatis mutandis to warehoused payment orders.

Article 20

Settlement of payment orders in the entry disposition

1. Unless instructing participants have indicated the settlement time in the manner described in Article 18, accepted payment orders shall be settled immediately or at the latest by the end of the business day on which they were accepted, provided that sufficient funds are available on the payer's PM account and taking into account any liquidity limits and liquidity reservations as referred to in Articles 16 and 17.

2. Funding may be provided by:

(a) the available liquidity on the PM account; or

(b) incoming payments from other TARGET2 participants, subject to the applicable optimisation procedures.

3. For highly urgent payment orders the ‘first in, first out’ (FIFO) principle shall apply. This means that highly urgent payment orders shall be settled in chronological order. Urgent and normal payment orders shall not be settled for as long as highly urgent payment orders are queued.

4. For urgent payment orders the FIFO principle shall also apply. Normal payment orders shall not be settled if urgent and highly urgent payment orders are queued.

5. By derogation from paragraphs 3 and 4, payment orders with a lower priority (or of the same priority but accepted later) may be settled before payment orders with a higher priority (or of the same priority which were accepted earlier), if the payment orders with a lower priority would net out with payments to be received and result on balance in a liquidity increase for the payer.

6. Normal payment orders shall be settled in accordance with the FIFO by-passing principle. This means that they may be settled immediately (independently of other queued normal payments accepted at an earlier time) and may therefore breach the FIFO principle, provided that sufficient funds are available.

7. Further details on the settlement of payment orders in the entry disposition are contained in Appendix I.

▼M2

Article 21

Settlement and return of queued payment orders

1. Payment orders that are not settled immediately in the entry disposition shall be placed in the queues in accordance with the priority to which they were designated by the relevant participant, as referred to in Article 15.

2. To optimise the settlement of queued payment orders, the [insert name of CB] may use the optimisation procedures described in Appendix I.

3. Except for highly urgent payment orders, the payer may change the queue position of payment orders in a queue (i.e. reorder them) via the ICM. Payment orders may be moved either to the front or to the end of the respective queue with immediate effect at any time during daytime processing, as referred to in Appendix V.

4. At the request of a payer, the [insert name of CB] or, in the case of an AL group, the CB of the AL group manager may decide to change the queue position of a highly urgent payment order (except for highly urgent payment orders in the context of settlement procedures 5 and 6) provided that this change would not affect the smooth settlement by ancillary systems in TARGET2 or would not otherwise give rise to systemic risk.

5. Liquidity transfer orders initiated in the ICM shall be immediately returned as non-settled if there is insufficient liquidity. Other payment orders shall be returned as non-settled if they cannot be settled by the cut-off times for the relevant message type, as specified in Appendix V.

▼B

Article 22

Entry of payment orders into the system and their irrevocability

1. For the purposes of the first sentence of Article 3(1) of the Settlement Finality Directive and [insert national law provisions implementing this Article of the Settlement Finality Directive], payment orders are deemed entered into TARGET2-[insert CB/country reference] at the moment that the relevant participant's PM account is debited.

2. Payment orders may be revoked until they are entered into TARGET2-[insert CB/country reference] in accordance with paragraph 1. Payment orders that are included in an algorithm, as referred to in Appendix I, may not be revoked during the period that the algorithm is running.

TITLE V

LIQUIDITY POOLING

Article 23

Liquidity pooling modes

The [insert name of CB] shall offer a consolidated account information (CAI) mode and an aggregated liquidity (AL) mode.

Article 24

Consolidated account information mode

1. The following may use the CAI mode:

(a) a credit institution and/or its branches (whether or not such entities participate in the same TARGET2 component system), provided that the entities concerned have several PM accounts identified by different BICs; or

(b) two or more credit institutions which belong to the same group and/or their branches, each having one or more PM accounts identified by different BICs.

2

(a) Under the CAI mode, each member of the CAI group and their respective CBs are provided with the list of PM accounts of the group members and the following additional information consolidated at the level of the CAI group: (i) intraday credit lines (if applicable); (ii) balances, including balances on sub-accounts; (iii) turnover; (iv) settled payments; and (v) queued payment orders.

(b) The CAI group manager and its respective CB shall have access to information on each of the above items in relation to any PM account of the CAI group.

(c) Information referred to in this paragraph is provided via the ICM.

3. The CAI group manager shall be entitled to initiate liquidity transfers via the ICM between the PM accounts, including their sub-accounts, forming part of the same CAI group.

4. A CAI group may also include PM accounts which are included in an AL group. In such a case, all the PM accounts of the AL group shall form part of the CAI group.

5. Where two or more PM accounts form part of an AL group and, at the same time, of a CAI group (comprising additional PM accounts), the rules applicable to the AL group shall prevail as to the relationship within the AL group.

6. A CAI group, which includes PM accounts of an AL group, may appoint a CAI group manager that is different from the AL group manager.

▼M2

7. The procedure for obtaining authorisation to use the AL mode, set out in Article 25(4) and (5), shall apply mutatis mutandis to the procedure for obtaining authorisation to use the CAI mode. The CAI group manager shall not address an executed CAI mode agreement to the managing NCB.

▼B

Article 25

Aggregated liquidity mode

1. The following may use the AL mode:

(a) a credit institution and/or its branches (whether or not such entities participate in the same TARGET2 component system), provided that the entities concerned are established in the euro area and have several PM accounts identified by different BICs;

(b) branches established in the euro area (whether or not such branches participate in the same TARGET2 component system) of a credit institution established outside the euro area, provided that such branches have several PM accounts identified by different BICs; or

(c) two or more credit institutions referred to in subparagraph (a) and/or branches referred to in subparagraph (b) which belong to the same group.

In each case referred in subparagraphs (a) to (c) it shall also be a requirement that the entities concerned have established intraday credit arrangements with the respective participating NCB.

2. Under the AL mode, for the purpose of checking whether a payment order is sufficiently covered, available liquidity on all the AL group members' PM accounts is aggregated. Notwithstanding the above, the bilateral PM account relationship between the AL group member and its AL NCB shall continue to be governed by the arrangements of the relevant TARGET2 component system, subject to the modifications set out in the AL agreement. Intraday credit extended to any AL group member on its PM account may be covered by the available liquidity on the other PM accounts held by such AL group member or PM accounts held by any other AL group members with the same or any other AL NCB.

3. In order to use the AL mode, one or more TARGET2 participants meeting the criteria in paragraph 1 shall enter into an AL agreement with the [insert name of CB] and, if applicable, other CB(s) of the TARGET2 component systems in which other AL group members participate. A TARGET2 participant may only enter into one AL agreement in relation to a particular PM account. The AL agreement shall be in conformity with the relevant template in Appendix VII.

4. Each AL group shall designate an AL group manager. In the event that the AL group consists of only one participant, this participant shall act as the AL group manager. The AL group manager shall address to the managing NCB a written request to use the AL mode (containing static data collection forms as provided by [insert name of CB]), together with the executed AL agreement on the basis of the template provided by the managing NCB. The remaining AL group members shall address their written requests (containing static data collection forms as provided by [insert name of CB]) to their respective AL NCBs. The managing NCB may request any additional information or document that it deems appropriate in order to decide on the request. In addition, the managing NCB, in agreement with the other AL NCBs, may require the insertion of any additional provision in the AL agreement that it deems appropriate in order to ensure the proper and timely discharge of any existing and/or future obligation of all AL group members towards any AL NCB.

5. The managing NCB shall verify whether the applicants fulfil the requirements to form an AL group and whether the AL agreement has been properly executed. To this end, the managing NCB may liaise with the other AL NCBs. The managing NCB's decision shall be addressed, in writing, to the AL group manager within one month of receipt of the request referred to in paragraph 4 by the managing NCB, or, if the managing NCB requests additional information, within one month of receipt of such information by the managing NCB. Any rejection decision shall contain reasons for the rejection.

6. AL group members shall automatically have access to the CAI mode.

7. The provision of information and all interactive control measures within an AL group shall be accessed via the ICM.

[Insert if applicable:

Article 25a

Pledge/enforcement

1. The [insert name of CB]'s current and future claims arising from the legal relationship between an AL group member and the [insert name of CB] and which are secured by the [insert the applicable term: pledge/floating charge] under Article 36(1) and (2) of these Conditions shall include the [insert name of CB]'s claims against such AL group member arising under the AL agreement to which both are party.

2. [Insert if required under the laws of the relevant jurisdiction: Without prejudice to the AL agreement, such pledge shall not prevent the participant from using the cash deposited in its PM account(s) during the business day.]

3. [Insert if required under the laws of the relevant jurisdiction: Special allocation clause: The AL group member allocates the cash deposited in its PM account for the execution of all its obligations arising from the [insert reference to the arrangements implementing the Harmonised Conditions].]

[If applicable and if required under the laws of the relevant jurisdiction:

Article 25b

Enforcement of the pledge

Upon the occurrence of an enforcement event, the [insert name of CB] shall have an unrestricted right to realise the pledge without any prior notice. [Insert if deemed appropriate under the laws of the relevant jurisdiction: in accordance with [insert relevant national law provisions governing enforcement of the pledge].]

[If applicable and if required under the laws of the relevant jurisdiction:

Article 25c

Enforcement of collateral

Upon occurrence of the enforcement event, the [insert name of the CB] shall have the right to realise collateral under Article 36.]

Article 26

Set-off of claims under Article 36(4) and (5)

On the occurrence of an enforcement event, any claim of the [insert name of CB] against such AL group member shall be automatically and immediately accelerated and shall be subject to Article 36(4) and (5) of these Conditions.

TITLE VI

SECURITY REQUIREMENTS AND CONTINGENCY ISSUES

Article 27

Business continuity and contingency procedures

In the event of an abnormal external event or any other event which affects the operation of the SSP, the business continuity and contingency procedures described in Appendix IV shall apply.

Article 28

Security requirements

1. Participants shall implement adequate security controls to protect their systems from unauthorised access and use. Participants shall be exclusively responsible for the adequate protection of the confidentiality, integrity and availability of their systems.

2. Participants shall inform the [insert name of CB] of any security-related incidents in their technical infrastructure and, where appropriate, security-related incidents that occur in the technical infrastructure of the third party providers. The [insert name of CB] may request further information about the incident and, if necessary, request that the participant take appropriate measures to prevent a recurrence of such an event.

3. The [insert name of CB] may impose additional security requirements on all participants and/or on participants that are considered critical by the [insert name of CB].

TITLE VII

THE INFORMATION AND CONTROL MODULE

Article 29

Use of the ICM

1. The ICM:

(a) allows participants to access information relating to their accounts and to manage liquidity;

(b) may be used to initiate liquidity transfer orders; and

(c) allows participants to initiate backup lump sum and backup contingency payments in the event of a failure of the participant's payment infrastructure.

2. Further technical details relating to the ICM are contained in Appendix I.

TITLE VIII

COMPENSATION, LIABILITY REGIME AND EVIDENCE

Article 30

Compensation scheme

If a payment order cannot be settled on the same business day on which it was accepted due to a technical malfunction of TARGET2, the [insert name of CB] shall offer to compensate the direct participants concerned in accordance with the special procedure laid down in Appendix II.

Article 31

Liability regime

1. In performing their obligations pursuant to these Conditions, the [insert name of CB] and the participants shall be bound by a general duty of reasonable care in relation to each other.

2. The [insert name of CB] shall be liable to its participants in cases of fraud (including but not limited to wilful misconduct) or gross negligence, for any loss arising out of the operation of TARGET2-[insert CB/country reference]. In cases of ordinary negligence, the [insert name of CB]'s liability shall be limited to the participant's direct loss, i.e. the amount of the transaction in question and/or the loss of interest thereon, excluding any consequential loss.

3. The [insert name of CB] is not liable for any loss that results from any malfunction or failure in the technical infrastructure (including but not limited to the [insert name of CB]'s computer infrastructure, programmes, data, applications or networks), if such malfunction or failure arises in spite of the [insert name of CB] having adopted those measures that are reasonably necessary to protect such infrastructure against malfunction or failure, and to resolve the consequences of such malfunction or failure (the latter including but not limited to initiating and completing the business continuity and contingency procedures referred to in Appendix IV).

4. The [insert name of CB] shall not be liable:

(a) to the extent that the loss is caused by the participant; or

(b) if the loss arises out of external events beyond the [insert name of CB]'s reasonable control (force majeure).

5. Notwithstanding the [insert national law provisions implementing Directive 97/5/EC of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers ( 13 )], paragraphs 1 to 4 shall apply to the extent that the [insert name of CB]'s liability can be excluded.

6. The [insert name of CB] and the participants shall take all reasonable and practicable steps to mitigate any damage or loss referred to in this Article.

7. In performing some or all of its obligations under these Conditions, the [insert name of CB] may commission third parties in its own name, particularly telecommunications or other network providers or other entities, if this is necessary to meet the [insert name of CB]'s obligations or is standard market practice. The [insert name of CB]'s obligation shall be limited to the due selection and commissioning of any such third parties and the [insert name of CB]'s liability shall be limited accordingly. For the purposes of this paragraph, the SSP-providing CBs shall not be considered as third parties.

Article 32

Evidence

1. Unless otherwise provided in these Conditions, all payment and payment processing-related messages in relation to TARGET2, such as confirmations of debits or credits, or statement messages, between the [insert name of CB] and participants shall be made through the network service provider.

2. Electronic or written records of the messages retained by the [insert name of CB] or by the network service provider shall be accepted as a means of evidence of the payments processed through the [insert name of CB]. The saved or printed version of the original message of the network service provider shall be accepted as a means of evidence, regardless of the form of the original message.

3. If a participant's connection to the network service provider fails, the participant shall use the alternative means of transmission of messages laid down in Appendix IV. In such cases, the saved or printed version of the message produced by the [insert name of CB] shall have the same evidential value as the original message, regardless of its form.

▼M3

4. The [insert name of CB] shall keep complete records of payment orders submitted and payments received by participants for a period of [insert period required by relevant national law] from the time at which such payment orders are submitted and payments are received, provided that such complete records shall cover a minimum of five years for any participant in TARGET2 that is subject to continuous vigilance pursuant to restrictive measures adopted by the Council of the European Union or Member States, or more if required by specific regulations.

▼B

5. The [insert name of CB]'s own books and records (whether kept on paper, microfilm, microfiche, by electronic or magnetic recording, in any other mechanically reproducible form or otherwise) shall be accepted as a means of evidence of any obligations of the participants and of any facts and events that the parties rely on.

TITLE IX

TERMINATION OF PARTICIPATION AND CLOSURE OF ACCOUNTS

Article 33

Duration and ordinary termination of participation

1. Without prejudice to Article 34, participation in TARGET2-[insert CB/country reference] is for an indefinite period of time.

2. A participant may terminate its participation in TARGET2-[insert CB/country reference] at any time giving 14 business days' notice thereof, unless it agrees a shorter notice period with the [insert name of CB].

3. The [insert name of CB] may terminate a participant's participation in TARGET2-[insert CB/country reference] at any time giving three months' notice thereof, unless it agrees a different notice period with that participant.

4. On termination of participation, the confidentiality duties laid down in Article 38 remain in force for a period of five years starting on the date of termination.

5. On termination of participation, the PM accounts of the participant concerned shall be closed in accordance with Article 35.

Article 34

Suspension and extraordinary termination of participation

1. A participant's participation in TARGET2-[insert CB/country reference] shall be immediately terminated without prior notice or suspended if one of the following events of default occurs:

(a) the opening of insolvency proceedings; and/or

(b) the participant no longer meets the access criteria laid down in Article 4.

2. The [insert name of CB] may terminate without prior notice or suspend the participant's participation in TARGET2-[insert CB/country reference] if:

(a) one or more events of default (other than those referred to in paragraph 1) occur;

(b) the participant is in material breach of these Conditions;

(c) the participant fails to carry out any material obligation to the [insert name of CB];

(d) the participant is excluded from, or otherwise ceases to be a member of, a TARGET2 CUG; ►M3 ————— ◄

(e) any other participant-related event occurs which, in the [insert name of CB]'s assessment, would threaten the overall stability, soundness and safety of TARGET2-[insert CB/country reference] or of any other TARGET2 component system, or which would jeopardise the [insert name of CB]'s performance of its tasks as described in [refer to relevant national law] and the Statute of the European System of Central Banks and of the European Central Bank ►M3 ; and/or ◄

▼M3

(f) an NCB suspends or terminates the participant’s access to intraday credit pursuant to paragraph 12 of Annex III.

▼B

3. In exercising its discretion under paragraph 2, the [insert name of CB] shall take into account, inter alia, the seriousness of the event of default or events mentioned in subparagraphs (a) to (c).

4.

(a) In the event that the [insert name of CB] suspends or terminates a participant's participation in TARGET2-[insert CB/country reference] under paragraph 1 or 2, the [insert name of CB] shall immediately inform that participant, other CBs and the other participants of such suspension or termination by means of an ICM broadcast message.

(b) In the event that the [insert name of CB] is informed by another CB of a suspension or termination of a participant in another TARGET2 component system, the [insert name of CB] shall immediately inform its participants of such suspension or termination by means of an ICM broadcast message.

(c) Once such an ICM broadcast message has been received by the participants, the latter shall be deemed informed of the termination/suspension of a participant's participation in TARGET2-[insert CB/country reference] or another TARGET2 component system. The participants shall bear any losses arising from the submission of a payment order to participants whose participation has been suspended or terminated if such payment order was entered into TARGET2-[insert CB/country reference] after receipt of the ICM broadcast message.

5. Upon termination of a participant's participation, TARGET2-[insert CB/country reference] shall not accept any new payment orders from such participant. Payment orders in the queue, warehoused payment orders or new payment orders in favour of such participant shall be returned.

6. If a participant is suspended from TARGET2-[insert CB/country reference], all its incoming payments and outgoing payment orders shall be stored and only entered into the entry disposition after they have been explicitly accepted by the suspended participant's CB.

Article 35

Closure of PM accounts

1. Participants may close their PM accounts at any time provided they give the [insert name of CB] 14 business days' notice thereof.

2. On termination of participation, pursuant to either Article 33 or 34, the [insert name of CB] shall close the PM accounts of the participant concerned, after having:

(a) settled or returned any queued payment orders; and

(b) made use of its rights of pledge and set-off under Article 36.

TITLE X

FINAL PROVISIONS

Article 36

The [insert name of CB]'s rights of pledge and set-off

1. [Insert if applicable: The [insert name of CB] shall have a pledge over the participant's existing and future credit balances on its PM accounts, thereby collateralising any current and future claims arising out of the legal relationship between the parties.]

1a. [Insert if applicable: A participant's current and future claims towards the [insert name of the CB] arising from a credit balance on the PM account shall be transferred to the [insert name of the CB] as collateral (i.e. as a fiduciary transfer) for any current or future claim of the [insert name of the CB] towards the participant arising out of the [insert reference to the arrangement implementing these Conditions]. Such collateral shall be established by the mere fact that the funds have been credited to the participant's PM account.]

1b. [Insert if applicable: The [insert name of CB] shall have a floating charge over the participant's existing and future credit balances on their PM accounts, thereby collateralising any current and future claims arising out of the legal relationship between the parties.]

2. [Insert if applicable: The [insert name of CB] shall have the right referred to in paragraph 1 even if its claims are only contingent or not yet due.]

3. [Insert if applicable: The participant, acting in its capacity as a PM account holder, hereby acknowledges the creation of a pledge in favour of [insert name of CB], with whom that account has been opened; this acknowledgement shall constitute the provision of pledged assets to the [insert name of CB] referred to under [insert relevant national adjective] law. Any amounts paid into the PM account whose balance is pledged shall, by the mere fact of being paid in, be irrevocably pledged, without any limitation whatsoever, as collateral security for the full performance of the secured obligations.]

4. On the occurrence of:

(a) an event of default, referred to in Article 34(1); or

(b) any other event of default or event referred to in Article 34(2) that has led to the termination or suspension of the participant's participation,

notwithstanding the commencement of any insolvency proceedings in respect of a participant and notwithstanding any assignment, judicial or other attachment or other disposition of or in respect of the participant's rights, all obligations of the participant shall be automatically and immediately accelerated, without prior notice and without the need for any prior approval of any authority, so as to be immediately due. In addition, the mutual obligations of the participant and the [insert name of CB] shall automatically be set off against each other, and the party owing the higher amount shall pay to the other the difference.

5. The [insert name of CB] shall promptly give the participant notice of any set-off pursuant to paragraph 4 after such set-off has taken place.

6. The [insert name of CB] may without prior notice debit any participant's PM account by any amount which the participant owes the [insert name of CB] resulting from the legal relationship between the participant and the [insert name of CB].

Article 37

Security rights in relation to funds on sub-accounts

1. The [insert name of CB] shall have [insert reference to a collateralisation technique under the applicable legal system] over the balance on a participant's sub-account opened for the settlement of AS-related payment instructions under the arrangements between the relevant ancillary system and its CB. Such balance shall collateralise the participant's obligation referred to in paragraph 7 towards the [insert name of CB] in relation to such settlement.

▼M2

2. The [insert name of CB] shall freeze the balance on the sub-account of the participant upon communication by the ancillary system (via a ‘start-of-cycle’ message). Where applicable, the [insert name of CB] shall thereafter increase or reduce the frozen balance by crediting or debiting cross-system settlement payments to or from the sub-account or crediting liquidity transfers to the sub-account. Such freezing shall expire upon communication by the ancillary system (via an ‘end-of-cycle’ message).

3. By confirming the freezing of the balance on the participant’s sub-account, the [insert name of CB] guarantees to the ancillary system payment up to the amount of this particular balance. By confirming, where applicable, the increase or reduction of the frozen balance upon crediting or debiting cross-system settlement payments to or from the sub-account or crediting liquidity transfers to the sub-account, the guarantee is automatically increased or reduced in the amount of the payment. Without prejudice to the abovementioned increase or reduction of the guarantee, the guarantee shall be irrevocable, unconditional and payable on first demand. If the [insert name of CB] is not the ancillary system’s CB, the [insert name of CB] shall be deemed instructed to issue the abovementioned guarantee to the ancillary system’s CB.

▼B

4. In the absence of any insolvency proceedings in relation to the participant, the AS-related payment instructions for the squaring of the participant's settlement obligation shall be settled without drawing on the guarantee and without recourse to the security right over the balance on the participant's sub-account.

5. In the event of the participant's insolvency, the AS-related payment instruction for the squaring of the participant's settlement obligation shall be a first demand for payment under the guarantee; the debiting of the instructed amount from the participant's sub-account (and crediting of the AS's technical account) shall therefore equally involve the discharge of the guarantee obligation by the [insert name of the CB] and a realisation of its collateral right over the balance on the participant's sub-account.

6. The guarantee shall expire upon communication by the ancillary system that the settlement has been completed (via an ‘end-of-cycle’ message).

7. The participant shall be obliged to reimburse to the [insert name of CB] any payment made by the latter under such guarantee.

Article 38

Confidentiality

1. The [insert name of CB] shall keep confidential all sensitive or secret information, including when such information relates to payment, technical or organisational information belonging to the participant or the participant's customers, unless the participant or its customer has given its written consent to disclose [insert the following phrase if applicable under national law: or such disclosure is permitted or required under [insert adjective relating to country name] law].

2. By derogation from paragraph 1, the participant agrees that the [insert name of CB] may disclose payment, technical or organisational information regarding the participant or the participant's customers obtained in the course of the operation of TARGET2-[insert CB/country reference] to other CBs or third parties that are involved in the operation of TARGET2-[insert CB/country reference], to the extent that this is necessary for the efficient functioning of TARGET2, or to supervisory and oversight authorities of Member States and the ►M3 Union ◄ , to the extent that this is necessary for the performance of their public tasks, and provided in all such cases that the disclosure is not in conflict with the applicable law. The [insert name of CB] shall not be liable for the financial and commercial consequences of such disclosure.

3. By derogation from paragraph 1 and provided this does not make it possible, whether directly or indirectly, to identify the participant or the participant's customers, the [insert name of CB] may use, disclose or publish payment information regarding the participant or the participant's customers for statistical, historical, scientific or other purposes in the exercise of its public functions or of functions of other public entities to whom the information is disclosed.

4. Information relating to the operation of TARGET2-[insert CB/country reference] to which participants have had access, may only be used for the purposes laid down in these Conditions. Participants shall keep such information confidential, unless the [insert name of CB] has explicitly given its written consent to disclose. Participants shall ensure that any third parties to whom they outsource, delegate or subcontract tasks which have or may have an impact on the performance of their obligations under these Conditions are bound by the confidentiality requirements in this Article.

5. The [insert name of CB] shall be authorised, in order to settle payment orders, to process and transfer the necessary data to the network service provider.

Article 39

Data protection, prevention of money laundering and related issues

▼M3

1. Participants shall be deemed to be aware of, and shall comply with, all obligations on them relating to legislation on data protection, prevention of money laundering and the financing of terrorism, proliferation-sensitive nuclear activities and the development of nuclear weapons delivery systems, in particular in terms of implementing appropriate measures concerning any payments debited or credited on their PM accounts. Participants shall also acquaint themselves with the network service provider’s data retrieval policy prior to entering into the contractual relationship with the network service provider.

▼B

2. Participants shall be deemed to have authorised the [insert name of CB] to obtain any information relating to them from any financial or supervisory authority or trade body, whether national or foreign, if such information is necessary for the participant's participation in TARGET2-[insert CB/country reference].

Article 40

Notices

1. Except where otherwise provided for in these Con