ANNEX II

MARKET INFRASTRUCTURE BOARD

RULES OF PROCEDURE

CHAPTER 1

Appointment and Membership

INTRODUCTION

The Eurosystem offers market infrastructures, platforms, applications and related services in the fields of cash settlement, securities settlement and collateral management, comprising TARGET services which include TARGET2, T2S and TIPS services as well as, in the future, ECMS (the ‘Eurosystem infrastructure services’).

The Market Infrastructure Board (MIB) is the governance body that supports the Governing Council (the ‘Governing Council’) of the European Central Bank (ECB) in ensuring that the Eurosystem infrastructure services are maintained and further developed, as well as that projects concerning existing or new Eurosystem infrastructure services (the ‘Eurosystem infrastructure projects’ or ‘projects’) are managed, in line with the Treaty objectives of the European System of Central Banks (ESCB), the business needs, technological advances, the legal framework applicable to Eurosystem infrastructure services and projects, as well as regulatory and oversight requirements, in full respect of the mandates of the ESCB committees established under Article 9 of the ECB Rules of Procedure. The MIB reports to the ECB decision-making bodies.

This Decision establishes no presumption to the effect that every new market infrastructures project falling within the scope of this Decision's definition of Eurosystem infrastructure project is to automatically be entrusted to the MIB. Only those projects explicitly entrusted by the Governing Council to the MIB are to be managed by the MIB.

1. Designation and appointment

MIB members are appointed by the Governing Council on the basis of a proposal from the ECB's Executive Board (the ‘Executive Board’).

Applications are presented to the Executive Board by the Governor or President, as applicable, of the relevant National Central Bank (NCB). In its proposal to the Governing Council, the Executive Board shall give preference to candidates who report directly to the highest governance body in their central bank. The Executive Board ensures in its proposal that the principles set out in section 3 of this Annex II are complied with.

Applications for non-central bank members of the MIB are collected by the Executive Board pursuant to the procedure for selection of such members pursuant to Annex IV to this Decision.

2. Membership and term of office — Participation of observers

Once appointed, MIB members shall act independently and in the best interest of the Eurosystem. They shall not be subject to instructions from any public or private body. MIB members shall report collectively and exclusively to the ECB decision-making bodies when they act in their capacity as MIB members. The central bank members of the MIB may seek, where appropriate, at their own initiative and discretion, the views of other staff members from their central bank, but they shall neither seek nor take instructions from their central bank, or commit to take a specific position during the deliberations and voting of the MIB.

The MIB has a Chairperson who is a senior manager at the ECB.

The MIB is composed of thirteen (13) members, as follows:

(a) Nine members from Eurosystem NCBs, including one member per NCB that provides market infrastructure services to the Eurosystem or that executes Eurosystem infrastructure projects with the Eurosystem (the ‘providing NCB’);

(b) Two members from non-Eurosystem NCBs participating in Eurosystem infrastructure services (e.g. having signed the T2S Currency Participation Agreement or participating in TARGET2);

(c) Two non-central bank members (without voting rights), one with experience as a senior official in the payments industry, and one with experience as a senior official in the securities industry.

The Chairperson is supported by a Deputy Chairperson from the MIB members who is appointed by the Governing Council. The exclusive task of the Deputy Chairperson shall be to chair MIB meetings, in the Chairperson's temporary absence during a meeting, in accordance with the pre-determined agenda for the MIB meeting in question.

The term of office of MIB members lasts for 36 months and may be renewed. The Governing Council may decide on a shorter mandate, including when members resign or retire before the expiry of their mandate.

In order to ensure that all NCBs (Eurosystem and NCBs participating in the relevant Eurosystem infrastructure services and projects) have the opportunity to send a representative to the MIB, there should be a rotation of members from non-providing NCBs, normally at the time the initial 36 months' term of office of the MIB members expires. It is understood that the above rotation scheme shall not result in the exclusion of the same non-providing NCB for more than two rotation periods.

An appropriate balance shall be maintained between members with project management experience, experience in the Eurosystem market infrastructure business, and IT experience.

The Chairperson shall invite non-voting observers from relevant ESCB Committees for discussing Eurosystem infrastructure services or projects within their field of competence. The MIB members are expected to dedicate at least 30 % of their working capacity to the MIB issues.

The MIB members shall not be directly involved in the oversight of Eurosystem's infrastructure services or of entities participating in the above (e.g. central securities depositories that outsource settlement operations to T2S), to the extent that such involvement could give rise to actual or potential conflicts with their functions as MIB members. Appropriate measures shall be put in place to identify and avoid any such conflicts. Members shall not be part of the Eurosystem's Internal Auditors Committee (IAC), nor shall they be involved in Level 3 activities on a day-to-day basis.

CHAPTER 2

Working procedures

1. Decision-making

In accordance with principles of good governance, members shall regularly participate in MIB meetings. Participation is strictly on a personal basis; members may not be replaced.

In order for the MIB to validly deliberate, there must be a quorum of seven members with voting rights. If there is no quorum, the Chairperson may convene an extraordinary meeting at which decisions may be taken without regard to the quorum.

To the extent possible, decisions of the MIB are to be taken by way of consensus. Failing that, and at the request of the Chairperson, the MIB may decide by way of simple majority vote. In the case of a tie, the Chairperson shall have the casting vote.

The MIB proceeds to vote at the request of the Chairperson. The Chairperson shall also initiate a voting procedure upon the request of at least 3 MIB members with a voting right. A member shall abstain from voting if they have a conflict of interest, within the meaning of the Code of Conduct. Absent voting Members may delegate their voting right in respect of a specific voting procedure to another voting member provided that no voting member may exercise more than two votes on any given issue.

Decisions may also be taken by written procedure, unless three or more members with voting rights object. A written procedure shall require: (a) no less than two working days' notice, (other than in exceptional circumstances, identified as such by the MIB Chairperson); and (b) a record of any such decision in the conclusions of the subsequent meeting of the MIB.

The non-central bank MIB members are appointed in a personal capacity. They do not have voting rights and they may not delegate their responsibilities to another MIB member or a third party.

2. Conduct of MIB meetings

The MIB decides on the dates of its meetings upon proposal by the Chairperson. The MIB should meet regularly based on a schedule it prepares in good time before the start of each year.

The Chairperson may convene extraordinary meetings of the MIB whenever it may deem it necessary. The Chairperson will convene an extraordinary meeting if a request for such a meeting is submitted by at least three members.

The MIB shall generally hold its meetings at the ECB's premises.

Meetings may also be held by means of teleconference, unless three or more members object.

The MIB adopts an agenda for each meeting.

Attendance at MIB meetings is restricted to the MIB members and other persons invited by the Chairperson.

3. Reporting to the ECB decision-making bodies

The MIB reports to the ECB decision-making bodies on a regular basis. In this respect, it prepares reports to the ECB decision-making bodies as necessary.

4. Internal flow of information and transparency

Non-central bank MIB members shall receive, under strict confidentiality conditions, all documentation on Eurosystem infrastructure services and projects submitted to the Governing Council.

Eurosystem NCBs not represented in the MIB shall have automatic access to all MIB documentation, including MIB agendas and minutes, at the same time as MIB members and may provide written comments prior to MIB meetings so that their views can be duly taken into account by the MIB. They may also make a request to the Chairperson to participate in the MIB if they have a particular interest in a topic. The Chairperson will be responsible for informing such Eurosystem NCBs if it is considered that they might have a particular interest and may also bring any point raised by such a Eurosystem NCB before the MIB.

In order to ensure that the Eurosystem's Market Infrastructure and Payments Committee (MIPC) is kept abreast of the MIB's work, there will be a regular reporting item on MIB topics on each MIPC agenda. If deemed appropriate, joint meetings of the MIPC and the MIB may be held.

The interaction between the MIB and other ESCB committees shall take place by means of written consultations.

The MIB's activities are subject to the review of the IAC.

5. External flow of information, transparency and representation

The Chairperson regularly informs any relevant stakeholder about all relevant issues concerning Eurosystem infrastructure services and projects under the responsibility of the MIB. The Chairperson ensures transparency through the timely and consistent availability of relevant technical documentation in relation to the Eurosystem infrastructure services and projects on the MIB-dedicated section of the ECB's website.

Members must inform the Chairperson in advance of undertaking any relevant and substantial external activities/communication in relation to the MIB's responsibilities and tasks, such as speaking on Eurosystem infrastructure services and projects under the responsibility of the MIB at conferences or meetings with relevant stakeholders, and must provide the MIB with a written summary within five working days following the event. Any substantial external activity/communication must be in the interest of the Eurosystem and must be consistent with any policy decisions of the Governing Council.

6. Support

The MIB shall receive organisational support from the ECB, inter alia, for the preparation of the MIB meetings, including the meeting documentation.

As a rule, the ECB sends documents for discussion to members five working days in advance of a meeting. However, short documents may be sent one working day in advance. Documents sent less than two working days in advance are considered ‘table documents’ which cannot lead to a decision by the MIB, unless all members agree otherwise.

Following each MIB meeting, the ECB prepares draft minutes recording the topics that were under consideration and the results of the discussion, as well as the agreed follow-up. The draft minutes include positions expressed during the meeting by individual members when so requested. The draft minutes are circulated to the members within five working days of the meeting.

Also following each MIB meeting, the ECB prepares a draft action list containing the tasks and deadlines that were allocated and agreed during that meeting, which is circulated to the members within five working days of the meeting.

The draft minutes and action list are submitted to the MIB for approval at the subsequent meeting (or, if necessary, earlier by written procedure) and are signed by the Chairperson.

The MIB shall appoint, and receive input from, a Controller, which may be one of its members.

The MIB may create substructures in agreement with the ECB. A substructure may be established differently to the MIB composition, and it would be open to all Eurosystem NCBs and, where relevant, non-Eurosystem NCBs to participate.

7. Revision of mandate

The MIB mandate may be reviewed every five years in the light of the experience made.