EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 1 November 2005 
at the request of Magyar Nemzeti Bank  
on a draft regulation on the material, technical,  security and business continuity requirements for 
clearing transactions 
(CON/2005/42) 
 1. On 20 September 2005 the European Central Bank (ECB) received a request from Magyar Nemzeti 
Bank  for an opinion on a draft regulation on the material, technical, security and business 
continuity requirements of clearing transac tions (hereinafter the ‘draft regulation’). 
2. The ECB’s competence to deliver an opinion is based on the second, third, fifth and sixth indents 
of Article 2(1) of Council Decisi on 98/415/EC of 29 June 1998 on th e consultation of the European 
Central Bank by national authorities re garding draft legislative provisions
1, as the draft regulation 
contains provisions concerning means of paymen t, Magyar Nemzeti Bank, payment and settlement 
systems and rules that materially influence the st ability of financial institutions and markets. In 
accordance with the first sentence of Article 17. 5 of the Rules of Procedure of the European 
Central Bank, the Governing Council has adopted this opinion. 
3. The draft regulation sets out in detail the different material, technical, security and business 
continuity requirements that clearing houses for credit institutions have to comply with as a precondition to performing their clearing activities, and also Magyar Nemzeti Bank for operating the payment and settlement system. The ECB welcom es the draft regulation, which is instrumental 
in order to address Core Principle VII (Security and operational reliability) of the Core Principles 
for Systemically Important Payment Systems of the Committee on Payment and Settlement Systems of the Bank for International Settlements. Core Principle VII requires a system with a high degree of security and operational reliabilit y and contingency arrangements for the timely 
completion of daily processing. In January 2001, the ECB’s Governing Council adopted the Core 
Principles for Systemically Important Payment Sy stems as the Eurosystem’s oversight standards 
for such payment systems
2. Subsequently, in June 2003 the Governing Council adopted an 
oversight framework for retail payment systems operating in euro3. The oversight framework is 
                                                      
1  OJ L 189, 3.7.1998, p. 42. 
2  ‘Core Principles for Systemically Important Payment Systems as the Eurosystem’s oversight standards for such payment 
systems’, 25 January 2001, availabl e on the ECB’s website at www.ecb.int . 
3  ‘Oversight standards for euro retail payment systems’, 26 June 2003, available on the ECB ’s website at www.ecb.int . 
2 intended to ensure that retail payment systems do not  become vectors of systemic risk or economic 
malfunctioning in the euro area. The Eurosystem ha s recently consulted the interested public on an 
issues paper concerning ‘Payment systems business continuity’4. The following suggestions are 
inspired by this issues paper, and are conveyed without prejudice to the Eurosystem’s future 
policies on business continuity arrangements for payment systems. 
4. The ECB considers that Section 3(3) of the dr aft regulation should provide that clearing houses for 
credit institutions and Magyar Nemzeti Bank must  introduce contingency and disaster procedures 
for critical functions in the event of a total failu re of the telecommunication networks. It is also 
suggested that the business continuity arrangements set out in Section 9 of the draft regulation should require a second processing site. Such second processing site should not depend on the same 
critical infrastructure components used by the pr imary site (telecommunications, water supply and 
electric power). 
5. The ECB also recommends that Section 11 of the draft regulation should also clarify that clearing 
systems need a well-defined business continuity st rategy endorsed by senior management. Business 
continuity plans should envisage a variety of plausible scenarios, including major disasters affecting a wide area. Critical functions should be identified and processes within these functions 
should be categorised according to their criticality. Fu rthermore, it should also be specified that the 
operational staff of both the clearing house and the participants (credit institutions) should be 
thoroughly trained in the use of the business continuity procedures and the recovery and 
resumption arrangements. In this context, cl earing houses could be required to implement the 
following measures:  
• business continuity processes and test results s hould be subject to an auditors’ security 
review, and 
• a periodic update and review of the busin ess continuity arrangements ensuring their 
effectiveness, and 
• business continuity arrangements could also consider including crisis management 
information dissemination. 
6. This opinion will be published on the ECB’s website. 
 
 
Done at Frankfurt am Main, 1 November 2005. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                     
 
4  ‘Payment systems business continuity’, 10 Ma y 2005, available on the ECB’s website at www.ecb.int .