Guideline of the European Central Bank of 4 April 2003 amending Guideline ECB/2001/3 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET), as amended on 27 February 2002 (ECB/2003/6)
Date: 2003-04-04
Institutions: European Central Bank
Subjects: European Central Bank, European Monetary System, central bank, indemnification, intra-EU payment, trans-European network

L 113/10

EN

Official Journal of the European Union

7.5.2003

EUROPEAN CENTRAL BANK

GUIDELINE OF THE EUROPEAN CENTRAL BANK

of 4 April 2003

amending Guideline ECB/2001/3 on a Trans-European Automated Real-time Gross settlement
Express Transfer system (TARGET), as amended on 27 February 2002

(ECB/2003/6)

(2003/309/EC)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

Having regard to the Statute of the European System of Central
Banks and of the European Central Bank, and in particular to
Article 3.1, Article 12.1, Article 14.3 and Articles 17, 18 and
22 thereof,

(4)

Whereas:

(1)

(2)

(3)

The fourth indent of Article 105(2) of the Treaty estab-
lishing the European Community and the fourth indent
of Article 3.1 of the Statute empower the European
Central Bank (ECB) and the national central banks
(NCBs) to promote the smooth operation of payment
systems.

In accordance with Article 22 of the Statute, the ECB
and the NCBs may provide facilities to ensure efficient
and sound clearing and payment systems within the
Community and with other countries.

the ECB (the Governing
The Governing Council of
Council) decided on 27 November 2002 that
the
TARGET reimbursement scheme contained in Article
3(h) of Guideline ECB/2001/3 (1) of 26 April 2001 on a
Trans-European Automated Real-Time Gross Settlement
Express Transfer System (TARGET), as amended by
Guideline ECB/2002/1 (2) of 27 February 2002 (the
should be replaced by a new
TARGET Guideline)
TARGET Compensation Scheme that better
reflects
existing market practices than the present TARGET
reimbursement scheme.

Since the Governing Council decided that compensation
offered under the TARGET Compensation Scheme is to
be the common compensation offered by the European
System of Central Banks (ESCB) in cases of a TARGET
malfunctioning,
the TARGET Compensation Scheme
should be incorporated as a common rule for all
the
national RTGS systems in a separate Article of

(1) OJ L 140, 24.5.2001, p. 72.
(2) OJ L 67, 9.3.2002, p. 74.

the
TARGET Guideline and not, as in the case of
TARGET reimbursement scheme,
in an Article deter-
mining minimum common features of national RTGS
systems.

In accordance with the principle decision taken by the
Governing Council on 29 August 2002 to phase out the
use of collateral
that may be used to collateralise
intraday credit for each NCB, which has declared its
intention to use certain collateral located in a Member
State that has not adopted the single currency, Article
3(g) of and Annex V to the TARGET Guideline have to
be deleted and Article 3(f)5 of the TARGET Guideline
has to be amended.

(5)

In accordance with Articles 12.1 and 14.3 of the Statute,
ECB Guidelines form an integral part of Community law,

HAS ADOPTED THIS GUIDELINE:

Article 1

The TARGET Guideline shall be amended as follows:

1.

2.

in Article 1(1), in the definition of ‘indirect participant’ the
wording between brackets shall be amended to read as
follows: ‘(as defined in this Article)’;

in Article 1(1), the definitions of ‘TARGET reimbursement
scheme’ or the ‘reimbursement scheme’ or the ‘scheme’
shall be deleted;

3.

in Article 1(1), the following definitions shall be added:

‘— “deposit facility” shall mean the deposit facility orga-

nised by the Eurosystem,’

‘— “marginal

lending facility” shall mean the marginal

lending facility organised by the Eurosystem,’;

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4. the definitions contained in Article 1(1) shall be rearranged

in alphabetical order;

5. Article 3(f)5 shall be amended as follows:

Intraday credit provided in accordance with Article

‘5.
3(f) shall be free of interest.’;

6. Article 3(g) shall be deleted;

7. Article 3(h) shall be deleted;

8. a new Article 8 shall be inserted as follows:

‘Article 8

TARGET Compensation Scheme

1. General principles

(a) In the event of a malfunctioning of TARGET, direct
and indirect participants (for the purposes of
this
Article hereinafter referred to as TARGET participants)
shall be entitled to submit claims for compensation in
accordance with the rules laid down in this Article.

(b) The TARGET Compensation Scheme shall apply to all
national RTGS systems and to the ECB payment
mechanism (EPM) and shall be available for all
TARGET participants (including TARGET participants
of national RTGS systems of participating Member
States that are not counterparties to the Eurosystem
monetary policy operations and TARGET participants
of national RTGS systems of non-participating Member
States) in relation to all TARGET payments (without
distinguishing between domestic payments and cross-
border
TARGET Compensation
Scheme shall not apply to customers in the EPM in
accordance with the Terms and Conditions governing
the use of the EPM, which are available on the ECB's
web site (www.ecb.int) and are updated from time to
time.

payments).

The

(c) Unless otherwise decided by the Governing Council of
the ECB, the TARGET Compensation Scheme shall not
apply where the malfunctioning of TARGET is caused
by:

(i) external events beyond the control of the ESCB; or

(ii) the failure of a third party other than the operator
of the national RTGS system where the malfunc-
tioning occurred.

(d) Offers under

the TARGET Compensation Scheme
(compensation offers) shall be the only compensation
offered by the ESCB in cases of a malfunctioning. The
TARGET Compensation Scheme does not exclude the
possibility for TARGET participants to avail themselves
of other legal means to claim compensation in case of
a malfunctioning of TARGET. However, the acceptance
of a compensation offer by a TARGET participant shall
thereby
constitute its irrevocable agreement
waives all claims (including any claims for consequen-
tial damages) it may have against any member of the
ESCB, in accordance with national laws or otherwise,
and that
the corresponding
compensation payment shall be in full and final settle-
ment of all such claims. The TARGET participant shall

the receipt by it of

that

it

indemnify the ESCB up to the amount received under
the TARGET Compensation Scheme from any further
compensation which might be claimed by any other
TARGET
respective
payment order.

concerning

participant

the

(e) The making of any compensation offers and/or
payments shall not constitute an admission of liability
by any NCB or the ECB in respect of a malfunctioning.

2. Conditions for compensation

(a) With respect to a sending TARGET participant, a claim
for compensation shall be considered if due to a
malfunctioning:

(i) the same day processing of a payment order was

not completed; or

(ii) such TARGET participant can show that it had the
intention to enter a payment order into TARGET
but was unable to do so due to a stop-sending
status of a national RTGS system.

(b) With respect

to a receiving TARGET participant, a
claim for compensation shall be considered if due to a
malfunctioning:

(i) such TARGET participant did not

a
TARGET payment that it was expecting to receive
on the day of malfunctioning; and

receive

(ii) such TARGET participant had recourse to the
marginal lending facility or, if a TARGET partici-
pant does not have access to the marginal lending
facility, such TARGET participant was left with a
debit balance or had a spill-over from intraday
credit into overnight credit on its RTGS account at
the close of business of TARGET or had to borrow
amounts from the respective NCB; and

(iii) either the NCB of the national RTGS system where
the malfunctioning occurred (the malfunctioning
NCB) was the receiving NCB, or the malfunc-
tioning occurred so late in the TARGET operating
day that it was technically impossible or impractic-
able for the receiving TARGET participant to have
recourse to the money market.

3. Calculation of compensation

3. 1. Compe nsat i on of se ndi ng T A R G E T p ar ti c i -

pants

(a) The compensation offer under the TARGET Compen-
sation Scheme shall consist of an administration fee
only or an administration fee and an interest compen-
sation.

(b) The

administration fee

shall be determined at
EUR 100 for the first payment order not completed
on the processing date and,
in case of multiple
payment adjustments, EUR 50 for each of the next
four payment orders and EUR 25 for each payment
order thereafter. The administration fee shall be deter-
mined by reference to each receiving TARGET partici-
pant.

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(c) The interest compensation shall be determined by
applying the rate (the reference rate), from day-to-day
whichever is the lower of the EONIA rate (the euro
overnight index average) and the marginal lending rate,
to the amount of the payment order not processed as a
result of a malfunctioning for each day in the period
starting on the date of the entering or the intended
entering of
the payment order into TARGET and
ending on the date that the payment order was or
could have been successfully completed (the period of
interest
malfunctioning). When
compensation, the proceeds of any actual use of funds
by having recourse to the deposit facility (or, in the
case of TARGET participants of national RTGS systems
of participating Member States that are not counterpar-
ties to the Eurosystem monetary policy operations, the
remuneration received on excess funds in the settle-
ment account, or, in the case of TARGET participants
of national RTGS systems of non-participating Member
States, the remuneration received for incurring addi-
tional positive end-of-day balances on the RTGS
account)
shall be deducted from the amount of
compensation.

calculating

the

(d) In the case of the placing of funds in the market or
using the funds for the fulfilment of minimum reserve
requirements, the TARGET participant shall not receive
any interest compensation.

(e) With respect

to sending TARGET participants of
national RTGS systems of non-participating Member
States, any limit to the remuneration on the aggregate
amount of overnight deposits on the RTGS accounts of
such TARGET participants shall be disregarded to the
extent
that such amount can be attributed to the
malfunctioning.

3 . 2 . C om p e ns a t i on of r e c e i v i ng T A R G E T p a r t i -

c i p a n ts

(a) The compensation offer under the TARGET Compen-
sation Scheme shall consist of an interest compensa-
tion only.

(b) The calculation method for the interest compensation
as referred to in 3.1(c) above shall apply, except that
the interest compensation shall be based on the differ-
ence between the marginal lending rate and the refer-
ence rate, and shall be calculated on the amount of the
recourse to the marginal lending facility as a result of
the malfunctioning.

(c) With respect to receiving TARGET participants of (i)
national RTGS systems of participating Member States
that are not counterparties to the Eurosystem monetary
policy operations, and (ii) national RTGS systems of
non-participating Member States, to the extent that a
debit balance or a spill-over from intraday credit into
overnight credit or the need to borrow amounts from
the respective NCB can be attributed to the malfunc-

tioning, that part of the applicable penalty rate (as
stipulated by the applicable RTGS rules in such cases)
which is above the marginal
lending rate, shall be
waived (and disregarded in future cases of spill-over)
and for TARGET participants of national RTGS systems
it shall be ignored for the
referred to in (ii) above,
purpose of access to intraday credit and/or continued
participation in the national RTGS system concerned.

4. Procedural rules

together with any relevant

(a) Any claim for compensation shall be submitted on a
claim form (the content and form of which shall be as
determined and made public by the ECB from time to
information and
time)
evidence required thereby. A sending TARGET partici-
pant shall submit one separate claim form in respect of
each receiving TARGET participant. A receiving
TARGET participant shall submit one separate claim
form in respect of each sending TARGET participant.
Claims in relation to a specific TARGET payment can
be submitted only once, either by a direct or an
indirect participant on their own behalf or by a direct
participant on behalf of an indirect participant.

(b) TARGET participants shall submit their claim form(s)
to the NCB where the RTGS account
that has or
should have been debited or credited is maintained
(the home NCB) within two weeks of the date of the
malfunctioning. Any
information and
evidence requested by the home NCB shall be supplied
within two weeks of such request being made.

additional

(c) The Governing Council of the ECB shall carry out the
assessment of all claims received and decide whether
compensation offers shall be made. Unless otherwise
decided by the Governing Council of the ECB and
communicated to the TARGET participants,
such
assessment shall be made no later than twelve weeks
after the malfunctioning.

compensation offer,

(d) The malfunctioning NCB shall communicate the result
of the assessment referred to in (c) above to the rele-
vant TARGET participants. If the assessment comprises
a
the TARGET participants
concerned shall, within four weeks of the communica-
tion of such offer, either reject the offer or accept it, in
respect of each payment order comprised within each
claim, by signing a standard letter of acceptance (the
content and form of which shall be determined and
made public by the ECB from time to time). If such
letter has not been received by the malfunctioning
NCB within that four week period, the TARGET parti-
cipants concerned shall be treated as having rejected
the compensation offer.

(e) Compensation payments

shall be made by the
malfunctioning NCB upon receipt of
the TARGET
participant's letter of acceptance. There shall be no
interest payable on any compensation payment.’

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9. Articles 8, 9 and 10 shall be renumbered as Articles 9, 10

and 11 respectively;

10. Annex V shall be deleted.

This Guideline shall be published in the Official Journal of

3.
the European Union.

Article 2

Final provisions

Done at Frankfurt am Main, 4 April 2003.

This Guideline is addressed to the national central banks

1.
of participating Member States.

2.

This Guideline shall enter into force on 1 July 2003.

On behalf of the Governing Council of the ECB

The President

Willem F. DUISENBERG