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)
Date: 2005-11-01
Institutions: European Central Bank
Subjects: Hungary, information security, national law, payment system

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 transactions (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 Decision 98/415/EC of 29 June 1998 on the consultation of the European 
Central Bank by national authorities regarding draft legislative provisions1, as the draft regulation 

contains provisions concerning means of payment, Magyar Nemzeti Bank, payment and settlement 

systems  and  rules  that  materially  influence  the  stability  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 welcomes 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  reliability  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  Systems  as  the  Eurosystem’s  oversight  standards 
for  such  payment  systems2.  Subsequently,  in  June  2003  the  Governing  Council  adopted  an 
oversight  framework  for  retail  payment  systems  operating  in  euro3.  The  oversight  framework  is 

1  
2  

3  

OJ L 189, 3.7.1998, p. 42. 
‘Core Principles for Systemically Important Payment Systems as the Eurosystem’s oversight standards for such payment 
systems’, 25 January 2001, available on the ECB’s website at www.ecb.int. 
‘Oversight standards for euro retail payment systems’, 26 June 2003, available on the ECB’s website at www.ecb.int. 

 
 
 
                                                      
intended to ensure that retail payment systems do not become vectors of systemic risk or economic 

malfunctioning in the euro area. The Eurosystem has 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 draft 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  failure  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 primary 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 strategy 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. Furthermore, 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,  clearing  houses  could  be  required  to  implement  the 

following measures:  

• 

• 

• 

business continuity processes and test results should be subject to an auditors’ security 

review, and 

a periodic update and review of the business 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 May 2005, available on the ECB’s website at www.ecb.int. 

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