Opinion of the European Central Bank of 13 April 2011 on the settlement risk management procedure for net settlement systems (CON/2011/35)
Date: 2011-04-13
Institutions: European Central Bank
Subjects: Romania, credit institution, electronic money, financial stability, national law, payment system

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 April 2011 

on the settlement risk management procedure for net settlement systems 

(CON/2011/35) 

Introduction and legal basis 

On  21  February  2011,  the  European  Central  Bank  (ECB)  received  a  request  from  Banca  Naţională  a 

României (BNR) for an opinion on a draft regulation on the procedure for settlement risk management for 

net settlement systems and the facilities granted by BNR for smooth settlement in ReGIS (hereinafter the 

‘draft regulation’).  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the fifth indent 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 relates to payment and settlement systems. 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. 

1.  

Purpose of the draft regulation 

1.1  According  to  Article  1,  the  draft  regulation  has  two  main  objectives.  First,  it  establishes  a 

procedure  for  settlement  risk  management  applicable  to  net  settlement  systems  which  settle  in 
ReGIS2, unless they are governed by their own procedures for the management of settlement risk in 

ReGIS.  Second,  it  provides  facilities  granted  by  BNR  to  the  credit  institutions  participating  in 

ReGIS for smooth settlement. 

1.2  The  ECB  understands  that  the  draft  regulation  is  intended  to  modify  the  national  regulatory 

framework for the settlement risk management procedure in ReGIS in connection with the closure 

of the paper-based clearing house operated by BNR. 

1.3  The  draft  regulation  lays  down  various  provisions  under  which  eligible  credit  institutions  may 

benefit from the facilities granted by BNR. These facilities include: (i) the intraday liquidity facility 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
According to BNR Order No 34/2008 on the systems falling under Law No 253/2004 on settlement finality in payment 
and securities settlement systems (Monitorul Oficial al României Part One, No 61, 25.1.2008), ReGIS is a national real-
time gross settlement payment system in Romanian leu owned and operated by BNR. 

 
 
 
 
                                                 
provided  via  repurchase  transactions  with  settlement  on  the  same  day,  against  assets  eligible  for 

collateralisation;  (ii)  the  Lombard  credit  lending  facility,  into  which  the  intraday  facility  can  be 

converted  at  the  request  of  the  credit  institution  in  the  event  of  a  failure  to  repurchase  the  assets 

used for the purposes of that facility; and (iii) the lending facility for the settlement of net positions 

calculated in the card payment schemes. To be eligible to access the intraday liquidity facility, or 

the  lending  facility  for  the  settlement  of  net  positions,  the  respective  credit  institutions  must  be 
participants  in  ReGIS  and  SaFIR3,  must  not  be  suspended  from  these  systems,  and  should  have 

concluded with BNR the framework contract for intraday repo transactions using the draft template 

annexed to the draft regulation. 

2. 

General observations  

2.1  The ECB notes the update of the national regulatory framework by the draft regulation. The safety 

and  efficiency  of  payment  systems  are  key  to  maintaining  and  promoting  financial  stability. 

Therefore,  the  ECB  attaches  great  importance  to  reinforcing  a  consistent  legal  framework  for 

smooth settlement within ReGIS. 

2.2  The  ECB  notes  that  the  legislation  in  this  area  needs  to  take  into  account  the  internationally 

accepted  standards  that  govern  the  design  and  operation  of  payment  systems,  notably  the  ‘Core 
Principles for Systemically Important Payment Systems’4 and the ‘Business Continuity Oversight 
Expectations  for  Systemically  Important  Payment  Systems’5,  while  also  making  it  possible  for 

entities  providing  settlement  services  to  include  additional  provisions  in  their  settlement  risk 

management procedures and to introduce further or stricter measures to ensure the safety of their 

operations. Moreover, the ECB assumes that the operators of net settlement systems are expected to 

comply with international standards. 

3. 

Specific observations  

3.1  The draft regulation does not define ‘card payment schemes’, a term used extensively throughout 

the draft regulation. To increase the transparency  of the draft regulation, as well as to enable the 

relevant participants to have a clear understanding of settlement risks for card payment systems, it 

would  be  appropriate  to  explicitly  define  ‘card  payment  scheme’  or  to  refer  to  its  definition  in 

national law. 

3.2   Furthermore, to become eligible for credit to manage the settlement risk, the clearing participant in 

a card payment scheme should enter into the framework contract with BNR in accordance with the 

3  

4  

5  

According  to  BNR  Order  No  34/2008  and  the  system  rules,  SaFIR  is  a  depository  and  settlement  system  for  financial 
instruments owned and operated by BNR.  
Committee  on  Payment  and  Settlement  Systems.  Core  Principles  for  Systemically  Important  Payment  Systems,  2001. 
Available on the Bank for International Settlement’s website at www.bis.org. 
Available on the ECB’s website at www.ecb.europa.eu. 

2 

 
 
                                                 
templates  for  framework  contracts  in  Annexes  2a  and  2b  of  the  draft  regulation.  Against  this 

background,  the  ECB  notes  that  the  draft  regulation  appears  to  restrict  the  eligibility  of  credit 

institutions for settling net positions calculated in the card payment schemes to clearing participants 

in  card  payment  systems  operated  by  VISA  Europe  (Annex  2a)  or  by  MasterCard  International 

(Annex  2b).  This  limitation  of  the  draft  regulation  may  disadvantage  disproportionately  and 

without  objective  justification  credit  institutions  administered  by  other  card  payment  schemes, 

whether existing competitors or new market entrants.  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 13 April 2011. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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