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Table Of Contents

ABBREVIATIONS
FOREWORD
ACKNOWLEDGEMENTS
INTRODUCTION
1 GENERAL ASPECTS
1.1 PAYMENTS AND THE PAYMENT SYSTEM
1.2 LIFE CYCLE OF A PAYMENT
Chart 1 Stylised life cycle of a non-cash payment
1.3 TYPES OF PAYMENT
1.4 PAYMENT INSTRUMENTS
Chart 2 Credit and debit-based payment instruments
Box 1 The most common non-cash payment instruments
1.5 TRENDS IN THE USE OF PAYMENT INSTRUMENTS
1.6 COMMUNICATION NETWORKS
Box 2 Selected issues concerning communication networks
2 PROCESSING (INCLUDING CLEARING) OF PAYMENTS
2.1 IN-HOUSE HANDLING OF PAYMENTS
2.2 CORRESPONDENT BANKING ARRANGEMENTS
Chart 4 Payments settled via correspondent banking
2.3 PAYMENT SYSTEMS (INTERBANK FUNDS TRANSFER SYSTEMS)
Box 3 Access to payment systems
Box 4 Netting
3 SETTLEMENT
3.1 SETTLEMENT ASSETS
Box 5 Central bank and commercial bank money
3.2 SETTLEMENT INSTITUTIONS
3.3 SETTLEMENT METHODS
4 SELECTED KEY ISSUES IN PAYMENT SYSTEMS
4.1 TYPES OF PAYMENT SYSTEM
Table 1 Main types of system
Table 2 Main payment systems in the euro area and the G10
Box 6 Different types of payment system
Chart A Payments settled in a multilateral net settlement system
Chart B Payments settled via an RTGS system
Chart C The settlement process with a central queue
4.2 CARD PAYMENT SYSTEMS
Chart 5 Business models for card payments
Box 7 Fraud prevention
Box 8 Two-sided markets and interchange fees
The interchange fee structure
4.3 OFFSHORE SYSTEMS
5 CROSS-BORDER AND CROSS-CURRENCY PAYMENTS
5.1 ISSUES IN CROSS-BORDER PAYMENTS
Chart 6 Stylised representation of a PvP mechanism
1.1 THE SECURITIES MARKET
1.2 FUNCTIONS AND INSTITUTIONS IN THE SECURITIES INDUSTRY
Chart 7 Stylised life cycle of a security
Table 3 Functions and institutions in the securities industry
1.3 ISSUANCE AND CENTRAL SECURITIES DEPOSITORIES
Box 9 Developments in issuance
Box 10 Eurobond issuance
Table 4 Comparison of services provided by CSDs and ICSDs
1.4 HOLDING STRUCTURES AND THE CUSTODY INDUSTRY
Chart 8 Examples of multi-tiered intermediation in securities custody
2 TRADING
2.1 TRADING VENUES AND PARTIES
2.2 TRADE CONFIRMATION AND MATCHING
3.1 GENERAL CONCEPT
3.2 CENTRAL COUNTERPARTY CLEARING
Chart 9 Effects of bilateral netting and novation by a CCP
3.3 MAIN RISKS AND RISK MANAGEMENT PROCEDURES OF CCPs
Chart 10 How clearing participants post initial and variation margin
3.4 CCP INTEROPERABILITY AND LINKS
4 SETTLEMENT
4.1 SETTLEMENT DATES AND INTERVALS
Box 12 Settlement intervals
4.2 DELIVERY VERSUS PAYMENT
4.3 INTERACTION BETWEEN SECURITIES AND CASH SETTLEMENT SYSTEMS
4.4 EMBEDDED PAYMENT SYSTEMS
4.5 BANKING SERVICES FACILITATING SECURITIES SETTLEMENT
Table 5 Major funds transfer systems in euro
1.2 MAIN TYPES OF DERIVATIVE
1.3 THE SIZE OF THE OTC MARKET
Chart 16 OTC derivatives: notional amounts outstanding
1.4 A STYLISED LIFE CYCLE OF A DERIVATIVES CONTRACT
Chart 18 A derivatives transaction from trade to confirmation
Chart 19 Life cycle elements of an OTC derivatives trade
2 TRADING AND POST-TRADE SERVICES
2.1 STYLISED EVOLUTION OF PRODUCTS AND TRADING MODALITIES
2.2 ON-EXCHANGE TRADING
2.3 OVER-THE-COUNTER TRADING
2.4 TRADE REPOSITORIES
2.5 ASSIGNMENT
3 CLEARING
3.1 BILATERAL CLEARING
Table 7 Use of portfolio reconciliation services
Table 9 Collateralisation levels by type of counterparty
Table 8 Percentage of trades which are subject to collateral agreements
3.2 CCP CLEARING
3.3 PORTFOLIO COMPRESSION
3.4 RECENT INITIATIVES
Box 14 How portfolio compression works
2.2 FOREIGN EXCHANGE SETTLEMENT RISK
2.3 SETTLEMENT AGENT RISK
2.4 CREDIT RISK IN SECURITIES SETTLEMENT SYSTEMS
2.5 CUSTODY RISK
2.6 RISKS IN INTERNALISED SECURITIES SETTLEMENT
2.7 RISKS RELATED TO CENTRAL COUNTERPARTIES
3 LIQUIDITY RISK
3.1 LIQUIDITY RISK IN PAYMENT SYSTEMS
3.2 LIQUIDITY RISK IN SECURITIES SETTLEMENT SYSTEMS
4 OPERATIONAL RISK
4.1 GENERAL CONSIDERATIONS
4.2 OPERATIONAL RISK MANAGEMENT AND BUSINESS CONTINUITY
5 LEGAL RISK
5.1 LEGAL RISK IN PAYMENT SYSTEMS
5.2 LEGAL RISKS IN SECURITIES SETTLEMENT SYSTEMS
6 SYSTEMIC RISK
6.1 SYSTEMIC RISK IN PAYMENT SYSTEMS
IN THE FIELD OF MARKET INFRASTRUCTURE
1 NETWORK EFFECTS AND EXTERNALITIES
2 ECONOMIES OF SCALE AND SCOPE
Chart 20 Long-run average cost curve
3 NATURAL AND QUASI-MONOPOLIES
4 MORAL HAZARD
5 COST RECOVERY AND PRICING, AND PUBLIC GOODS
6 TWO-SIDED MARKETS
INFRASTRUCTURE SERVICES
1 A SOUND LEGAL BASIS
Box 15 A basic legal framework
2 FINALITY
3 NETTING
2.2 LINKS WITH MONETARY POLICY AND FINANCIAL STABILITY
2.3 ADDRESSING POTENTIAL FAILURES BY INFRASTRUCTURES
3 POTENTIAL ROLES OF CENTRAL BANKS
3.1 OBJECTIVES AND ROLES OF A CENTRAL BANK
3.2 THE CENTRAL BANK AS OPERATOR
3.3 THE CENTRAL BANK AS OVERSIGHT AUTHORITY
Table 10 Objectives of the oversight and catalyst functions
Box 17 Principles for effective oversight
Box 18 Distinction between banking supervision and oversight
3.4 THE CENTRAL BANK AS CATALYST
4 TRENDS AFFECTING THE ROLE OF THE CENTRAL BANK
4.1 INNOVATION AND TECHNOLOGICAL PROGRESS
4.2 INTERDEPENDENCIES
4.3 DELOCATION
4.4 CONCENTRATION
IN THE EURO AREA
1 INTRODUCTION 16
2 PAYMENT INSTRUMENTS
2.1 CASH
2.2 NON-CASH PAYMENT INSTRUMENTS
3 LARGE-VALUE PAYMENT SYSTEMS OPERATING IN EURO
3.1 TARGET2
Chart 23 Large-value payment systems in 1998 and 1999
3.2 EURO1
Chart 24 The EURO1 liquidity bridge
3.3 CONTINUOUS LINKED SETTLEMENT SYSTEM
3.4 OTHER LARGE-VALUE SYSTEMS OPERATING IN EURO
Chart 25 CLS settlement cycle
4 RETAIL PAYMENT ARRANGEMENTS IN EURO
4.1 THE SINGLE EURO PAYMENTS AREA PROJECT
Chart 26 Main stakeholders in the creation of SEPA
Chart 27 The main elements of SEPA
Box 19 The SEPA building blocks
Box 20 Main benefits of SEPA for the various stakeholders
4.2 EURO AREA-WIDE RETAIL PAYMENT SYSTEMS
4.3 NATIONAL RETAIL PAYMENT SYSTEMS
Table 12 Retail payment systems in the euro area
4.4 INTEROPERABILITY BETWEEN RETAIL PAYMENT SYSTEMS
Chart 29 Settlement of SEPA credit transfers in linked CSMs
4.5 CARD PAYMENT SCHEMES
Table 13 Card schemes operating in the euro area
5 CORRESPONDENT BANKING ARRANGEMENTS
United States
Table 14 Overview of main post-trading initiatives
3 SECURITIES AND DERIVATIVES TRADING IN THE EURO AREA
Box 22 Consolidation in the stock exchange industry
3.1 EQUITIES
Table 15 Main trading venues in the euro area as at 31 December 2008
3.2 DEBT INSTRUMENTS
3.3 DERIVATIVES
Table 17 Exchange-traded derivatives turnover
Table 18 Total outstanding amounts of OTC derivatives
Table 19 Shares of euro and US dollar-denominated OTC derivatives
Table 20 Share of EU counterparties in the global OTC derivatives market
4 CENTRAL COUNTERPARTY CLEARING IN THE EURO AREA
4.1 AN EVOLVING LANDSCAPE
Table 21 Euro area central counterparties as at end-December 2009
4.2 EQUITIES AND DEBT INSTRUMENTS
Table 22 Key statistics for European CCPs in 2008
4.3 DERIVATIVES
5 SECURITIES SETTLEMENT INFRASTRUCTURE
5.1 CSDs AND SSSs
Table 23 CSDs in the euro area
Table 24 Key statistics for euro area CSDs and SSSs as at end-2008
Table 25 Embedded payment systems operating in euro
Box 23 Consolidation around the two ICSDs
Chart A Consolidation around the two ICSDs: Euroclear
Chart B Consolidation around the two ICSDs: Clearstream
5.2 LINKS AND THE CROSS-BORDER SETTLEMENT OF COLLATERAL
6 CUSTODY
1 TOWARDS GREATER HARMONISATION AND LEGAL CERTAINTY
Box 24 Regulations and directives
2 AREAS AND ISSUES COVERED BY EXISTING LEGISLATION
3 LEGAL ACTS CONCERNING PAYMENTS, CLEARING AND SETTLEMENT
3.1 E-MONEY DIRECTIVE
3.2 REGULATION ON CROSS-BORDER PAYMENTS IN THE COMMUNITY
3.4 PAYMENT SERVICES DIRECTIVE
3.5 SETTLEMENT FINALITY DIRECTIVE
3.6 FINANCIAL COLLATERAL DIRECTIVE
3.7 MIFID
4 LEGISLATIVE INITIATIVES
2 TARGET2
2.1 THE BACKBONE FOR THE SETTLEMENT OF PAYMENTS IN EURO
2.2 HISTORICAL BACKGROUND
Chart 34 Turnover in selected large-value payment systems
2.3 TARGET2 PROPERTIES
Chart 35 Structure of the SSP
Table 26 Operational day for TARGET2
2.4 LIQUIDITY AND ITS MANAGEMENT
Box 25 Liquidity management features in TARGET2
2.5 ACCESS AND PRICING
Table 27 Pricing scheme for TARGET2 core services
2.6 OPERATIONAL RISK MANAGEMENT
Chart 36 Structure of the TARGET2 risk management framework
2.7 SOME FIGURES
Chart 37 Resilience based on the “two regions – four sites” principle
Chart 44 The CCBM
Chart 45 CCBM2 modules
4 TARGET2-SECURITIES
4.1 INTEGRATION OF SECURITIES INFRASTRUCTURES
4.2 THE BASIC CONCEPT OF T2S
Chart 46 T2S – a single platform for settling cash and securities
4.3 MAJOR PROJECT MILESTONES
Chart 47 Timeline for the establishment of T2S
4.4 GOVERNANCE AND ORGANISATION
Chart 48 The governance structure of T2S
1 OVERSIGHT IS A CENTRAL BANK FUNCTION
3 OVERSIGHT RESPONSIBILITIES
4 SCOPE OF OVERSIGHT
Box 26 Oversight policy documents published by the Eurosystem
4.1 PAYMENT SYSTEMS
Box 27 The Eurosystem’s oversight policy on business continuity
Box 28 The oversight of retail payment systems
4.2 PAYMENT INSTRUMENTS
4.3 SECURITIES CLEARING AND SETTLEMENT SYSTEMS
4.4 CORRESPONDENT BANKS AND CUSTODIAN BANKS
4.5 THIRD-PARTY SERVICE PROVIDERS
5 OVERSIGHT METHODS
Box 31 Common oversight assessments conducted by the Eurosystem
Box 30 Payment Economics Network
6 ORGANISATIONAL SET-UP AND ALLOCATION OF ROLES WITHIN THE EUROSYSTEM
Box 32 Oversight conducted by the ECB
7 COOPERATIVE OVERSIGHT
7.2 COOPERATIVE OVERSIGHT ARRANGEMENTS
Box 33 Cooperative oversight arrangements
7.3 COOPERATION WITH OTHER AUTHORITIES
Box 34 Existing memoranda of understanding
1 A CATALYST FOR MARKET EFFICIENCY AND INTEGRATION
2 LEADERSHIP AND COORDINATION
3 AREAS OF INVOLVEMENT
3.1 INTEGRATION OF RETAIL PAYMENT MARKETS
Box 35 Ensuring stakeholder involvement: the SEPA Council
3.2 INTEGRATION OF SECURITIES INFRASTRUCTURES
4 DEVELOPING AND SHARING THE EUROSYSTEM’S EXPERTISE
1 THE LEGAL BASIS FOR EUROSYSTEM INVOLVEMENT
1.1 INTRODUCTION
1.4 THE ECB’S LEGAL ACTS AND INSTRUMENTS
Box 36 ECB legal acts and instruments1
2 THE EUROSYSTEM’S COOPERATION FRAMEWORK
2.1 THE NEED FOR INTERACTION
2.4 INTERACTION AT THE GLOBAL LEVEL
3 ORGANISATION WITHIN THE ECB AND THE EUROSYSTEM
3.1 DECISION-MAKING BODIES OF THE ECB
3.2 ORGANISATION AT THE ECB
3.3 ADVISORY BODIES TO THE ECB’S DECISION-MAKING BODIES
BIBLIOGRAPHY
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Payment System 200909 En

Payment System 200909 En

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Published by Michiel Beerens

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Published by: Michiel Beerens on Sep 29, 2011
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