Summary of the May 2010 joint meeting of the TWG and WGT2

Transcription

1 JOINT TWG-WGT2 18 June 2010 WGT2/2010/131-rev Summary of the May 2010 joint meeting of the TWG and WGT2 Held on Wednesday, 12 May :00 to 12:30 C.E.T at the Hotel Lev (conference room "Karantanija" ground floor), Ljubljana, Slovenia (hotel address: Vošnjakova ulica 1, 1000 Ljubljana) 1. Introduction Mr Sylvain Debeaumont (WGT2 Chairperson, ECB) welcomed the participants to the joint meeting in Ljubljana. On behalf of the joint group, Mr Roger Jones (TWG Chairperson) and Mr Debeaumont thanked Mr Sašo Črnugelj (WGT2 representative from Slovenia) and colleagues at the Banka Slovenije for the organisation and for hosting the May joint meeting. The agenda was adopted by the joint group. Upon the request from Mr Gerd Luebke Chairman of the Back-up Task Force, the reporting to the joint group on Task Force developments was agreed to take place at the beginning of the joint meeting (see reporting in agenda item 3.2). Due to tight flight schedules and the need for WGT2 to resume its meeting in the afternoon, the joint group agreed to close the joint meeting half and hour earlier, at 12: Reporting 2.1 TWG meeting Most of the issues discussed by the TWG in its May meeting were included in the agenda. Mr Roger Jones (TWG Chairperson) suggested covering them as they came up. In addition to these points and on behalf of the TWG he referred to the following: - Release management procedures: The TWG regarded the recent changes to the procedures as positive (e.g. the template for collecting changes and the extended time for user feedback), but still with some room for improvement. The TWG stands ready to contribute with a concrete proposal for fine tuning the procedures before the definition of the release 6.0. A proposal could be presented in the September 2010 joint TWG-WGT2 meeting.

2 - The two sets of Guidelines 1 have been reviewed and are expected for publication beginning of June 2010 on the EBF-FBE website ( plus the other ECSA websites. Comments by the joint group would be welcomed. - Around the interactions with T2S, the TWG would appreciate feedback to the questions raised in the February joint meeting. These were in relation to (i) the so-called change request number 8 discussed in the context of the changes to ISO standards; ii) the usage of ISO standards and their coexistence with FIN standards; and (iii) the use of the network. 2 Mr Jones highlighted the importance of identifying the issues at an early stage and advocated for TWG involvement on T2S issues affecting the cash management function. - The Danish user community raised the question whether it would be possible for non-euro countries to grant euro credit in the night time settlement in T2S. - In the March COGEPS meeting a presentation was made on the subject Liquidity management and Eurosystem services. Stemming from the presentation, Mr Jones would appreciate an explanation on a number of issues. On the release management procedures, Mr Debeaumont flagged that an advance notification would be appreciated on the issues where the TWG feels there is some room for improvement. After notification of the issues the WGT2 would be ready to assess them. On the question from the Danish community, Mr Debeaumont clarified that the issue has already been raised by Danmarks National bank itself and that discussions are about to take place. Once a decision is adopted by the central banks it will be communicated to the user community. Finally, since the joint group participants were neither present in the March COGEPS meeting nor had access to the presentation, it was agreed that questions are formulated in writing and sent to the ECB [Rapporteur s note: A response to the questions provided by Mr Jones was sent on Tuesday, 25 May]. 2.2 WGT2 meeting Since the last joint meeting in February the WGT2 had discussed a number of topics that are included in the agenda. These are the ongoing work on the implementation of release 4.0 including the preparation of the testing activities (the planning of which was published end April) and the amendment to the legal documentation, for which a presentation to the joint group was prepared. The WGT2 also discussed the outcome of the analysis carried out by the central banks in the context of the 1 st user consultation for the SSP release 5.0, and on the latest activities and developments around the interdependencies between T2 and T2S. A debriefing was also expected on the TARGET2 traffic figures for the first quarter 2010, and on forthcoming communication events. In addition the WGT2 has been engaged in the following: - The central banks have initiated a letter reply to the TWG letter dated 8 th March 2010 on issues around the Internet-based participation. In addition to the amendments to the TARGET2 Guideline, the letter includes reassurances to the concerns raised around the use of platform BIC 1 2 European Interbank Guidelines on Liquidity Management, and European Interbank Compensation Guidelines. More detailed on the questions raised are available on item 5, summary of the February 2010 meeting: 2

3 and the security requirements. [Rapporteur s note: The letter was sent to the TWG Secretariat on Friday, 28 May 2010]. - The WGT2 is working on the Static Data forms for the SSP release 4.0 as well as the new version of the static data user manual, to be published on the T2 website in the coming weeks. The majority of new/updated forms are related to introduction of Internet-based participants. - An effort is being made on the side of WGT2 to ensure the quality and coherence of TARGET2 statistics, for the benefit of the data that is shared with users and the general public. One step in this direction is the 2009 data available in the TARGET Annual Report (covered in agenda point 6.1), which is the first comprehensive publication under the new framework for TARGET2 payments statistics. - The WGT2 worked on the designation of credit institutions as critical participants. According to the tentative schedule the central banks will start notifying the critical participants beginning of June Statistics were collected on the basis of the 1 st quarter 2010 and a number of credit institutions were identified. The WGT2 is currently reviewing the requests for reclassification raised by individual central banks. It is worth noting that the top-five institutions only represent 15% of the total TARGET2 value, which denotes a very fragmented scene from a liquidity viewpoint. In the context of the designation of critical participants, the group also considered other standards than the ISO/IEC 17799:2005 that could be accepted for the self certification. For the time being only one request for assessment has been received, but any further demand would always be looked at Eurosystem level and all standards that are deemed acceptable would be published on the TARGET2 website. 3. SSP new releases 3.1 SSP release 4.0 (Nov 2010) On Thursday 29 April the testing activities and detailed test cases for interoperability testing for SSP release version 4.0 were published on the T2 website and notified to TWG members. The communication specifies the testing requirements as well as the testing procedures applicable to that release. 3 In a letter dated 08 March 2010 (EBF ref: 0068) the TWG expressed interest to see the amendments to the Guideline before the Governing Council approval, but neither the current procedures nor the envisaged timeline allow for a prior consultation. Nevertheless, to partially accommodate to the TWG request, Ms Sara Testi (ECB) made a presentation to the joint group on the nature and the structure of the amendments to the Guideline. The inclusion of Internet-based access in the legal texts has a very limited impact for the current (SWIFT) participants. The supplementary conditions that would apply to participants using the Internet-based access are included in a newly created Annex 5. To avoid inconsistencies in relation to possible cases of (T2 participant) insolvency, the rules for access of intraday credit will be aligned in the Guideline with those for monetary policy operations. This alignment will be part of the Guideline s revision corresponding to the release 4.0. In view of the TWG, the Internet-based participation would be acceptable as long as it is limited to the interactions with the Central Bank. It was therefore requested that the legal documentation reflects unequivocally this limitation applicable to Internet-based accounts. 3 For further information on the test procedures, please refer to the Guide for TARGET2 User Testing also available on the T2 website. 3

4 Mr Debeaumont however recalled that in the framework of the user consultation there had been requests from participants to use the Internet-based access for processing payments, even though the business case was primarily for the purpose of operations with the central bank. For that reason the request expressed by the TWG could not be accommodated. TWG representatives insisted that for current direct participants it is very important to identify the (real) participant that is sending the payment, also for the definition of bilateral limits. In the case of payments from Internet-based accounts this is assumed as problematic since the sender BIC would be a platform BIC and system changes would be needed at the level of participants to ensure identification of the true sending participant. However, Eurosystem-3CB representatives confirmed that in case of payments from Internet-based accounts (i.e. from a platform BIC) the direct participants would be able to unambiguously identify the participant on the sending side (i.e. field 52). It was also clarified that the formatting of payments initiated by Internet-based participants would be similar to that of mandated payments, transactions with which direct participants are already coping today. However, Mr. Jones explained that there were two significant differences between mandated payments and internet based access payments, namely: 1) It is understood that mandated payments are normally of an exceptional nature resulting from problems at the level of a direct participant, hence any manual intervention that may be needed, particularly in relation to queries, is limited. 2) In practice, for mandated payments the sending central bank is treated as the counterparty but this is not considered appropriate for regular payments both from and to internet based participants. The central banks corrected that the counterparty to a mandated payment (from a legal and also practical viewpoint) is the originating bank indicated in field 52 and not the central bank in the sender field. The TWG and the WGT2 Chairpersons convened that the necessary clarifications are included in the forthcoming letter response to the TWG. 3.2 List of changes for the SSP release 5.0 (November 2011) 1. Items short-listed for detailed central bank assessment The central banks collected 31 change requests from participants for the release 5.0. In a second step the change requests were distributed to the National User Groups and to the TWG for getting their feedback. On behalf of the WGT2, the ECB prepared a summary of the feedback received, which included also the outcome of the central bank analysis as agreed by the WGT2 in its May 2010 meeting. In general the WGT2 acknowledged the significant drop of traffic and revenues in TARGET2 in In this context the WGT2 focussed on the changes that either have the potential to increase the traffic or bring real new features to the users. This means that a number of requests, which were of a comfort nature, were discarded. This approach adopted by the central banks is typically the one applied in private systems and follows the logic of sound financial practices. As a result, the WGT2 identified eight change requests that could be assessed from a cost and feasibility viewpoint, the outcome of which will serve as a basis for the second user consultation in September. The necessary clarifications were made during the joint meeting on the reasons why a few changes were not included in the list for further assessment. A communication would be prepared to announce the outcome of the central bank short listing exercise [Rapporteur s note: The communication was available on the T2 website on Tuesday, 18 May]. 4

5 Some change requests were received from NUGs/NCBs which concern T2S. The WGT2 found it would be better to consider them in the context of the interdependencies (as discussions are still ongoing) and involve the user community when appropriate. For that reason the change requests were not included in the list. 2. Back up payment functionality Mr Gerd Luebke (Chairman of the Back-up Task Force BUTF ) reported on latest developments and the way to proceed around the back up functionality 4. Clarity has been achieved on the redistribution of liquidity and major progress made with regard to the use of a different value date in field 32 to enable identification of delayed payments as well as in the area of compensation. In addition, the Task Force prepared two change requests, the optional acceptance of different value in field 32A and switch off the value date with immediate effect. The joint group thanked Mr Luebke for his debriefing. On change request (switch off the value date check with immediate effect), the central banks judged it necessary to have a solid and unanimously agreed position from the user communities/the TWG before undertaking developments, envisaged as rather heavy. It was clarified that, since not all the users would be using it, the back up payments functionality (whatever functionality that may be developed at a later stage) would be available as an optional service and pricing would need to be considered. Mr Patrick Poncelet (EBF) suggested that the back up payments functionality would render a safer, more reliable and liquid TARGET2. However, it was made clear that the unanimous support from the NUGs/the TWG to the functionality is a requisite sine qua non its development could be assessed further. 4. Interdependencies between T2 and T2S Mr Debeaumont provided the joint group with an update on the latest activities and developments around the interdependencies between T2 and T2S. For the time being the discussions are still focussing very much on the connections and procedures between the systems (e.g. coherence of static data, handling of participants exclusion, accounting reconciliation, calculation of country positions, restrictions applying to out countries). It is however expected that when the issues are mature enough and when a clearer idea exists on the yearly release when the developments have to be implemented, users will be involved in particular on the issues having an impact on their business. In general the TWG is concerned with developments in T2S that could be decided in isolation and as a result be in conflict with T2 and the cash management side. Therefore, a proactive dialogue with the central banks around T2 and T2S interactions is needed to predict and address potentially conflictive issues well in advance. The joint group agreed on the possibility to discuss whether some features that could be offered by T2S to all connected RTGS systems should be developed in TARGET2. The opportunity brought by ISO20022 for the user interface) could also be investigated. However, the TWG believes that any impact on the current FIN based structure of T2 messaging would need very careful consideration pending any move of the global payments business away from FIN. 4 Additional information on the back up functionality is available in the October 2008, March and May 2009 joint meeting summaries 5

6 In this context Mr Debeaumont recalled that the interdependencies with CCBM2 should not be underestimated. While on the functional side the impact for TARGET2 is very limited, the CCBM2 procedures are maturing and the work is starting. This is particularly the case for the operational aspects, testing and migration procedures which are currently being elaborated and which will have to be looked at from a TARGET2 viewpoint. Mr. Debeaumont also enquired whether, if it could be arranged, the TWG would appreciate a presentation on CCBM2 at the next joint meeting. The TWG Chair accepted this suggestion. On the interdependencies, and as way forward if and when needed, the idea of a small joint substructure to report to the joint TWG-WGT2 group, in similar ways as in T2 project times, might be presented to the PSSC for agreement. 5. Traffic statistics The WGT2 collected the TARGET2 statistics for the 1 st quarter of 2010 in a presentation to the joint group. The presentation covered the developments in terms of value and volume. Due to lack of time the presentation could not take place at the May joint meeting. [Rapporteur s note: The presentation was sent to the TWG Secretariat on Monday, 17 May]. 6. Any Other Business 6.1 Communication items The joint group was informed about the forthcoming publication of the TARGET2 Annual Report 2009 and the June 2010 issue of the TARGET2 Newsletter. In the September 2010 meeting the joint group will be provided with the details of the Eurosystem programme at Sibos 2010 in October in Amsterdam. The TARGET Annual Report 2009 was planned for publication on Tuesday, 18 May. 5 Similar to last year s report the TARGET Annual Report 2009 represents a more streamlined, analytic and at the same time reader-friendly version as compared to previous years. In its Chapter I the report provides information on the current TARGET2 system and background information of its predecessor. Chapter II details TARGET2 traffic activity, its performance and the main developments that took place in A number of dedicated information boxes have been included in the report covering items of special interest, for example, around the new methodology for TARGET2 payment statistics, the management of system release and the Internet-based participation. The publication of the next TARGET2 Newsletter is planned towards the end of June The central banks appreciate the proposals received from market representatives to contribute to the Newsletter; this will of course be taken into account in forthcoming issues. The June Newsletter is planned to contain an article comparing the T2 and Fedwire funds systems (Mr Bob Bucco Fed writing on T2 and Mr Patrick Papsdorf ECB writing on Fedwire funds, based on experience gained in their one-year swap), and an interview-article on a colleague who most of the joint group know well, Mr Dieter Becker (former Head of the TARGET and Collateral Division at ECB, and currently Head of the Enterprise Systems Division, Directorate General Information Systems, ECB). 5 Available on the ECB and TARGET2 websites at 6

7 6.2 Date and place of next joint meetings The next joint meeting is scheduled at the time of the September 2010 WGT2 meeting (07-08 September) at ECB premises in Frankfurt. The next joint TWG-WGT2 meeting dates are: - Wednesday 08 September (ECB) - Thursday 25 November (ECB) The meeting dates for 2010 have been chosen to fit with the planning for the SSP release 5.0. As it was the case in 2009, between the September and the November meetings the TWG and the WGT2 Secretaries will cooperate in view of proposing a joint meeting calendar in The meeting dates in 2011 will be selected to fit with the planning for the SSP release 6.0., and will likely be around similar dates/months as the joint meeting dates in 2009 and Follow up items after the February 2010 meeting An update of the follow up items after the February 2010 joint meeting is presented in the following: - Release 5.0, first consultation: The National Central Banks contacted the respective National User Groups and the ECB approached the TWG on the possible content of the release 5.0. Users feedback was collected by the central banks by 22 March Between 30 March and 22 April 2010, all collected proposals were compiled and circulated so that users could provide their feedback on changes proposed by other banking communities (see agenda point 3.2). - List of pending bugs: The Central Banks are working on a list that will be updated on a regular basis and available on the T2 website. At the time of preparing this summary the list was not yet available. - Bug corrections after release 3.0: A communication was posted on the T2 website on 19 February, announcing the bug-correction implementation in production on 08 March T2S interactions: ECB participants in the February joint meeting conveyed the concerns raised by TWG members to the T2S team. A reminder was sent shortly after the May joint meeting (more details in agenda points 2.1 and 4). - Internet-based participation: A letter from TWG to the central banks was sent on 08 March (EBF ref: 0068). A response to this letter was initiated by the central banks; its delivery to the TWG Secretariat is expected shortly after the May joint meeting (see agenda point 3.1). - Back-up functionality: The BUTF met beginning of March to further assess the technical feasibility of the back up functionality, and to formulate a change request (see agenda point 3.2.2). 7. Follow up table Task Responsible Deadline Target body 7

8 Interactions with T2S: The TWG would appreciate feedback to the questions raised in the February joint meeting (more details in agenda points 2.1 and 4). ECB - September 2010 joint meeting Release management procedures: Central banks would appreciate an advance notification on the issues the TWG feels there is some room for improvement (more details in agenda point 2.1) TWG - September 2010 joint meeting The WGT2 is working on the Static Data forms for the SSP release 4.0 as well as the new version of the manual, to be published on the T2 website after the May 2010 joint meeting. WGT2 Course of June - If possible a presentation on CCBM2 to be arranged for the September 2010 joint meeting. WGT2 - September 2010 joint meeting 8