Slide 1 TARGET2_implementation_2006_v9.ppt Name of speaker Title Institution Event name, location and date SWIFT and TARGET2

Slide 1 TARGET2_implementation_2006_v9.ppt

Name of speakerTitleInstitution

Event name, location and date

SWIFT and SWIFT and TARGET2TARGET2

2

Agenda

Concept of TARGET2Concept of TARGET2

A comprehensive set of SWIFTNet services & interfacesA comprehensive set of SWIFTNet services & interfaces

TARGET2 DirectoryTARGET2 Directory

SWIFT traffic pricingSWIFT traffic pricing

SWIFT help & educationSWIFT help & education

3

Why TARGET2 ?

Rationale for TARGET2: Strategic move to overcome drawbacks of TARGET1 and to be prepared for the future

User’s requests: – A more harmonised service level– Cost recovery problem– Adaptability problem– EU enlargement– Credibility of the Eurosystem

4

TARGET2 features and functionalities

« one single system » More robust and resilient system Harmonised interfaces to connect users Same core service for all TARGET2

participants irrespective of their location Single price structure for core service Flexible liquidity management

5

Concept of TARGET2

“Single platform” system Concentration of domestic

euro RTGSs Direct & indirect participants Full set of SWIFTNet

services and Interfaces MT, MX and XML standards Automated or manual

access Live November 2007

TARGET2 TARGET2 DirectDirectParticipantParticipant

NCBs Ancillary Systems

SWIFTNet Services

TARGET2 TARGET2 DirectDirectParticipantParticipant

TARGET2 Indirect TARGET2 Indirect ParticipantParticipant

6

Direct and indirect participation

Feature Direct participant Indirect participant

Submit/receive payments • using own SWIFT interface via direct participant

directly from SSP • via a service bureau

Own RTGS account in PM yes no

Liquidity provisioning on its RTGS account by direct participant

Liquidity control by itself by direct participant

Access to ICM yes no

Addressability directly by direct participant

BIC 8 or 11-digit published SWIFT 8 or 11-digit published

BIC SWIFT or non- SWIFT BIC

Publication in BIC/ TARGET2 as direct participant (TGT) as indirect participant

(TG+) directory

7

Ancillary systems

Ancillary systems

– Retail payment systems

– Large value payment systems

– Foreign exchange systems

– Money market systems

– Clearing houses (CCP)

– Securities Settlement systems (SSS)

SSP provides services to AS via:

– Ancillary system interface (ASI)

– Participant Interface (PI)

– Proprietary Home Account (PHA) (4 years transition period)

– Information & control Module (ICM)

8

Central Banks

Current role of Central Banks in TARGET remains in general terms unchanged. Each CB will remain fully responsible for the business relations vis-à-vis its

participants.

Responsibilities

In generalAll contacts and provision of any kind of support to their participants (credit institutions and ancillary systems)

During migrationResponsible for planning and structuring the domestic migration process

In operation– Inclusion and exclusion of participants– Monitoring the activity of participants– Provision of intraday liquidity necessary for the smooth running of the

system– Initiating payments on behalf of their own or on behalf of their participants– Billing to their participants– Handling of local contingency

9

Slovenia

SpainMalta

PolandPortugalLuxembourg

contingencyItalyNetherlandsLithuania

ForGreeceIrelandLatvia

ReservedECBFranceGermany

EstoniaFinlandCyprus

DenmarkBelgiumAustria

Group 4Group 3Group 2Group 1

Slovenia

SpainMalta

PolandPortugalLuxembourg

contingencyItalyNetherlandsLithuania

ForGreeceIrelandLatvia

ReservedECBFranceGermany

EstoniaFinlandCyprus

DenmarkBelgiumAustria

Group 4Group 3Group 2Group 1

Developments Testing 1 2 3 4

Migration windows

Migrationphase

Transitionphase

201220082006 2007

19/11/200718/02/2008 19/05/2008

15/09/2008

10

Country migration models

National Big Bang Phased Approach

Cyprus Austria Denmark Belgium Estonia Germany ECB Spain Finland Lithuania France Malta Greece Poland Italy Portugal Ireland Latvia Luxembourg Netherlands Slovenia

11

Agenda






12

Single Shared Platform and its modules

Optional Services for Central Banks

ParticipantInterface

TARGETInterlinking

Ancillarysystemsinterface

Paymentsprocessing

MonitoringMonitoring

Information and Information and Control Module Control Module

(ICM)(ICM)

PaymentsPaymentsModuleModule(PM)(PM)

(Storage, Archiving,

Files forbilling

calculation)

HomeAccounting

Module (HAM)

Standing Facilities(SF)

Reserve Management

(RM)

NCBs Credit

institutions

Ancillary

systems

Static DataStatic DataManagementManagement

(SD)(SD)

ContingencyContingencyModuleModule

(CM)(CM) CRSS

PAPSS

MandatoryMandatory

Optional

SSP

Standard Interfaces

For all

For NCB

• PAPSS (Payment and Accounting Processing Services Systems)• CRSS (Customer Related Services System)

Y-copy

Internal accounting, Collateral management, Proprietary home accounts etc.

13

TARGET2 Direct Participant

payment message

SWIFTNet FIN Copy

settlementrequest

authorisation/

refusal

SWIFTNet InterActSWIFTNet InterAct

Real-timeReal-time

SWIFTNet FileActSWIFTNet FileAct

Real-timeReal-time

Store & ForwardStore & Forward

Full set of core SWIFT messaging services

SWIFTNet FIN

SWIFTNet BrowseSWIFTNet Browse

On-line visualisationOn-line visualisationof informationof information

NCBs

Ancillary

systems

TARGET Direct Participant

TARGET2 Indirect Participants connected via TARGET2 direct participant

BranchBranch

IndirectIndirect

EU BankEU Bank

Non EU Non EU BankBank

14

Full set of core SWIFT messaging services

SWIFTNet InterAct

SWIFTNet FileAct

Secure, reliable, and STP-oriented. Appropriate for exchange of individual structured financial messages and short reports.

Secure, reliable, and flexible. Appropriate for exchange of files and batches of structured financial messages and large reports

Secure browsing with standard internet technologies. Appropriate for data exchange in thin-client browser-based financial solutions. To be used with SWIFTNet InterAct and FileAct.

SWIFTNet Browse

SWIFTNet FIN

SWIFT's core store-and-forward messaging service. A secure, reliable, resilient, access controlled, structured store-and-forward messaging service.

SWIFTNet messaging

15

SWIFTNet FIN & FIN-Copy: payment processing

Bank B

11 Payment Instruction MT103, 103+, 202,204*)

33 Settlement response(MT097)

44 Approved/SettledPayment Instruction received

55Sender / receiver notification and reporting (Optional MT012, MT019,MT900, MT910, MT940, MT950 )

22 Settlement request(MT096)

SettlementApplication

SWIFTInterface

SWIFTNet FINPaymentorder

Y- Copy11

22

44

5533

Bank A

55

16

Bank A Bank B

Optional messages

FIN Interbank transfers - between HAM accounts

SWIFTNet FINSWIFT interface

Internalpayment system

Payment processing

Participant interface

SWIFT interface

Internalpayment system

1

2

43

HAM

1 MT202 “simplified”

3 MT202 “simplified”

4MT900 to senderMT910 to receiver

2 Booking

4

17

SWIFTNet Browse overview

Service user

Workstation(running SWIFTAlliance

WebStation and a standard Browser)

Web Server andSWIFTNet Link*

Service provider

SWIFTNet Browse enables secure browser-based access (over SIPN) from an operator using a standard browser and SWIFTAlliance

WebStation to a service provider’s web server

SWIFTNet

* Typically used in conjunction with SWIFTAlliance Gateway

18

SWIFTNet Browse overviewSWIFTNet Browse transparently combines two communication mechanisms

Service user

Workstation

Web Server +SNL

Service provider

SWIFTNet Browse allows to initiate InterAct or FileAct exchanges via a secure browser link. By doing so sensitive data can be exchanged with all the security and reliability inherent to

the SWIFTNet platform, while preserving the benefits of a browser-based environment.

SWIFTNet

HTTP-S

InterAct/FileAct

HTTP-S channel only authenticates the system of the

end user

Using non-managed Web certificates

InterAct / FileAct channel authenticates

the end user

Using managed SWIFTNet PKI certificates

19

Key characteristics of SWIFTNet Browse (when used with SWIFTNet InterAct/FileAct)

Highly secure Highly secure & reliable& reliable

Highly secure Highly secure & reliable& reliable

Integration with SWIFTNet InterAct / FileAct for security sensitive data

HTTP-S exchanges secured with web-certificates for non-sensitive / un-structured exchanges

Closed User Group control SIPN

Standard Standard technologiestechnologies

Standard Standard technologiestechnologies

Client uses standard browser to navigate HTTP-S for screens and InterAct for transactions or

FileAct for file transfers

Re-utilisation of existing SWIFTNet infrastructureSingle Single

WindowWindowSingle Single

WindowWindow

Thin clientThin clientThin clientThin client Service provider does not install software at

client side

20

Real-time query &

response

SWIFTNet InterAct is used in real-time mode query & response

SWIFTNet InterAct Q& R: real-time exchange of information XML messages for SWIFTNet InterAct: Cash Management Standards Access to the SSP (mandatory and optional modules) through

SWIFTNet InterAct:

– Payments queue management

– Liquidity management

– Management of reservation and limits

– etc…

Used either in the context of person-to-application solutions (with SAB) or application-to-application (with SAG)

21

Key characteristics of SWIFTNet InterAct

Highly Highly securesecureHighly Highly securesecure

Secured with SWIFTNet PKI (managed certificates) Encryption, authentication and integrity control Non-repudiation Closed user group control SIPN

Highly Highly reliablereliableHighly Highly reliablereliable

Highly available operations Store-and-forward (not planned in

TARGET2) Delivery notification (not planned in

TARGET2)

Message validation (not planned in TARGET2) XML-based

STP STP orientedoriented

STP STP orientedoriented

Short messages (max 100 K; recommended < 20 K for RT) Higher priority vs. SWIFTNet FileAct Flexible central routing Real-time messaging requires 64K lines minimum

OtherOtherOtherOther

22

The SWIFT XML Cash Management standards AdviceStatementGetAccount & ReturnAccountGetTransaction & ReturnTransaction ModifyTransaction CancelTransaction GetLimit & Return Limit ModifyLimit DeleteLimitGetReservation & ReturnReservationModifyReservationDeleteReservationGetMember & ReturnMember ModifyMember GetBusinessDayInformation & ReturnBusinessDayInformationGetCurrencyExchangeRate & ReturnCurrencyExchangeRateGetGeneralBusinessInformation & ReturnGeneralBusinessInformationLiquidityCreditTransferLiquidityDebitTransferBackUpPaymentModifyStandingOrder Receipt

21messages

21messages

23

Real-time file download

SWIFTNet FileAct: real-time and store-and-forward

Typically used to reach a large number of counterparties

Store-and-forward file

transfer

Typically used in the context of person-to-application solutions (with SWIFTNet Browse)

FileAct RT and SnF used for:

– Reporting

– Directory distribution

Used by TARGET2 participants to pull TARGET2 directory

Store & Forward: TARGET2 sender of files (TARGET2 Directory updates)

24

Key characteristics of SWIFTNet FileAct

Any file content (structure and character set) Files size up to 250 MbFlexibleFlexibleFlexibleFlexible

Highly Highly securesecureHighly Highly securesecure

Secured with SWIFTNet PKI (managed certificates) Encryption, authentication and integrity control Non-repudiation Closed user group control SIPN

Highly Highly reliablereliableHighly Highly reliablereliable

Highly available operations Store-and-forward Delivery notification Highly reliable file transfer protocol

Lower priority vs. SWIFTNet InterAct / SWIFTNet FIN Flexible central routing Real-time file transfer requires 64K lines minimum

OtherOtherOtherOther

25

Two different technical modes for accessing the Information and Control module (ICM)

Allows direct communication between a participant’s users and ICM.

access to data of the current business day only, which are available through "pull mode".

The information is displayed in a browser running on a PC system (SWIFTAlliance Webstation)

Participants do not need to develop a special application.

User-to-Application

SWIFTNet InterAct

SWIFTNet Browse

(SWIFTNet FileAct)

Application-to-Application

SWIFTNet InterAct

SWIFTNet FileAct

Information and messages are transferred between the SSP and participants’ internal applicationA2A interface for the management of XML message flowsTherefore the participant must:

– Develop own application– Adapt existing application or– Purchase an appropriate solution

26

Accessing TARGET2

User-to-ApplicationApplication-to-

Application

Any user *

SAA/Eusers

SWIFTAlliance WebStation

orSWIFTAlliance Gateway

WebStation concentration SWIFTAlliance

Gateway Single Window

SWIFTAlliance Starter Set

ICM access mode

ICM user profile

* It is assumed user is already a SWIFTNet FIN user

27

SWIFTAlliance Gateway – Licensing & pricing ‘An easy step approach’

Profile 1 :“WebStation Concentration”

Benefits :-Flexible SAB deployment-From 5 till 320 concurrent users

Price :Starts at 7,500$ (5 users)

Profile 2 :“Automated “

Benefits :-Off-the-shelf application integration using Agents(FTA or TDA for < 200 InterAct or FileAct per day)-Flexible SAB deployment-From 1 till 320 concurrent users

Price :Starts at 14,000$ (1 User, 1 Agent)

Profile 3:“Single Window”

Benefits :-Can reside in DMZ-Scalability & resource optimisation-Resilience -Off-the-shelf application integration using Agents(FTA or TDA)-Flexible SAB deployment-From 5 till 320 concurrent users

Price:Starts at 30,000$ (5 Users, 1 Agent, 1 Host Adapter)+Traffic licence

SWIFTAllianceStarter Set

Benefits :-FileAct out-of-the box-1 concurrent user

6,500$

16,000$

28

Agenda






29

TARGET2 directory contents

ContentsContents

– Overall view of all institutions able to receive payments via the PM directly or indirectly

– Main purpose: information for automating and routing of payments

– Weekly updates based on the content of the up-to-date BIC directory (BIC directory updated monthly)

– During migration, the TARGET2 directory also contains routing information on non-migrated participants. Current TARGET Directory will exist until end of migration, mid 2008

30

TARGET2 Directory

•Distribution•provided electronically in a structured form via FileAct •set up in addition to SWIFT’s BIC directory to support the specific needs of the SSP and its users

31

Distribution

Only via FileAct. No other distribution or publication allowed

Only to direct members– Push mode: each Thursday

after close of operational day, SSP sends to all registered users a file containing changes vs. previous version of the directory

– Pull mode: at any time during service hours full content of the last version can be downloaded

Registration– Form available from the User

Helpdesk at the responsible national central bank

TARGET2 Directory

Payment Processing Chain

Payment Order

Beneficiary Bank

Name orBIC orNational Code

BIC address

RegularUpdates

32

Agenda






33

SWIFT Traffic Pricing for TARGET2

FIN Copy pricing

T-copy, Y-copy Volume of daily copies of MI Decentralized (billed to participants)

SWIFTNet InterAct or FileAct

Global tier of sender Domestic / International Standard, centralized or decentralized billing

FIN User-to-user pricing Global tier of sender Sender pays (standard billing) Non reporting / reporting Domestic / International

SN Browse Number of service end-users Centralized or decentralized billing

FIN from and to Market Infrastructure Fee independent from global tier Non reporting / reporting Standard, centralized or decentralized billing

34

Agenda






35

Where to find help ?

www.swift.com

National Central Bank

https://target2.ecb.int

• Contact details of Network Providers and Business Partners• SWIFT on-line support and FAQ’s• Updates on vendor initiatives, activities and status

36

SWIFT Training solutions

Different training modules about the business and technical implications of this new payment clearing system in relation to SWIFT

Two different modules specific to your role and requirements:

– Overview of SWIFT in TARGET2

– SWIFT infrastructure for TARGET2

Technical training courses on the SWIFTAlliance interfaces

See www.swift.com/training

37

&&uestions

Answers

Documents

Slide 1 TARGET2_implementation_2006_v9.ppt Name of speaker Title Institution Event name, location and date SWIFT and TARGET2