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ECB’s planned RTGS & TIPS platform will be part of Target Services rebrand


The European Central Bank (ECB) announced this week at SWIFT’s Sibos 2017 trade show in Toronto, Canada, that it intends to build a new real-time gross settlement (RTGS) by 2021 if it gets the permission of its governing board before the end of the year.

It will add the revamped Target2 RTGS and its Target Instant Payment Settlement (TIPS) instant payment platform to a new over-arching Target Services rebrand, which will also cover its Target2Securities (T2S) system.

A new Eurosystem Central Liquidity Management (CLM) layer – and new type of main account – will sit above the revamped single securities settlement engine, RTGS and new TIPS platform, which is due to go live by November 2018 providing instant payment capabilities for central bank money. Various connectivity options will be available to TIPS, such as SWIFTNet Instant.

Sylvain Debeaumont, head of market infrastructure, management, ECB, told the Sibos 2017 conference attendees in Canada on 16 October that the European Central Bank is undertaking the technology and organisational revamp in order to modernise itself and aid integration. In the event of any liquidity limits being breached “treasurers will get an alert from the CLM layer”, he added. This would allow users to transfer money between platforms to ensure there is liquidity “where it is needed” to comply with the Basel III capital adequacy regime and other such rules.

The overhauled Eurosystem central bank money system in Europe, including TIPS, will also benefit from a multi-currency approach in future so that the Danish Krone, for instance, and other currencies can be easily added next year.

The use of ISO20022 standards will also be mandated and a multi-network service provider framework will ensure access for all different types of financial technology (FinTech), bank and other participants.

Speaking at the same Sibos session Mehdi Manaa, head of market infrastructure, development, ECB, told the Sibos 2017 delegates that TIPS would be open to three types of users:

  • Participants.
  • Reachable parties – i.e. those who can settle instant payments via a participant’s TIPS platform.
  • Instructing parties: These can instruct on behalf of either of the above classes of user.

“We believe these simple rules provide the space for a lot of different actors and new services,” said Manaa.

He also outlined the operational details and pricing for TIPS, commenting that it will operate constantly on a 24x7x365 basis, possess a processing time of less than 10 seconds for payments, and comply with the SEPA credit transfer (SCT Inst) scheme that is going ‘live’ next month in Europe.

The maximum price of using TIPS will be EUR0.20 cents for the first two years after it goes live in November 2018, although Manaa did add he “hopes to go below this maximum price” if the platform captures enough volume in the European payment marketplace.

The consolidation of the securities, collateral and cash platforms operated by the ECB is intended to give European users of its new rebranded Target Services operation a more common, shared experience that is interoperable across market segments, open to newcomers, and more modern. The TIPS platform is a key component of the overhaul

Author: Neil Ainger