02014R0795 — EN — 25.05.2021 — 002.001
This text is meant purely as a documentation tool and has no legal effect. The Union's institutions do not assume any liability for its contents. The authentic versions of the relevant acts, including their preambles, are those published in the Official Journal of the European Union and available in EUR-Lex. Those official texts are directly accessible through the links embedded in this document
REGULATION OF THE EUROPEAN CENTRAL BANK (EU) No 795/2014 of 3 July 2014 on oversight requirements for systemically important payment systems (OJ L 217 23.7.2014, p. 16) |
Amended by:
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Official Journal |
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No |
page |
date |
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REGULATION (EU) 2017/2094 OF THE EUROPEAN CENTRAL BANK of 3 November 2017 |
L 299 |
11 |
16.11.2017 |
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REGULATION (EU) 2021/728 OF THE EUROPEAN CENTRAL BANK of 29 April 2021 |
L 157 |
1 |
5.5.2021 |
REGULATION OF THE EUROPEAN CENTRAL BANK (EU) No 795/2014
of 3 July 2014
on oversight requirements for systemically important payment systems
(ECB/2014/28)
Article 1
Subject matter and scope
A payment system shall be identified as a SIPS if: (a) it is eligible to be notified as a system pursuant to Directive 98/26/EC by a Member State whose currency is the euro or its operator is established in the euro area, including establishment by means of a branch, through which the system is operated; and (b) at least two of the following occur over a calendar year:
the total daily average value of euro-denominated payments processed exceeds EUR 10 billion;
the total euro-denominated payments processed represent at least one of the following:
its cross-border activity (i.e. participants established in a country other than that of the SIPS operator and/or cross border links with other payment systems) involves five or more countries and generates a minimum of 33 % of the total volume of euro-denominated payments processed by that SIPS;
it is used for the settlement of other FMIs.
An identification exercise shall be performed on an annual basis.
Nothwithstanding paragraph 3, the Governing Council, exercising sound and reasoned judgement, may also decide under paragraph 2 that a payment system shall be identified as a SIPS in either of the following cases:
where such a decision would be appropriate taking into account the nature, size and complexity of the payment system; the nature and importance of its participants; the substitutability of the payment system and the availability of alternatives to it; and the relationship, interdependencies, and other interactions the system has with the wider financial system;
where a payment system does not meet the criteria set out in paragraph 3 solely because the criteriaestablished in point (b) of paragraph 3 occur over a period of less than a calendar year and it is plausible that the payment system will continue to meet the criteria when assessed in the next verification review.
A decision adopted under paragraph 2 shall remain in force until it has been repealed. Verification reviews of payment systems that have been identified as SIPS shall be carried out on an annual basis to verify that the payment systems continue to meet the criteria for being identified as SIPS. A decision adopted pursuant to paragraph 2 shall be repealed if:
in two consecutive verification reviews it is verified that a SIPS has not met the criteria set out in paragraph 3 and/or paragraph 3-a; or
in one verification review it is verified that a SIPS has not met the criteria set out in paragraph 3 and/or paragraph 3-a and the SIPS operator demonstrates, to the satisfaction of the Governing Council, that the SIPS is unlikely to meet those criteria prior to the next verification review.
Article 2
Definitions
For the purposes of this Regulation:
‘payment system’ means a formal arrangement between three or more participants, not counting possible settlement banks, central counterparties, clearing houses or indirect participants, with common rules and standardised arrangements for the execution of transfer orders between the participants;
‘transfer order’ has the same meaning as defined in Article 2(i) first indent of Directive 98/26/EC;
‘systemic risk’ means the risk of a participant or the SIPS operator not meeting their respective obligations in a SIPS will cause other participants and/or the SIPS operator to be unable to meet their obligations when they become due, potentially with spillover effects threatening the stability of or confidence in the financial system;
‘SIPS operator’ means the legal entity legally responsible for operating a SIPS;
“competent authority” means:
the Eurosystem national central bank with primary oversight responsibility identified as such pursuant to Article 1(2); or
in relation to a payment system which is a SIPS that meets the criteria in Article 1(3)(iii) ‘competent authority’ means either:
the ECB; or
where a Eurosystem national central bank was entrusted with primary oversight responsibility for a period of five or more years immediately before the decision referred to in Article 1(2) was taken, both the ECB and that national central bank;
‘Eurosystem SIPS’ means SIPS owned and operated by a Eurosystem central bank;
‘legal risk’ means the risk arising from the application of law or regulation, usually resulting in a loss;
‘credit risk’ means the risk that a counterparty, whether a participant or other entity, will be unable to fully meet its financial obligations when they fall due or at any time in the future;
‘liquidity risk’ means the risk that a counterparty, whether a participant or other entity, will have insufficient funds to meet its financial obligations when they fall due, although it may have sufficient funds to do so in the future;
‘operational risk’ means the risk that deficiencies in information systems or internal processes, human error, management failures, or disruptions caused by external events or outsourced services will result in the reduction, deterioration or breakdown of services provided by a SIPS;
‘custody risk’ means the risk of incurring a loss on assets held in custody in the event of a custodian's or sub-custodian's insolvency, negligence, fraud, poor administration or inadequate recordkeeping;
‘investment risk’ means the risk of loss faced by a SIPS operator or participant when the SIPS operator invests its own or its participants' resources, e.g. collateral;
‘market risk’ means the risk of losses, in both on- and off-balance sheet positions, arising from movements in market prices;
‘deferred net settlement system’ (DNS system) means a system in relation to which settlement in central bank money takes place on a net basis at the end of a predefined settlement cycle, e.g. at the end of, or during, a business day;
‘cross-border collateral’ means collateral for which, from the perspective of the country in which the assets are accepted as collateral, at least one of the following is foreign: (a) the currency of denomination; (b) the country in which the assets are located; or (c) the country in which the issuer is established;
‘cross-border payment’ means a payment between participants established in different countries;
‘financial market infrastructure’ (FMI) means a multilateral system among participating institutions, including the system operator, used to clear, settle, or record payments, securities, derivatives, or other financial transactions;
‘direct participant’ means a legal entity that has a contractual relationship with a SIPS operator, is bound by the relevant SIPS's rules, is allowed to send transfer orders to that system and is capable of receiving transfer orders from it;
‘indirect participant’ means a legal entity that does not have direct access to a SIPS's services and is typically not directly bound by the relevant SIPS's rules, and whose transfer orders are cleared, settled and recorded by the SIPS through a direct participant. An indirect participant has a contractual relationship with a direct participant. The relevant legal entities are limited to:
credit institutions as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council ( 1 ),
investment firms as defined in point (1) of Article 4(1) of Directive 2004/39/EC of the European Parliament and of the Council ( 2 ),
any undertaking whose head office is outside the Union and whose functions correspond to those of a Union credit institution or investment firm, as defined in points (i) and (ii),
public authorities and publicly guaranteed undertakings, and central counterparties, settlement agents, clearing houses and system operators as defined in Article 2(c), (d), (e) and (p) of Directive 98/26/EC,
‘the Board’ means the administrative or supervisory board of a SIPS operator, or both, in accordance with national law;
‘the Management’ means executive directors, i.e. members of a unitary board who are engaged in the daily management of the SIPS operator and members of a managerial board of the SIPS operator in a dual board system;
‘relevant stakeholders’ means participants, FMIs that have an impact on the risk in a SIPS, and, on a case-by-case basis, other affected market actors;
‘credit exposure’ means an amount or value at risk that a participant will not settle for full value, either when due or at any time thereafter;
‘collateral’ means an asset or third-party commitment that is used by a collateral provider to secure an obligation vis-à-vis a collateral taker. Collateral includes both domestic and cross-border collateral;
‘liquidity provider’ means a provider of cash under Articles 5(3), 6(5), 8(1), 8(9) and 8(11) or assets under Article 8(4), including a SIPS participant or external party;
‘extreme but plausible market conditions’ means a comprehensive set of historical and hypothetical conditions, including the most-volatile periods that have been experienced by the markets the SIPS serves;
‘intended settlement date’ means the date that is entered into SIPS as the settlement date by the sender of a transfer order;
‘general business risk’ means any potential impairment of the financial position of the SIPS as a business concern as a consequence of a decline in its revenues or an increase in its expenses, such that expenses exceed revenues and result in a loss that must be charged against capital;
‘recovery plan’ means a plan developed by a SIPS operator to re-establish the smooth operation of a SIPS;
‘orderly wind-down plan’ means a plan developed by a SIPS operator for the orderly closure of a SIPS;
‘material’ qualifies a risk, a dependency and/or a change which may affect the ability of an entity to perform or provide services as expected;
‘relevant authorities’ means authorities who have a legitimate interest in accessing information from a SIPS to fulfil their statutory requirements, e.g. resolution authorities and supervisors of major participants;
‘principal risk’ means the risk that a counterparty will lose the full value involved in a transaction, i.e. either the risk that a seller of a financial asset will irrevocably deliver the asset, but not receive payment, or the risk that a buyer of a financial asset will irrevocably pay for, but not receive the asset;
‘custodian bank’ means a bank holding and safeguarding the financial assets of third parties;
‘settlement bank’ means a bank holding accounts with regards to payments, where the discharge of obligations arising from a payment system takes place;
‘nostro agent’ means a bank used by the participants in a SIPS for settlement;
‘one-sided payment’ means a payment involving only one funds transfer in one currency;
‘two-sided payment’ means a payment involving two funds transfers in different currencies in an exchange-for-value settlement system;
‘wrong-way risk’ means risk arising from exposure to a participant or issuer when the collateral provided by that participant or issued by that issuer is highly correlated with its credit risk;
‘business day’ has the same meaning as defined in Article 2(n) of Directive 98/26/EC;
‘independent director’ means a non-executive member of the Board who has no business, family or other relationship that raises a conflict of interests regarding the SIPS or SIPS operator, their controlling shareholders, their management or their participants, and who has had no such relationship during the two years preceding their membership of the Board;
‘affiliate’ means a company that controls, or is controlled by, or is under control with, the participant. Control of a company is defined as (a) ownership, control or holding of 20 % or more of a class of voting securities of the company; or (b) consolidation of the company for financial reporting purposes;
‘emergency situation’ means an event, occurrence or circumstance that has the capacity to lead to the loss of or disruption to a SIPS's operations, services, or functions, including interfering with or preventing final settlement;
‘financial obligations’ means legal obligations arising, within the SIPS, between participants or between participants and the SIPS operator, as a consequence of transfer orders being entered into that SIPS;
‘corrective measure’ means a specific measure or action, regardless of its form, duration or gravity, that is imposed on a SIPS operator by a competent authority to remedy, or avoid a repetition of, non-compliance with the requirements of Articles 3 to 21.
Article 2a
Written notice of the initiation of the process to identify a payment system as a SIPS
The ECB shall notify the payment system operator of its intention to initiate a process under Article 1 in view of the identification of that payment system as a SIPS. The written notice shall state all material facts and legal grounds regarding a possible identification of the payment system concerned as a SIPS.
Article 2b
Right of access to files during the process to identify a payment system as a SIPS
Upon receipt of the written notice referred to in Article 2a, the payment system operator shall be entitled to access the ECB’s files, documents or other material that serve as a basis for the identification of that payment system as a SIPS. This right shall not extend to information deemed to be confidential in relation to the ECB, a national central bank, or other third parties, including other Union institutions or bodies.
Article 2c
Right to be heard during the process to identify a payment system as a SIPS
Article 2d
Motivation of the decision identifying a payment system as a SIPS
Article 3
Legal soundness
Article 4
Governance
The Board's roles and responsibilities shall be clearly defined. The Board's roles and responsibilities shall include all of the following:
establishing clear strategic aims for the SIPS;
establishing documented procedures for the SIPS' functioning, including procedures to identify, address and manage conflicts of interest of its members;
with the exception of Eurosystem SIPS, ensuring the effective selection, monitoring, and, where appropriate, removal of members of Management;
with the exception of Eurosystem SIPS, establishing appropriate compensation policies, consistent with best practices and based on long-term achievements.
Management's role, responsibilities and reporting lines shall be clearly defined. The composition shall ensure integrity and an appropriate mix of technical skills, knowledge and experience both of SIPS and of the financial market in general, allowing Management to fulfil its responsibilities for the operation and risk management of the SIPS operator. Management's responsibilities shall include, under Board direction, ensuring all of the following:
that the SIPS operator's activities are consistent with its objectives, strategy and risk tolerance;
that internal controls and related procedures are appropriately designed, executed and overseen in order to promote the SIPS operator's objectives;
that internal controls and related procedures are subject to regular review and testing by well-trained and sufficiently staffed risk-management and internal-audit functions;
active involvement in the risk-control process;
that sufficient resources are allocated to the SIPS's risk-management framework.
The Board shall establish and oversee a documented risk-management framework, which shall:
include the SIPS operator's risk-tolerance policy;
assign responsibilities and accountability for risk decisions;
address decision making in crises and emergencies;
address internal control functions.
The Board shall ensure that there are three clear and effective lines of defence (operations, risk management and internal audit), which are separate from each other and have sufficient authority, independence, resources and access to the Board.
Article 5
Framework for the comprehensive management of risks
A SIPS operator shall establish and maintain a sound risk-management framework to comprehensively identify, measure, monitor and manage the range of risks that arise in or are borne by the SIPS. It shall review the risk-management framework at least annually. The risk-management framework shall:
include the SIPS operator's risk-tolerance policy and appropriate risk-management tools;
assign responsibility and accountability for risk decisions;
address decision-making in emergency situations relating to a SIPS, including developments in financial markets potentially having an adverse effect on market liquidity and the stability of the financial system in any Member State whose currency is the euro where the SIPS operator or one of the participants are established.
Article 6
Credit risk
A SIPS operator operating a DNS system shall ensure that
financial obligations are established no later than the moment at which a transfer order is included in the calculation of the net settlement positions accessible to each participant; and
sufficient resources are held to cover the resulting credit exposures in accordance with paragraphs 3 and 4 at the latest at the moment referred to in point (a).
Article 7
Collateral
A SIPS operator shall only accept the following assets as collateral: (a) cash; and (b) assets with low credit, liquidity and market risks, i.e. assets for which the SIPS operator can demonstrate to the competent authority based on an adequate internal assessment that they meet all of the following conditions:
they have been issued by an issuer with low credit risk;
they are freely transferable without any legal constraint or third party claims;
they are denominated in a currency the risk of which is managed by the SIPS operator;
they have reliable price data published on a regular basis;
they are not otherwise subject to significant wrong-way risk;
they are not issued by the participant providing the collateral or an entity that is part of the same group as that participant, except in the case of a covered bond and only where the assets in the cover pool are appropriately segregated within a robust legal framework and satisfy the requirements set out in points (i) to (v).
In performing the internal assessment of points (i) to (vi), the SIPS operator shall define, document and apply an objective methodology.
Article 8
Liquidity risk
A SIPS operator operating a DNS system shall ensure that
financial obligations are established no later than the moment at which a transfer order is included in the calculation of the net settlement positions accessible to each participant; and
sufficient liquid resources are held in accordance with paragraphs 3 to 6 at the latest at the moment referred to in point (a).
A SIPS operator settling one-sided payments in euro shall hold, or ensure that participants hold, sufficient liquid resources, in accordance with paragraph 3, to effect timely settlement of financial obligations in the event of a default of the participant which, together with its affiliates, has the largest aggregate financial obligation as determined by paragraph 3(a), in any of the following ways:
in cash with the Eurosystem; or
in eligible collateral as defined in the collateral framework of the Eurosystem laid down in Guideline (EU) 2015/510 of the European Central Bank (ECB/2014/60) ( 5 ) and Guideline ECB/2014/31 of the European Central Bank ( 6 ) provided that the SIPS operator can demonstrate that such collateral is readily available and convertible into cash on a same-day basis using prearranged and highly reliable funding arrangements, including in stressed market conditions.
A SIPS operator settling one-sided payments in euro shall hold, or ensure that participants hold, additional liquid resources, in accordance with paragraph 3(b), in the ways referred to in paragraph 4 or with a creditworthy commercial bank in one or more of the following instruments:
committed lines of credit;
committed foreign exchange swaps;
committed repos;
assets meeting the requirements of Article 7(1), which are held by a custodian;
investments.
All of these instruments must allow cash to be available within a timeframe that allows the completion of same-day settlement. In particular, the SIPS operator must be able to demonstrate that non-cash instruments are readily available and convertible into cash on a same-day basis using prearranged and highly reliable funding arrangements, including in stressed market conditions.
The SIPS operator shall be prepared to demonstrate to the competent authority, based on an adequate internal assessment, that the commercial bank is creditworthy.
When such scenarios are considered, the design and operation of the SIPS shall be taken into account and all entities that might pose material liquidity risks to the SIPS shall be examined, including settlement banks, nostro agents, custodian banks, liquidity providers and linked FMIs. Where appropriate, the scenarios shall cover a multiday period.
A SIPS operator shall establish clear rules and procedures enabling the SIPS to effect same-day and, where appropriate, timely intraday and multiday settlement of financial obligations following the default of one or more of its participants. These rules and procedures shall:
address unforeseen and potentially uncovered liquidity shortfalls;
aim to avoid the unwinding, revocation or delay of same-day settlement of financial obligations;
indicate how to replenish the cash and other assets used by the SIPS during a stress event, to the extent required pursuant to paragraphs 3 to 5.
Article 9
Final settlement
A SIPS operator shall establish rules and procedures to enable final settlement to take place no later than the end of the intended settlement date.
Article 10
Money settlements
If a settlement takes place in commercial bank money, a SIPS operator's legal agreements with any commercial settlement banks shall state clearly:
when transfers on the books of individual settlement banks are expected to occur;
that transfers are to be final when effected;
that funds received shall be transferable as soon as possible, at least by the end of the day.
Article 11
Payment versus payment
A SIPS operator using a payment versus payment mechanism shall eliminate principal risk by ensuring that the final settlement of one obligation occurs if and only if the final settlement of the linked obligation also occurs. This rule shall be followed regardless of whether settlement takes place on a gross or net basis and when finality occurs.
Article 12
Participant-default rules and procedures
A SIPS operator shall have default rules and procedures that enable it to continue to meet its obligations in the event of a participant default, which address the replenishment of resources following a default. The rules and procedures shall define, as a minimum, all of the following:
the actions that a SIPS operator can take when a default occurs;
whether taking such actions is automatic or discretionary and the means by which that discretion is exercised;
potential changes to a SIPS operator's normal settlement practices to ensure timely settlement;
the management of payments at different stages of processing;
the probable sequencing of actions;
the roles, obligations and responsibilities of the relevant parties, including non-defaulting participants;
other mechanisms to be activated to limit the impact of a default.
A SIPS operator shall publicly disclose the key aspects of the rules and procedures outlined in paragraph 2, including, as a minimum, all of the following:
the circumstances in which action shall be taken;
who shall take those actions;
the scope of the actions which shall be taken;
the mechanisms to address a SIPS operator's obligations towards non-defaulting participants.
Article 13
General business risk
Article 14
Custody and investment risks
Article 15
Operational risk
Article 16
Access and participation criteria
Article 17
Tiered participation arrangements
For the purpose of risk management, a SIPS operator shall ensure that the SIPS's rules, procedures and contractual arrangements allow it to gather information about indirect participation in order to identify, monitor and manage any material risks to the SIPS arising from participation. This information shall, as a minimum, cover the following:
the activity that direct participants conduct on their own behalf and on behalf of indirect participants in proportion to the activity at system level;
the number of indirect participants that settle via individual direct participants;
the volumes and values of payments in the SIPS originating from each indirect participant;
the volumes and values of payments referred to in point (c) in proportion to those of the direct participant through which the indirect participant accesses the SIPS.
Article 18
Efficiency and effectiveness
A SIPS operator shall have a process to identify and meet the needs of the markets the SIPS serves, in particular, with regard to:
choice of a clearing and settlement arrangement;
operating structure;
scope of products cleared or settled;
use of technology and procedures.
Article 19
Communication procedures and standards
A SIPS operator shall use or accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, settlement and recording.
Article 20
Disclosure of rules, key procedures and market data
Article 21
Powers of a competent authority
A competent authority shall have the power to:
obtain, at any time, from a SIPS operator all of the information and documents necessary to assess compliance with the requirements under this Regulation or to promote the smooth operation of payment systems at systemic level. The SIPS operator shall report the relevant information to the competent authority without undue delay;
require a SIPS operator to appoint an independent expert to perform an investigation or independent review on the operation of the SIPS. The competent authority may impose requirements concerning the type of expert to be appointed, the content and scope of the report to be produced, the treatment of the report, including disclosure and publication of certain elements, and timing for the production of the report. A SIPS operator shall inform the competent authority how the imposed requirements have been satisfied;
conduct on-site inspections or delegate the carrying out of on-site inspections. Where the proper conduct and efficiency of an inspection so requires, the competent authority may carry it out without prior announcement.
Article 21a
Organisation of oversight activities
A competent authority may carry out continuous and/or ad hoc oversight activities to assess the compliance by a SIPS operator with the requirements set out in Articles 3 to 21 or to promote the smooth operation of payment systems at systemic level.
Article 21b
Confidentiality
Information shared by a SIPS operator with a competent authority on a confidential basis may be shared within the European System of Central Banks (ESCB). Such information shall be treated as confidential by the members of the ESCB, in accordance with the duty of professional secrecy laid down in Article 37.1 of the Statute of the ESCB.
Article 22
Corrective measures
Where a SIPS operator has not complied with this Regulation or where there are reasonable grounds for suspecting that a SIPS operator has not complied with this Regulation, the competent authority shall:
give written notice to the SIPS operator of the nature of the non-compliance or suspected non-compliance; and
give the SIPS operator the opportunity to be heard and to provide explanations.
Article 23
Sanctions
In the case of an infringement of this Regulation, the ECB may impose sanctions. Such sanctions shall be in accordance with Regulation (EC) No 2532/98 and Regulation (EC) No 2157/99 of the European Central Bank (ECB/1999/4) ( 8 ). The ECB shall adopt a decision on the methodology for the calculation of the amount of the sanctions.
Article 24
Review
The Governing Council shall review the general application of this Regulation by no later than two years following the date on which it enters into force, and thereafter every three years, and assess whether it needs to be amended.
Article 25
Final provisions
( 1 ) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
( 2 ) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ L 145, 30.4.2004, p. 1).
( 3 ) Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35).
( 4 ) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, p. 7).
( 5 ) Guideline (EU) 2015/510 of the European Central Bank of 19 December 2014 on the implementation of the Eurosystem monetary policy framework (ECB/2014/60) (OJ L 91, 2.4.2015, p. 3).
( 6 ) Guideline ECB/2014/31 of the European Central Bank of 9 July 2014 on additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral and amending Guideline ECB/2007/9 (OJ L 240, 13.8.2014, p. 28).
( 7 ) Council Regulation (EC) No 2532/98 of 23 November 1998 concerning the powers of the European Central Bank to impose sanctions (OJ L 318, 27.11.1998, p. 4).
( 8 ) Regulation (EC) No 2157/99 of the European Central Bank of 23 September 1999 on the powers of the European Central Bank to impose sanctions (ECB/1999/4) (OJ L 264, 12.10.1999, p. 21).