The European Central Bank (ECB) has identified four systemically important payment systems (SIPS), which are subject to new regulations that came into effect on 12 August 2014. The regulations cover large-value and retail payment systems in the euro area operated by both central banks and private entities, and aim to ensure efficient management of risks as well as sound governance.
The four SIPS include TARGET2, operated by the Eurosystem; EURO1 and STEP2-T, operated by EBA CLEARING; and CORE(FR), operated by STET, a joint initiative of six major French banks. They were identified according to the combination of at least two of four main criteria: the value of payments settled, market share, cross-border relevance and provision of services to other infrastructures. The Eurosystem will review this list annually on the basis of updated statistical data.
This is the first time that the ECB has made use of its regulatory powers in the field of payment systems oversight. The SIPS Regulation is stricter than previous oversight standards and calls for sanctions and corrective measures in the case of non-compliance. Furthermore, it implements and is consistent with the “Principles for financial market infrastructures” (PFMIs), introduced in April 2012 by the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements and the International Organization of Securities Commissions (IOSCO).
“With this regulation, Europe is consolidating international practice for the oversight of SIPS into EU law, as with past efforts for other financial market infrastructures, such as the European Market Infrastructure Regulation for the supervision of central counterparties and trade repositories, and the ongoing regulatory initiative for central securities depositories,” said Benoît Cœuré, member of the ECB’s Executive Board and Chairman of the CPSS.
Eurosystem central banks with primary oversight responsibilities for one or more payment systems, are expected to regularly assess compliance of these systems with the SIPS Regulation.
For consistency with international practice, and to take account of the increased integration of retail payment systems in the Single Euro Payments Area (SEPA), the Eurosystem has also undertaken a comprehensive review of the oversight standards for euro retail payment systems that are not SIPS initially adopted in June 2003. As the result of this review, the ECB has published the Revised Oversight Framework for Retail Payment Systems.
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