The European Central Bank (ECB) has highlighted four systemically important payment systems (SIPS) that will be subject to its new regulations. These are based on market share, the value of payments settled, cross-border relevance and provision of services to other infrastructures.
The four systems that have been identified are TARGET2, which is 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. Criteria used for compiling the list will be reviewed annually by the Eurosystem.
The oversight requirements, which came into force on 12th August, cover large-value and retail payment systems in the Eurozone that are operated by central banks or private firms. Its purpose is to ensure that legal, credit, liquidity, operational, custody, investment, general business and other risks are all managed efficiently, and that payment systems in the region run smoothly.
This is the first time that the ECB has applied its regulatory powers to the overseeing of payment systems and SIPS regulations are more stringent than any previous measures taken, with the threat of sanctions and other corrective measures for operators who fail to comply.
“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, Chairman of the CPSS and a member of the ECB’s Executive Board.
The Eurosystem has also conducted an extensive review of oversight standards for euro retail payment systems that are not deemed to be SIPS. Its findings have been published in the “Revised Oversight Framework for Retail Payment Systems”.
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