TARGET2 market infrastructure changes
The ECB is updating the TARGET2 RTGS platform to provide financial institutions with integrated and more sophisticated functionality and to support the Swift ISO20022 messages. This is a complex change program that effects all financial institutions currently making use of Target RTGS settlement and/or make use of Target accounts for their minimal reserve management. The new platform will be implemented with a Big Bang scenario and become live as of 22 November 2022.
Detailed information on Target2 changes can be found on the ECB website.
What will change
As of November 2022, the account structure at TARGET2 will change. Every bank / entity / indirect participant with reserve requirements in EUR will have to set up a new Main Cash Account (MCA) with Target. This MCA account will be used for cash & liquidity management purposes and for central bank operations (including reserve management). Dedicated Cash Accounts (DCA) will subsequently be used for RTGS, T2S and TIPS purposes, where applicable. The split between MCA and DCA is a change compared to the current structure where the accounts for RTGS and cash & liquidity management are one and the same.
The European Central Bank (T2 platform) wants to be able to monitor payment (RTGS), instant payment (TIPS), securities (T2S) services and cash and liquidity management services separately. By splitting the account structure in an MCA and DCA setup ECB addresses the increasing demand for having an effective facility for the provision of liquidity to existing and future Eurosystem payment and settlement services. It enables the use of a common data layer and harmonization of services.
If you have reserve requirements in EUR, you will have to open an MCA via your central bank. ING will continue the processing of your T2 payments and we will support your MCA/DCA funding. ING will continue the processing of your T2S account funding. The same applies for your future DCA TIPS account funding.
As of November 2022, all communication from and to the T2 platform will be done in MX (xml) format instead of the MT format we know today. From an RTGS perspective the MT1xx, MT2xx and MT9xx series will change in MX formats (PACS and CAMT). From a cash & liquidity management perspective the reserve management transfers will have to be done in CAMT.050 format.
T2S and TIPS are already on the ISO20022 standard. A number of services and components across the Eurosystem will be consolidated (e.g. single market, infrastructure gateway, reference data, data warehousing, billing). ISO20022 is the way forward towards a common and harmonized language for payment data. Benefits include more straight through processing resulting in fewer repairs and investigations, less false positives in transaction screening, better structured data for customer activity monitoring, more and better structured data for clients in their account statements.
Impact for FI clients
As of 22/11/2022 ING will be able to receive ISO20022 messages from FI clients to be settled on the T2 platform. The following messages are in scope: pacs.008, pacs.009, pacs.010, pacs.004, pacs.002, camt.056, camt.029. For outgoing payments as of November, you can still send us MT103/ 202 or opt for the new pacs.008/pacs.009 format. ING will ensure the correct routing and required format. In line with the Swift CBPR+ timelines, MT messages will be accepted until Nov 2025.
As of 22/11/2022 ING will start sending ISO20022 payment messages to FI clients. For T2, the following messages are in scope: pacs.008, pacs.009, pacs.004, pacs.002, camt.054, camt.056, camt.029. For incoming payments from T2 in your favor, ING will send MX format to your bank. ING is not offering the option to remain receiving MT messages. This is in line with the Swift strategy that all financial institutions must be able to receive MX messages as of 22/11/2022.
With respect to reporting on accounts held with ING, FI clients will continue to receive MT9xx messages. Changing current reporting messages to MX is in scope of the CBPR+ deliverables.
For clients making use of the ING sub-participation services, a special service will be implemented for funding of their Target account for cash reserve management purposes, using the new camt.050 formats. The sub-participation service is only offered by ING Belgium.
ING Belgium will offer bilateral testing options with Financial Institutions currently making use of the ING sub-participation service to guarantee a smooth migration process towards November 2022.
If you currently make use of TARGET2 services via ING Belgium, you will be contacted by your ING sales contact to discuss impact and options for testing. You can also reach out to your regular contacts with any questions related to TARGET2 Consolidation.
Swift messages in scope
As part of the TARGET2 changes the following ISO20022 message will be supported by ING as of 22/11/2022:
|MT message||ISO equivalent||MT message||ISO equivalent|
|MT202 RET||PACS.004||MT103 RET||PACS.004|
|MT103 REJ||PACS.002||MT202 RET||PACS.004|
|MT202 REJ||PACS.002||MT103 REJ||PACS.002|