Name of speaker Title Institution

Event name, location and date SWIFT and TARGET2 Name of speaker Title Institution TARGET2_implementation_2006_v9.ppt

Agenda Concept of TARGET2 A comprehensive set of SWIFTNet services & interfaces TARGET2 Directory SWIFT traffic pricing SWIFT help & education

Why TARGET2 ? • Rationale for TARGET2: Strategic move to overcome drawbacks of TARGET1 and to be prepared for the future • User’s requests: • A more harmonised service level • Cost recovery problem • Adaptability problem • EU enlargement • Credibility of the Eurosystem

TARGET2 features and functionalities • « one single system » • More robust and resilient system • Harmonised interfaces to connect users • Same core service for all TARGET2 participants irrespective of their location • Single price structure for core service • Flexible liquidity management

Concept of TARGET2 TARGET2 Indirect Participant • “Single platform” system • Concentration of domestic euro RTGSs • Direct & indirect participants • Full set of SWIFTNet services and Interfaces • MT, MX and XML standards • Automated or manual access • Live November 2007 SWIFTNet Services TARGET2 Direct Participant TARGET2 Direct Participant SSP NCBs Ancillary Systems

Direct and indirect participation Feature Direct participant Indirect participant Submit/receive payments • using own SWIFT interface via direct participant directly from SSP • via a service bureau Own RTGS account in PM yes no Liquidity provisioning on its RTGS account by direct participant Liquidity control by itself by direct participant Access to ICM yes no Addressability directly by direct participant BIC 8 or 11-digit published SWIFT 8 or 11-digit published BIC SWIFT or non- SWIFT BIC Publication in BIC/ TARGET2 as direct participant (TGT) as indirect participant (TG+) directory

Ancillary systems Retail payment systems Large value payment systems Foreign exchange systems Money market systems Clearing houses (CCP) Securities Settlement systems (SSS) SSP provides services to AS via: Ancillary system interface (ASI) Participant Interface (PI) Proprietary Home Account (PHA) (4 years transition period) Information & control Module (ICM) Ancillary systems

Responsibilities In general All contacts and provision of any kind of support to their participants (credit institutions and ancillary systems) During migration Responsible for planning and structuring the domestic migration process In operation Inclusion and exclusion of participants Monitoring the activity of participants Provision of intraday liquidity necessary for the smooth running of the system Initiating payments on behalf of their own or on behalf of their participants Billing to their participants Handling of local contingency Central Banks Current role of Central Banks in TARGET remains in general terms unchanged. Each CB will remain fully responsible for the business relations vis-à-vis its participants.

Group 1 Group 1 Group 2 Group 2 Group 3 Group 3 Group 4 Group 4 Austria Austria Belgium Belgium Denmark Denmark Cyprus Cyprus Finland Finland Estonia Estonia Germany Germany France France ECB ECB Reserved Reserved Latvia Latvia Ireland Ireland Greece Greece For For Lithuania Lithuania Netherlands Netherlands Italy Italy contingency contingency Luxembourg Luxembourg Portugal Portugal Poland Poland Malta Malta Spain Spain Slovenia Slovenia 1 2 3 4 Migration windows 2006 2007 2012 2008 Developments Testing 15/09/2008 19/11/2007 18/02/2008 19/05/2008 Migration phase Transition phase

Country migration models National Big Bang Phased Approach • Cyprus Austria • Denmark Belgium • Estonia Germany • ECB Spain • Finland Lithuania • France Malta • Greece Poland • Italy Portugal • Ireland • Latvia • Luxembourg • Netherlands • Slovenia

Single Shared Platform and its modules SSP Optional Services for Central Banks Payments Module (PM) Static Data Standing Management Facilities (SF) Payments processing (SD) PAPSS Participant Ancillary Home TARGET systems Monitoring Interface Accounting For all Interlinking Y-copy interface Module ( HAM) ( Storage , Contingency Reserve Archiving , Module Management Files for CRSS (CM) (RM) billing calculation ) Standard Interfaces For NCB Information and Control Module (ICM) Mandatory NCBs Credit Ancillary Optional Internal accounting, Collateral management, Proprietary home accounts etc. institutions systems • PAPSS (Payment and Accounting Processing Services Systems) • CRSS (Customer Related Services System)

Full set of core SWIFT messaging services TARGET2 Indirect Participants connected via TARGET2 direct participant Non EU Bank SWIFTNet FIN payment message TARGET Direct Participant Branch TARGET2 Direct Participant settlement request authorisation/ refusal Indirect EU Bank SWIFTNet FIN Copy SWIFTNet FileAct Real-time Store & Forward SWIFTNet Browse On-line visualisationof information SWIFTNet InterAct Real-time Ancillary systems NCBs

Full set of core SWIFT messaging services SWIFT's core store-and-forward messaging service. A secure, reliable, resilient, access controlled, structured store-and-forward messaging service. SWIFTNet FIN Secure browsing with standard internet technologies. Appropriate for data exchange in thin-client browser-based financial solutions. To be used with SWIFTNet InterAct and FileAct. SWIFTNet Browse SWIFTNet messaging Secure, reliable, and STP-oriented. Appropriate for exchange of individual structured financial messages and short reports. SWIFTNet InterAct Secure, reliable, and flexible. Appropriate for exchange of files and batches of structured financial messages and large reports SWIFTNet FileAct

SWIFTNet FIN & FIN-Copy: payment processing SWIFTNet FIN Payment order Y- Copy 1 Payment Instruction MT103, 103+, 202,204*) 1 4 Bank A Bank B 2 2 Settlement request (MT096) 5 5 3 3 Settlement response (MT097) SWIFT Interface 4 Approved/SettledPayment Instruction received SSP Sender / receiver notification and reporting (Optional MT012, MT019,MT900, MT910, MT940, MT950 ) 5 Settlement Application

Internal payment system Internal payment system SWIFT interface SWIFT interface FIN Interbank transfers - between HAM accounts Bank A Bank B SWIFTNet FIN 4 1 3 4 1 MT202 “simplified” 2 Booking HAM Participant interface 3 MT202 “simplified” 2 MT900 to sender MT910 to receiver 4 Payment processing Optional messages

SWIFTNet Browse overview Service user Service provider SWIFTNet Workstation (running SWIFTAlliance WebStation and a standard Browser) Web Server and SWIFTNet Link* SWIFTNet Browse enables secure browser-based access (over SIPN) from an operator using a standard browser and SWIFTAlliance WebStation to a service provider’s web server * Typically used in conjunction with SWIFTAlliance Gateway

SWIFTNet Browse overviewSWIFTNet Browse transparently combines two communication mechanisms HTTP-S channel only authenticates the system of the end user Service user Service provider Using non-managed Web certificates HTTP-S SWIFTNet Web Server +SNL InterAct/FileAct Using managed SWIFTNet PKI certificates Workstation InterAct / FileAct channel authenticates the end user SWIFTNet Browse allows to initiate InterAct or FileAct exchanges via a secure browser link. By doing so sensitive data can be exchanged with all the security and reliability inherent to the SWIFTNet platform, while preserving the benefits of a browser-based environment.

Key characteristics of SWIFTNet Browse (when used with SWIFTNet InterAct/FileAct) Highly secure & reliable • Integration with SWIFTNet InterAct / FileAct for security sensitive data • HTTP-S exchanges secured with web-certificates for non-sensitive / un-structured exchanges • Closed User Group control • SIPN Standard technologies • Client uses standard browser to navigate • HTTP-S for screens and InterAct for transactions or FileAct for file transfers Thin client • Service provider does not install software at client side • Re-utilisation of existing SWIFTNet infrastructure Single Window

SWIFTNet InterAct is used in real-time mode query & response Used either in the context of person-to-application solutions (with SAB) or application-to-application (with SAG) • SWIFTNet InterAct Q& R: real-time exchange of information • XML messages for SWIFTNet InterAct: Cash Management Standards • Access to the SSP (mandatory and optional modules) through SWIFTNet InterAct: • Payments queue management • Liquidity management • Management of reservation and limits • etc… Real-time query & response

Secured with SWIFTNet PKI (managed certificates) • Encryption, authentication and integrity control • Non-repudiation • Closed user group control • SIPN Highly secure • Highly available operations • Store-and-forward (not planned in TARGET2) • Delivery notification (not planned in TARGET2) Highly reliable STP oriented • Message validation (not planned in TARGET2) • XML-based Other • Short messages (max 100 K; recommended < 20 K for RT) • Higher priority vs. SWIFTNet FileAct • Flexible central routing • Real-time messaging requires 64K lines minimum Key characteristics of SWIFTNet InterAct

The SWIFT XML Cash Management standards AdviceStatement GetAccount & ReturnAccount GetTransaction & ReturnTransaction ModifyTransaction CancelTransaction GetLimit & Return Limit ModifyLimit DeleteLimit GetReservation & ReturnReservation ModifyReservation DeleteReservation GetMember & ReturnMember ModifyMember GetBusinessDayInformation & ReturnBusinessDayInformation GetCurrencyExchangeRate & ReturnCurrencyExchangeRate GetGeneralBusinessInformation & ReturnGeneralBusinessInformation LiquidityCreditTransfer LiquidityDebitTransfer BackUpPayment ModifyStandingOrder Receipt 21 messages

SWIFTNet FileAct: real-time and store-and-forward • FileAct RT and SnF used for: • Reporting • Directory distribution Store-and-forward file transfer Typically used to reach a large number of counterparties • Store & Forward: TARGET2 sender of files (TARGET2 Directory updates) Typically used in the context of person-to-application solutions (with SWIFTNet Browse) Real-time file download • Used by TARGET2 participants to pull TARGET2 directory

Secured with SWIFTNet PKI (managed certificates) • Encryption, authentication and integrity control • Non-repudiation • Closed user group control • SIPN Highly secure Highly reliable • Highly available operations • Store-and-forward • Delivery notification • Highly reliable file transfer protocol Flexible • Any file content (structure and character set) • Files size up to 250 Mb Key characteristics of SWIFTNet FileAct Other • Lower priority vs. SWIFTNet InterAct / SWIFTNet FIN • Flexible central routing • Real-time file transfer requires 64K lines minimum

Two different technical modes for accessing the Information and Control module (ICM) • Information and messages are transferred between the SSP and participants’ internal application • A2A interface for the management of XML message flows • Therefore the participant must: • Develop own application • Adapt existing application or • Purchase an appropriate solution • Allows direct communication between a participant’s users and ICM. • access to data of the current business day only, which are available through "pull mode". • The information is displayed in a browser running on a PC system (SWIFTAlliance Webstation) • Participants do not need to develop a special application.

Accessing TARGET2 Application-to-Application User-to-Application ICM access mode ICM user profile Any user * SWIFTAlliance WebStationor SWIFTAlliance Gateway WebStation concentration SWIFTAlliance Gateway Single Window SAA/E users SWIFTAlliance Starter Set * It is assumed user is already a SWIFTNet FIN user

Profile 3: • “Single Window” • Benefits: • -Can reside in DMZ • -Scalability & resource • optimisation • Resilience • Off-the-shelf application integration using Agents • (FTA or TDA) • -Flexible SABdeployment • From 5 till 320 concurrent users • Price: • Starts at 30,000$ (5 Users, 1 Agent, 1 Host Adapter) • + • Traffic licence 16,000$ 6,500$ • Profile 2 : • “Automated “ • Benefits: • -Off-the-shelf application • integration using Agents • (FTA or TDA for < 200 InterAct or FileAct per day) • -Flexible SAB deployment • From 1 till 320 concurrent users • Price : • Starts at 14,000$ (1 User, • 1 Agent) • Profile 1 : • “WebStation Concentration” • Benefits: • -Flexible SAB deployment • From 5 till 320 concurrent users • Price : • Starts at 7,500$ (5 users) • SWIFTAlliance • Starter Set • Benefits: • -FileAct out-of-the box • 1 concurrent user SWIFTAlliance Gateway – Licensing & pricing ‘An easy step approach’

TARGET2 directory contents • Contents • Overall view of all institutions able to receive payments via the PM directly or indirectly • Main purpose: information for automating and routing of payments • Weekly updates based on the content of the up-to-date BIC directory (BIC directory updated monthly) • During migration, the TARGET2 directory also contains routing information on non-migrated participants. Current TARGET Directory will exist until end of migration, mid 2008

TARGET2 Directory • Distribution • provided electronically in a structured form via FileAct • set up in addition to SWIFT’s BIC directory to support the specific needs of the SSP and its users

TARGET2 Directory Distribution • Only via FileAct. No other distribution or publication allowed • Only to direct members • Push mode: each Thursday after close of operational day, SSP sends to all registered users a file containing changes vs. previous version of the directory • Pull mode: at any time during service hours full content of the last version can be downloaded • Registration • Form available from the User Helpdesk at the responsible national central bank Payment Order Payment Processing Chain BIC address Name or BIC or National Code Beneficiary Bank Regular Updates

SWIFT Traffic Pricing for TARGET2 FIN User-to-user pricing • Global tier of sender • Sender pays (standard billing) • Non reporting / reporting • Domestic / International FIN Copy pricing • T-copy, Y-copy • Volume of daily copies of MI • Decentralized (billed to participants) SWIFTNet InterAct or FileAct • Global tier of sender • Domestic / International • Standard, centralized or decentralized billing SN Browse FIN from and to Market Infrastructure • Number of service end-users • Centralized or decentralized billing • Fee independent from global tier • Non reporting / reporting • Standard, centralized or decentralized billing

Where to find help ? • Contact details of Network Providers and Business Partners • SWIFT on-line support and FAQ’s • Updates on vendor initiatives, activities and status

Different training modules about the business and technical implications of this new payment clearing system in relation to SWIFT Two differentmodules specific to your role and requirements: Overview of SWIFT in TARGET2 SWIFT infrastructure for TARGET2 Technical training courses on the SWIFTAlliance interfaces SWIFT Training solutions See www.swift.com/training

uestions & Answers

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