ECB offers new safety standards for central bank triparty usage
05 September 2017 Brussels
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The European Central Bank (ECB) has proposed six new safety standards for triparty agents (TPAs) undertaking eurosystem credit operations.
Industry stakeholders are invited to comment on the proposed standards with an eye on the final version coming into force by the end of the year or the beginning of 2018.
The standards cover: legal soundness; substitution of collateral and the processing of corporate actions; eligibility of assets and mobilisation channels; collateral realisation; data confidentiality; and opening days and operating hours.
The proposed standards are an update and build upon those introduced in 2014.
As part of the update, the new requirements will now aim to validate the functional features of individual cross-border triparty collateral management services against the triparty models defined by the eurosystem.
Legal soundness (standard one) relates to the need for eurozone TPAs to provide adequate protection of the rights of the national central banks and the ECB in respect of collateral mobilised by and through them for eurosystem credit operations.
Collateral substitutions (standard two), aims to ensure the processing of corporate actions are executed in a way that does not expose the eurosystem to credit risk, including settlement bank risk.
Asset eligibility (standard three) simply proposes that TPAs should build in processes which properly cater for specific eurosystem requirements for the eligibility of assets and collateral mobilisation channels.
Collateral realisation (standard four) relates to the need for TPAs to cater for instances of counterparty default with processes ensuring that instructions for the transfer of collateral to the realisation account of a central bank are completed.
Data confidentiality (standard five) will protect central bank’s data and ensure it is only accessed for activities relating to eurosystem credit operations.
Industry stakeholders are invited to comment on the proposed standards with an eye on the final version coming into force by the end of the year or the beginning of 2018.
The standards cover: legal soundness; substitution of collateral and the processing of corporate actions; eligibility of assets and mobilisation channels; collateral realisation; data confidentiality; and opening days and operating hours.
The proposed standards are an update and build upon those introduced in 2014.
As part of the update, the new requirements will now aim to validate the functional features of individual cross-border triparty collateral management services against the triparty models defined by the eurosystem.
Legal soundness (standard one) relates to the need for eurozone TPAs to provide adequate protection of the rights of the national central banks and the ECB in respect of collateral mobilised by and through them for eurosystem credit operations.
Collateral substitutions (standard two), aims to ensure the processing of corporate actions are executed in a way that does not expose the eurosystem to credit risk, including settlement bank risk.
Asset eligibility (standard three) simply proposes that TPAs should build in processes which properly cater for specific eurosystem requirements for the eligibility of assets and collateral mobilisation channels.
Collateral realisation (standard four) relates to the need for TPAs to cater for instances of counterparty default with processes ensuring that instructions for the transfer of collateral to the realisation account of a central bank are completed.
Data confidentiality (standard five) will protect central bank’s data and ensure it is only accessed for activities relating to eurosystem credit operations.
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