TARGET2 - Participation

Overview

TARGET2 provides open and competitively neutral access to large-value payments in euro without any size-related access criteria. In principle, credit institutions will be free to choose between direct or indirect participation.

Direct participation

Direct participants must have their own RTGS account and their own Information and Control Module (ICM) connection. Supervised credit institutions established in the European Economic Area (EEA) are allowed to become direct participants. A direct participant may also hold several accounts in TARGET2, in which case these have to be assigned to different BICs. On demand, single BICs, which are generally used for internal purposes of a participant, may remain unpublished in the TARGET2 routing directory (“unpublished BICs”). Due to the liquidity pooling feature, several direct participants may also group their accounts to form a virtual account (only for accounts in the euro area) or may use the consolidated information feature. Furthermore, while participants may hold just one RTGS account, branches and subsidiary institutions belonging to the same group and located in EEA countries may also register using an autonomous BIC to send and receive payments directly (known as “multi-addressee access”).

Forms of indirect participation

Indirect participation

Indirect participants, as a matter of policy, settle their TARGET2 payments via a direct participant, ie they do not have their own RTGS account and are not able to send or receive payments directly. Only credit institutions established in the EEA are allowed to become indirect participants. Indirect participants are recognised by the system operator. They benefit from the protection of the EU Settlement Finality Directive (in the countries where such protection has been granted).

Addressable BICs

Any branch or correspondent of a direct participant, irrespective of location, may be listed as an addressable BIC in the TARGET2 directory. From a technical point of view, there is no difference between indirect participants and addressable BICs. Legally, however, addressable BICs only provide routing information in the TARGET2 directory without any further legal consequences.