TARGET2-Securities ECMS

ECMS Eurosystem Collateral Management System

Alongside TIPS and the TARGET2/T2S consolidation, the ECMS is an additional project launched by the Eurosystem in 2017 to enhance the market infrastructure. The projects, subsumed under the title “Vision 2020”, are designed to strengthen the Eurosystem’s market infrastructure, leverage potential and deepen the integration of the European financial market.

The realisation phase of the ECMS began with the decision taken by the ECB Governing Council on 6 December 2017. It was originally scheduled to go live in November 2022. However, now that the TARGET2/T2S consolidation and the SWIFT ISO 20022 migration in the area of correspondent banking have both been postponed on account of the COVID-19 pandemic, the go-live of the ECMS will also be moved to November 2023.

Upon the introduction of the ECMS, the management of assets eligible as collateral for Eurosystem monetary policy credit operations will be integrated on a central technical platform. Monetary policy counterparties will receive access to the ECMS via a single gateway across all central banks and will benefit from a much simpler and more efficient procedure for mobilising collateral across borders. This does not change the fact, however, that national central banks remain responsible for their counterparties.

The objective of the ECMS project is to replace the existing 19 different national collateral management systems (CMSs) run by the national central banks by a unified collateral management system covering the entire Eurosystem. A prerequisite for a single functional approach is sufficient harmonisation of the underlying processes. Based on a stocktaking exercise with the Eurosystem’s national central banks, a framework was drawn up. This framework comprises general principles, specifies high-level user requirements and identifies areas that still need harmonising.

The ECMS will consist of core components (functionalities, services and processes) which have already been harmonised or can be harmonised at the Eurosystem level. In addition, there will be components within the ECMS where the individual national central banks may opt either to use the ECMS services or to continue using the national collateral management system for these areas. Non-harmonised functionalities, services and processes will not be covered by the ECMS.

The ECMS will largely supplant the nationally operated monetary policy collateral management applications. The Bundesbank will only use its national system for administering credit claims, as before.

Participation in the ECMS is essential in order to be able to continue participating in monetary policy operations. Monetary policy counterparties will need a new method of access to the system in future in order to be able to make full use of the ECMS. Communication with the ECMS can take place either in U2A mode (user-to-application, i.e. via a graphical user interface) and/or in A2A mode (application-to-application, i.e. via the exchange of ISO 20022 messages between systems). 

Going forward, connection to the ECMS, as with all TARGET Services (T2 (consisting of CLM and RTGS), T2S, TIPS and ECMS), will be via the Eurosystem Single Market Infrastructure Gateway (ESMIG). For technical communication, the use of a network service provider accredited and approved by the Eurosystem will be mandatory for both U2A and A2A access. Counterparties can either connect directly to the ECMS via ESMIG or use third-party technical access.

Once the ECMS goes live, queries and instructions on the monetary policy collateral account which is then held in the ECMS can be initiated only via ESMIG. The current access channels (Bundesbank CAP or previous form of SWIFT access) will no longer be available once the ECMS has gone live. The current mobilisation channels for collateral (domestic and links via Clearstream Banking AG as well as the CCBM) will remain available for use, though settlement will take place in T2S as a rule. It will likewise still be possible to use triparty systems.

In order to ensure a smooth “big bang” migration, the Bundesbank will partner closely with all counterparties which currently hold monetary policy collateral accounts with it up until the launch of the ECMS as part of a community readiness monitoring process that is harmonised throughout the Eurosystem. A roadmap drawn up by the Eurosystem and harmonised across Europe forms the basis for planning all activities up until the migration of data and systems.