On target with TARGET2

SWIFT supports the community in preparing for the move

At Sibos Atlanta the Eurosystem announced their TARGET2 programme which will revolutionise European banking. It will provide a single RTGS system for euro settlement throughout the European Union, replacing the fifteen RTGS systems which currently combine to form today’s TARGET. TARGET2 will be one of the most important programmes for European banking and will directly affect at least 1000 SWIFT members. All major banks globally will be impacted.

Within the framework agreed by the Eurosystem, the central banks of France, Germany and Italy have come together to produce the central platform (Single Shared Platform or SSP) for the new system. SWIFT has been working closely with this group over the last year as they have developed the project which will use SWIFT messaging.

From January 2007 financial transactions in euro of a first migration group of central banks will be settled in TARGET2, whether they are payments, treasury, trade, or securities related. After completion of the migration (within about 6 months) TARGET2 will be at the heart of euro financial activity with approximately 1000 members. “TARGET2 will bring huge benefits to the European financial system, delivering a single state of the art central bank settlement mechanism for the euro,” said Harry Newman, Director Banking Market Infrastructures at SWIFT.

SWIFT’s role

In addition to providing the messaging solution, SWIFT’s role is to support the SWIFT community – the central banks, commercial banks, and ancillary systems (e.g. Securities Settlement Systems) so that they are technically ready in time to make use of TARGET2 services. SWIFT has a project team at La Hulpe, but Regional Account Managers worldwide can be contacted for discussions on all aspects of the project that relate to SWIFT.

All direct members of TARGET2 will use SWIFTNet FIN, FIN Copy, FileAct, InterAct and Browse and many will no doubt want to use these services before TARGET2 testing starts. “By SWIFTNet enabling their interfaces, banks can already use SWIFTNet FileAct for bilateral file transfers and SWIFTNet InterAct for Cash Reporting, as well as other Market Infrastructures. This will help them get ready for TARGET2,” explains Joëlle Lockman, Business Manager, Market Infrastructures, TARGET2, SWIFT.

SWIFT support – an example

In March, the Bank of Greece invited SWIFT to an information session with its banking community. The objective was to explain the SWIFTNet messaging infrastructure for TARGET2, and the different connectivity options. The Bank of Greece received positive feedback from the meeting participants, confirming their awareness about possible adaptations in their infrastructure in view of the TARGET2 services.With testing due to begin in Q2 2006 both the banks and the ancillary systems are keen to move forward. The Bank of Greece meeting is one of a series being held by Central Banks across Europe with SWIFT support.

On TARGET, on schedule

TARGET2 Project Plan
At the current stage of the project the following milestones are envisaged. Each is subject to the completion of the previous steps.
Date	Step
End of Q1 2005	Finalisation of the User Detailed Functional Specifications document
April 2005 to Dec 2005	Completion of the development of the SSP
Jan 2006 to March 2006	SSP internal testing
April 2006 to May 2006 (tentative)	Acceptance testing by the central banks
June 2006 to Dec 2006 (tentative)	Customer testing for the first country window (TARGET users migrating in later windows might also take part in these tests)
Dec 2006	Live trials/activities in the production environment
Jan 2007	Go-live for the first country window
Jan 2007 – Sept 2007	Customer testing, live trials, etc and go-live for the other country windows
source: http://www.ecb.int/pub/pdf/other/target2progressreport200502en.pdf