BI-COMP - Banca d'Italia

BI-COMP

User Guide

October 2020

The following abridged English version is for information purposes only.

The full Italian version of the Guide, as published on the Banca d’Italia website, shall be binding.

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TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................ 3

INTRODUCTION ........................................................................................................................... 5

SECTION A ..................................................................................................................................... 6

BI-COMP ......................................................................................................................................... 6

CHAPTER I ................................................................................................................................. 7 BI-COMP ..................................................................................................................................... 7

1. MAIN FEATURES .............................................................................................................. 7 2. NETTING AND SETTLEMENT CYCLES ...................................................................... 10 3. NETTING PHASES .......................................................................................................... 11 4. BUSINESS DAYS .............................................................................................................. 14

CHAPTER II ............................................................................................................................. 15 PARTICIPATION IN THE SYSTEM ..................................................................................... 15

1. PARTICIPATION REQUIREMENTS ............................................................................. 15 2. FINALIZATION OF THE PARTICIPATION PROCESS .............................................. 17 3. CHANGES TO THE PARTICIPATION ARRANGEMENTS ......................................... 17

CHAPTER III ............................................................................................................................ 18 FEES, INTEREST AND PENALTIES .................................................................................... 18

1. FEES AND INTEREST .................................................................................................... 18 2. PENALTIES ...................................................................................................................... 19

CHAPTER IV ............................................................................................................................ 20 REGISTER AND ELECTRONIC INFORMATION ............................................................. 20

1. REGISTER OF BI-COMP PARTICIPANTS AND SETTLEMENT BANKS OF THE

INTERMEDIATION SERVICE IN STEP2 ............................................................................ 20 2. ELECTRONIC INFORMATION ..................................................................................... 20

SECTION B ................................................................................................................................... 21

REACHABILITY ......................................................................................................................... 21

CHAPTER I ............................................................................................................................... 22 OPTIONAL REACHABILITY SERVICES ........................................................................... 22

1. INTEROPERABILITY SERVICE .................................................................................... 22 2. INTERLINKING SERVICE ............................................................................................. 29 3. INTERMEDIATION SERVICE IN STEP2 ..................................................................... 34 4. STEP2 ‘TRANSFERABILITY’ OPTIONAL SERVICE .................................................... 38

CHAPTER II ............................................................................................................................. 39 FEES, INTEREST AND PENALTIES .................................................................................... 39

1. INTEROPERABILITY SERVICE .................................................................................... 39 2. INTERLINKING SERVICE ............................................................................................. 39 3. INTERMEDIATION SERVICE IN STEP2 ..................................................................... 40 4. STEP2 ‘TRANSFERABILITY’ OPTIONAL SERVICE ................................................. 41

SECTION C ................................................................................................................................... 42

CLEARING SYSTEMS OPERATORS AND TECHNICAL FACILITATORS ..................... 42

1. ACTIVITY OF CLEARING SYSTEM OPERATORS AND TECHNICAL

FACILITATORS....................................................................................................................... 43 1.1 INPUT OF PAYMENT INFORMATION INTO BI-COMP ............................................................ 43 1.2 BANCA D’ITALIA’S PRE-FUNDING SERVICE FOR THE SETTLEMENT OF SCT INSTS .............. 44 1.3 INTEROPERABILITY SERVICE ................................................................................................ 47 1.4 INTERLINKING SERVICE ....................................................................................................... 51 1.5 INTERMEDIATION SERVICE IN STEP2 .................................................................................. 56

2. CONTRACTUAL AGREEMENTS AND COMMUNICATIONS WITH BANCA

D’ITALIA .................................................................................................................................. 57 3. BUSINESS DAYS AND OPERATING HOURS ................................................................. 57 4. INTEREST ON PRE-FUNDING ACCOUNTS AND BANCA D’ITALIA PM

ACCOUNTS FOR THE INTEROPERABILITY/INTERLINKING SERVICES ............... 57

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5. INTERMEDIATION SERVICE IN STEP2 – FEES FROM EBA-CLEARING AND

NETWORK FEES ..................................................................................................................... 58

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INTRODUCTION

BI-COMP is a retail payment system managed by Banca d'Italia, as a not-for-

profit public service to settle euro-denominated payments in central bank money.

The system, designated within the meaning of Legislative Decree 2001/210 which

implements the provisions of Directive 98/26/EC on settlement finality in payment and

securities settlement systems, is protected against the risks deriving from participants’

insolvency proceedings, and is subject to oversight by Banca d’Italia pursuant to Article

146 of Legislative Decree 385/1993 (the Consolidated Law on Banking).

BI-COMP performs the multilateral netting of payments made using domestic

(e.g. cheques and debit cards) and SEPA1 (SEPA Credit Transfer-SCT, SEPA Instant

Credit Transfer-SCT Inst, SEPA Core Direct Debit-SDD Core, and SEPA B2B Direct

Debit-SDD B2B) instruments. BI-COMP:

1) receives from clearing systems payments processed in electronic interbank

procedures that manage homogeneous transaction flows (hereinafter referred to as

‘interbank procedures’);2

2) determines the multilateral balances of the individual participants and sends them

to TARGET2 (the real-time gross settlement system for the euro area).

In order to mitigate the inherent credit risk of a deferred net settlement model in

central bank money that may be adopted by the clearing systems that process SCT Inst

and are designated for the purpose of settlement finality, Banca d’Italia provides a pre-

funding service to settle such payments in TARGET2 via BI-COMP.

To extend the reachability for its participants throughout the SEPA, BI-COMP is

connected to other retail payment systems by means of interoperability and interlinking

services. Banca d’Italia also offers – through the ῾Technical facilitators’ – the

intermediation service in STEP2, the system managed by EBA-Clearing, in order to

exchange SEPA payments with payment service providers participating in that system.

This User Guide is divided into three sections:

Section A contains BI-COMP’s regulatory framework, meant for participants;

Section B contains the terms and conditions regarding reachability services

(interoperability, interlinking and intermediation services in STEP2);

Section C sets out the rules for clearing system operators and Technical facilitators.

1Single Euro Payments Area.

2The clearing systems, which are subject to the oversight on retail payment systems, have formal and

standardized operating mechanisms and common rules to enable the exchange of payment information

among participating payment service providers (PSPs). The typologies of payments exchanged in the

interbank procedures and their operating rules are defined by the operators.

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SECTION A

BI-COMP

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CHAPTER I

BI-COMP

1. MAIN FEATURES

BI-COMP performs the multilateral netting of payments (made with domestic and

SEPA instruments) after they have been processed in the related interbank procedures. It

acquires the relevant payment information – in the form of single items and/or bilateral

balances – from the various clearing systems (see Section C).

Credits submitted to BI-COMP must be liquid, collectable and in the form of legal

tender. Participants net their credit and debit positions in BI-COMP and settle their net

multilateral balances in TARGET2.

BI-COMP processes payments made by means of:

- domestic or SEPA instruments, among PSPs using the related interbank procedures;

- SEPA payment instruments, among PSPs using these interbank procedures and the

PSPs reachable in other retail payment systems that are interoperable or interlinked

with BI-COMP (hereinafter ‘connected systems’, see Section B).

The use of BI-COMP to settle payments exchanged in interbank procedures that

process SEPA instruments requires the participant to adhere to the European Payments

Council (EPC)’s payment schemes for the various instruments.

1.1 Banca d’Italia’s pre-funding service for the settlement of SCT Insts

In order to mitigate the inherent credit risk of a deferred net settlement model in

central bank money that may be adopted by the clearing systems that process SEPA

Instant Credit Transfers (SCT Insts), Banca d’Italia provides a pre-funding service.3

This tool allows BI-COMP participants who use the SCT Inst interbank procedure to

make payments into a Banca d’Italia pre-funding account opened in TARGET2 with the

necessary funds to settle transactions under the SCT Inst scheme and their related return4

via BI-COMP.

The pre-funding service is optional and the choice to use it for the purposes

indicated above is within the discretion of each clearing system operator. Its use may only

be requested by the operator of a clearing system that processes SCT Inst transactions and

requires that the clearing system and its operator have been designated and notified to

3 Deferred net settlement is the model in which SCT Inst transactions are settled on a net basis in TARGET2

after being credited to the accounts of the beneficiary customers.

4 The return is the positive reply to a request from the debtor to return originally transferred funds to the

creditor through an SCT.

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ESMA5 pursuant to Article 10 of the aforementioned Legislative Decree No 210/2001

transposing the Settlement Finality Directive6. In the case of a non-Italian system, both

the clearing system and its operator must have been designated and notified to ESMA

under the applicable law of the Member State of the European Union to which that system

is subject, which transposes Article 10 of the Settlement Finality Directive. ESMA

publishes on its website www.esma.europa.eu the list of designated systems and

operators.

In order to avoid mixing of the pre-funding accounts of different clearing systems,

Banca d’Italia shall make available a single pre-funding account for each clearing system

exclusively dedicated to settle the SCT Inst/ Return exchanged within that clearing system

via BI-COMP. The pre-funding account opened in the TARGET2-Banca d’Italia system

cannot show negative balances. Funding and de-funding operations7 can only be

executed by participants through the clearing system they belong to, which feeds BI-

COMP for this purpose.8 The funds deposited by the participants into the pre-funding

account shall be covered by Article 1834 of the Civil Code. Therefore, Banca d’Italia, as

depositary, acquires ownership of such funds and is obliged to hold and then return them

as described above (de-funding), upon request of the depositing participant, and to

transfer them on the basis of the payment information concerning the SCT Inst/ Return

processed by the clearing system itself.

The quantification of the share of the balance of the pre-funding account

pertaining to each BI-COMP participant9 relies upon the communications sent to Banca

d’Italia by the clearing system operators (see Section C, section 1.2), which have sole

responsibility for their correctness and timeliness. Banca d’Italia exclusively relies on

such communications also in relation to any obligations imposed to impede access to the

funds deposited into the pre-funding account by a BI-COMP participant.

The funds deposited into the pre-funding account shall not be eligible to fulfil the

reserve requirements referred to in Article 19 of the Statute of the European System of

Central Banks and of the European Central Bank10 by the participants who have deposited

them or by third parties. The pre-funding account shall be subject to the TARGET2

5 European Securities and Markets Authority established by the Regulation (EU) No 1095/2010 of the

European Parliament and of the Council of 24 November 2010.

6 Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality

in payment and securities settlement systems.

7 Transactions to charge and credit the participants’ PM accounts, correspondingly crediting/debiting the

pre-funding account.

8 Participants cannot establish/release the pre-funding directly within TARGET2, e.g. with MT202

messages.

9 The amount of funds held on the pre-funding account above which a BI-COMP participant may claim a

refund according to Art. 1834 of the Civil Code.

10 Protocol No 4 on the Statute of the European System of Central Banks and of the European Central Bank,

published in the Official Journal of the European Union on 26 October 2012, No C 326/230.

http://www.esma.europa.eu/

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Guideline provisions regarding interest;11 any (positive or negative) interest shall not be

credited to/debited from the above-mentioned account, but shall be reimbursed/recovered

by Banca d’Italia as described in Chapter III. On the date of publication of this Guide, the

TARGET2 Guideline envisages that such interest is ‘zero per cent or the deposit facility

rate,12 whichever is lower’.

The clearing system operator using Banca d’Italia’s pre-funding service shall

reject the SCTs Inst/ Returns that are not covered by the share of the balance of the pre-

funding account currently pertaining to the BI-COMP participant moment-to-moment.

The payment information concerning a SCT Inst or Return transaction that, having passed

the coverage verification, has been processed by the clearing system, may only be entered

into the BI-COMP system as single items and/or bilateral balances if the related transfer

orders and the corresponding balances resulting from the clearing process carried out by

the clearing system itself are irrevocable and final within the meaning and for the

purposes of, respectively, Articles 4 and 2 of the aforementioned Legislative Decree No

210/2001, or, if the clearing system is not Italian, within the meaning and for the purposes

of the law of the Member State of the European Union to which that system is subject,

which transposes Articles 5 and 3 of the Settlement Finality Directive.

Payment information (single items and/or bilateral balances) for funding and de-

funding operations and/or SCT Inst/Return transactions processed by a clearing system

that uses a Banca d’Italia pre-funding account are entered into BI-COMP by the clearing

system itself, debiting/crediting its pre-funding account and, as a result of the netting

process referred to in section 3 below, are sent by BI-COMP to TARGET2 for settlement.

The settlement of the multilateral debit balance of the pre-funding account

determined by BI-COMP is conditional on the availability of sufficient funds on this

account. If there are insufficient funds in the pre-funding account, Banca d’Italia reserves

the right to delete all the single items and/or bilateral balances entered into BI-COMP by

the concerned clearing system, debiting and crediting its pre-funding account, to run the

netting process again excluding such single items and/or bilateral balances

(‘unwinding’). These items/balances are not autonomously reinserted by Banca d’Italia

in BI-COMP.13

In order to preserve the smooth functioning of BI-COMP, the clearing system

operator using Banca d’Italia’s pre-funding service is required to ensure that the

multilateral debit balance of its pre-funding account, determined by BI-COMP as a result

of the netting of payment information entered by the clearing system itself, is covered by

the funds available in this account.

11 Please refer to the ‘Guideline of the European Central Bank of 5 December 2012 on a Trans-European

Automated Real-time Gross settlement Express Transfer system (TARGET2)’ (ECB/2012/27), as

subsequently amended and supplemented, hereinafter referred to as the TARGET2 Guideline.

12 Interest rate applicable to ‘a Eurosystem standing facility which counterparties may use to make overnight

deposits with a National Central Bank at the pre-specified deposit rate’.

13 If there are insufficient funds in the pre-funding account, it shall not be subject to the penalty referred to

in Chapter III, section 2.

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It is the responsibility of each clearing system operator to set out the rules,

operating arrangements and risk mitigation measures of its own system, such as:

- management arrangements for funding/defunding operations, preparatory to

entering the corresponding payment information into BI-COMP;14

- criteria and operational arrangements for prior verification of the coverage of each

SCT Inst/Return instruction against the balance of the pre-funding account

currently pertaining to the BI-COMP participant moment-to-moment and for the

rejection of those instructions in the case of non-coverage;

- the deadline after which the SCT Inst/Return transfer orders cannot be withdrawn

from the clearing system, within the meaning of Article 4 (1) of the aforementioned

Legislative Decree No 210/2001, or, where the clearing system is not an Italian

clearing system, within the meaning of the law of the Member State of the European

Union to which that system is subject, transposing Article 5 (1) of the Settlement

Finality Directive;

- the time to enter the SCT Inst/Return transfer orders in the clearing system, within

the meaning of Article 2 (2) of the aforementioned Legislative Decree No 210/2001,

or, if the clearing system is not Italian, within the meaning of the law of the Member

State of the European Union to which that system is subject, which transposes

Article 3 (3) of the Settlement Finality Directive;

- the operational functionalities to ensure that the multilateral debit balance of the

pre-funding account dedicated to the clearing system, as determined by BI-COMP

as a result of the netting of payment information submitted to it by the clearing

system itself, is covered by the balance of that account.

2. NETTING AND SETTLEMENT CYCLES

BI-COMP carries out six daily netting and settlement cycles, one night-time cycle

at 21:00, and five daytime cycles at 07:15, 10:15, 12:00, 14:30, 17:05. This schedule may

be postponed due to unforeseen events such as, for example, a late input in BI-COMP by

the clearing systems, the unavailability of the network, a malfunctioning of the

procedures, etc. The actual start of the cycle shall be determined exclusively by the time

resulting from the IT applications managing the netting process.

Payments made through the instruments referred to in the table below are

processed in netting and settlement cycles.

14 E.g.: technical-operational standards of interaction between participants and the clearing system to input

funding/de-funding operations in the system, the discretionary and/or automatic nature of the funding/de-

funding operations initiated by the participants and/or by the clearing system in the name and on behalf of

participants, criteria to follow to make a selection among multiple funding/de-funding operations initiated

by the same participant, etc.

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cycle 0

(21:00)

cycle 1

(07:15)

cycle 2

(10:15)

cycle 3

(12:00)

cycle 4

(14:30)

cycle 5

(17:05)

Domestic

instruments no no no yes no no

SEPA Credit

Transfers yes yes yes yes yes yes

SEPA

Instant

Credit

Transfers

no no no no yes no

SEPA Core

Direct Debits

and SEPA

B2B Direct

Debits

no no no yes no no

3. NETTING PHASES

The netting process consists of the following steps for each daily netting and

settlement cycle:

a) receipt of the information from TARGET2 concerning the liquidity set aside for

cycle 0 and notification to the clearing systems (see next paragraph);

b) acquisition of participants’ single items and/or bilateral balances from the clearing

systems and – for the daytime netting and settlement cycle where the SCT Inst is

processed – the debit/credit single items and/or bilateral balances of the pre-funding

accounts;15

c) calculation of participants’ bilateral balances and, limited to daytime netting and

settlement cycles where SCT Inst is processed, bilateral debit/credit balances of the

pre-funding accounts;

d) determination of multilateral balances for all single items and bilateral balances

entered into BI-COMP:

- by participants;

- the pre-funding accounts, limited to the BI-COMP cycles where the SCT Inst

transactions are processed;

- any settlement banks of interoperable systems operators participating in BI-

COMP;16

e) coverage verification of the multilateral debt balances to be settled in cycle 0 against

the funds set aside by ‘Full status’ participants (see next paragraph);

f) transmission of the multilateral balances to TARGET2 for settlement.

15 See paragraph 2 above.

16 See Section B, Chapter I, section 1.

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For the settlement of cycle 0, BI-COMP uses TARGET2’s Ancillary System

Interface (ASI) procedure 6 for night-time settlement and procedure 4 for daytime cycle

settlement.

BI-COMP multilateral balances are settled in the PM accounts held by participants

in the TARGET2/pre-funding/PM accounts of the settlement banks of interoperable

system operators participating in BI-COMP; multilateral debt balances arising from cycle

0 are settled in the PM sub-accounts of Full status participants (see next paragraph). The

effectiveness of the multilateral netting and the closing of each netting process depend on

all the multilateral balances being successfully settled in TARGET2.

Once the settlement process is over, BI-COMP forwards to participants a telematic

message (post-settlement 676 message), summarizing the multilateral balances currently

settled in TARGET2; post-settlement 676 messages relating to pre-funding accounts shall

be forwarded to the clearing systems using them.

3.1 Night-time cycle

BI-COMP participants using the SCT interbank procedure can use cycle 0 to settle

debit and credit SCT/Returns (‘full’ status) or credit SCT/Returns only (‘creditor only’

status).

Participants opting for Full status shall open a dedicated sub-account in

TARGET2, in which to pre-fund liquidity to cover debit SCT/Returns to be settled in

cycle 0. Debit SCT/Returns exceeding these funds are entered by the clearing system

concerned into the next BI-COMP cycle 1.

The netting and settlement procedures of cycle 0 consists of the following steps:

1) Pre-funding of liquidity to settle SCTs and Returns in cycle 0

a) The Full status participant shall prepare in TARGET2 – before 18:00 of the

TARGET2 business day prior to the cycle 0 settlement date, through the

functionality ‘standing order liquidity transfer’ – a specific reserve to cover

SCT/Returns to be settled in cycle 0.

b) At 19:3017 TARGET2 shall initiate the ASI night-time procedure. This results in

the execution of the standing order and the consequent transfer of liquidity from

the PM account of the Full status participant to its cycle 0 sub-account. The

liquidity transferred to the sub-account may actually be less than that specified

in the standing order (if the funds available on the PM account were insufficient).

c) BI-COMP communicates to the clearing systems the liquidity set aside on the

sub-accounts dedicated to cycle 0 (the so-called ‘cap’). These caps represent the

maximum threshold for the debit balance of SCT/Returns of Full status

participants to be settled in cycle 0. The liquidity set aside on the sub-account

dedicated to cycle 0 cannot be used for BI-COMP daytime cycles.

2) Coverage verification and feeding into BI-COMP by clearing systems

The clearing system verifies whether the sum of the amount of the SCT/Return

payable by a Full status participant is lower than the cap communicated by BI-

COMP, identifying the transactions to enter into BI-COMP for settlement in cycle

0 and those which, being over the cap, will be autonomously inserted in the

17 19:45 of the last day of the reserve maintenance period.

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following cycle 1.18 The coverage verification is conducted by bulk files,19 based

on the time of acquisition. If the SCT/Return in a bulk file has a debit balance that

exceeds the cap, the clearing system stores the entire bulk file to enter it into BI-

COMP cycle 1 again, and proceeds to the coverage verification of the next bulk file.

For example, assume that the cap (availability on the TARGET2 sub-account

dedicated to cycle 0) for a Full status participant is EUR 1,600 and the clearing

system has received three bulk files in the following order:

- a file containing 10 SCT/Returns debiting a Full status participant totalling

EUR 1,000;

- a file containing 5 SCT/Returns debiting a Full status participant totalling EUR

800;

- a file containing 15 SCT/Returns debiting a Full status participant totalling

EUR 200.

On the basis of the above, the clearing system will feed into BI-COMP the

SCT/Returns of the first and the third bulk files (totalling EUR 1,200) for settlement

in cycle 0 and those of the second bulk file (totalling EUR 800) for settlement in

the following cycle 1.

3) Netting, coverage verification with possible removal of the debit items/balances

and submission to settlement by BI-COMP

a) At 21:00 BI-COMP determines the multilateral balances and, in order to prevent

fund insufficiency in the sub-accounts dedicated to cycle 0, verifies the coverage

of the multilateral debit balances of the Full status participants against their caps.

- In the event that such a verification gives a negative result, BI-COMP:

i) removes all the single debit items and/or bilateral balances of the

concerned participant entered by the clearing systems;

ii) compute the new participants’ bilateral balances, including those of the

participant with insufficient funds (excluding debit items/balances);

iii) determine new multilateral balances.

The coverage verification of Full status participants, the removal of their debit

items/balances and the determination of new bilateral and multilateral balances

excluding the items/balances removed will follow an iterative process until the

coverage verification of the multilateral debit balances against the caps gives a

positive result for all Full status participants. The payments underlying the

single debit items and/or bilateral balances that were removed are entered again

by the clearing systems in the following BI-COMP cycle 1.

- In the event that the coverage verification referred to above has been

successfully completed, BI-COMP initiates the settlement in TARGET2 of the

multilateral debit balances on sub-accounts dedicated to cycle 0 of the Full

status participants and of the multilateral credit balances on the PM accounts

of the Full or Creditor-only participants and of the settlement banks of

interoperable systems operators participating in BI-COMP.20

18 The coverage verification can be carried out by the clearing systems on the SCTs/Returns debiting a Full

status participant net of its credit SCT/Returns, processed by the clearing system itself.

19 A bulk file is a file containing data on a group of payment transactions of an operator.

20 See Section B, Chapter I, section 1.

14

b) Following the settlement of all multilateral balances, the remaining liquidity set

apart on the sub-accounts dedicated to cycle 0 is restored to the PM accounts of

the Full status participants.

In the event that the activities referred to in point (3)21 cannot be completed, Banca

d’Italia shall assess any circumstances deemed useful and reserves the right to take the

most appropriate steps to conclude the netting and settlement process of cycle 0,

including: (i) transferring funds from the PM account of a Full status participant to its PM

sub-account dedicated to cycle 0 to cover its funding insufficiency in TARGET2, and (ii)

removing all single debit and credit items and/or bilateral balances of a participant entered

into BI-COMP by the clearing systems, to run the netting process again excluding such

single items and/or bilateral balances (‘unwinding’); these items/balances are not

autonomously entered again by Banca d’Italia into BI-COMP for settlement.

3.2 Daytime cycles

Settlement of the multilateral balances from daytime cycles takes place on the PM

accounts held in TARGET2 by the participants, by the settlement bank of interoperable

system operators participating in BI-COMP22 and/or on pre-funding accounts23 and, in

contrast to the night-time cycle, does not require prefunding of dedicated sub-accounts.

If the funds in the participants’ PM accounts are insufficient, a penalty will be

applied (see Chapter III, section 2). If a participant’s PM account/the pre-funding account

has insufficient funds, Banca d’Italia reserves the right to delete all its single debit and

credit items and/or bilateral balances entered into BI-COMP by the clearing systems, and

to run the netting process again excluding such single items and/or bilateral balances

(‘unwinding’); these items/balances are not autonomously re-entered by Banca d’Italia

into BI-COMP for settlement.24

4. BUSINESS DAYS

BI-COMP and its reachability services (interoperability, connecting and

intermediation in STEP2 services) are available on all TARGET2 business days as set out

in the TARGET2 Guideline.

21 For example, if a malfunction of the procedures, the unavailability of the network or an event of any kind

does not allow the completion of the netting and settlement process of cycle 0.

22 See Section B, Chapter I, paragraph 1.

23 See paragraph 2 above.

24 Banca d’Italia reserves the right to implement unwinding even when a malfunction of the procedures, the

unavailability of the network or an event of any kind does not allow the completion of the netting and

settlement process of any daytime cycle.

15

CHAPTER II

PARTICIPATION IN THE SYSTEM

1. PARTICIPATION REQUIREMENTS

The following paragraphs set out the requirements to participate in BI-COMP.

They shall be maintained throughout the entire duration of any participation.

The requirements for the use of the optional reachability services are set out in

Section B.

1.1 Subjective requirements

The following entities can participate in BI-COMP:

1) CENTRAL BANKS

2) BANKS – Entities authorized to conduct banking business.25

3) ENTITIES PURSUANT TO ARTICLE 2, PAR. 5, points 3 et seq. of DIRECTIVE

2013/36/EU – entities included in the list referred to in Article 2 (5) (3) et seq. of

Directive 2013/36/EU of the European Parliament and of the Council of 26 June

2013 on access to the activity of credit institutions and the prudential supervision

of credit institutions and investment firms (hereinafter the Banking Directive),

where they are:

subject to at least one of the forms of control foreseen by the regulations on

harmonized supervision within the European Union (harmonized supervision on

the basis of the Banking Directive) by the competent authorities of the country

in which they are legally established or to equivalent forms of supervision;

legally established in an EU Member State.

4) ENTITIES PROVIDING CLEARING AND/OR SETTLEMENT SERVICES –

entities offering clearing and/or settlement services, provided that they are subject

to the supervision envisaged by the law and/or to the payment systems oversight

referred to in Article 146 of Legislative Decree 385/1993 (Consolidated Law on

Banking), and, if they are legally established in a country other than the Italian

Republic, that they are subject to equivalent forms of supervision or oversight by

the competent authorities.

5) TREASURIES OR EQUIVALENT BODIES of central or regional governments of

an EU Member State.

25 ‘Banking business’ means the collection of savings and the provision of credit.

16

6) PUBLIC SECTOR BODIES:26

European Union institutions/bodies;

state, regional or local authorities, other public bodies, other public law bodies

and public enterprises27 provided that they belong to the public sector of an EU

Member State.

Banca d’Italia participates in BI-COMP by right.

1.2 Legal opinion

Entities interested in participating in BI-COMP and possibly using the optional

reachability services28 shall provide specific legal opinions (Capacity Opinion and

Country Opinion) to attest that the fulfilment of all obligations arising from the provisions

of BI-COMP and the reachability services is not contrary to any provisions of law,

regulation or statute applicable to such entities or any agreement to which they are bound.

The Capacity Opinion shall be drawn up by an internal or external legal counsel.

It shall not be submitted if the applicant is:29

a) the central bank of an EU Member State or the European Central Bank;

b) a bank or institution referred to in Article 2 (5), points 3 et seq. of Directive

2013/36/EU, having its registered office in the Italian Republic.

The Country Opinion shall be drawn up by an external legal counsel. If the

applicant has its registered office in an EU Member State, it is not required.

A BI-COMP participant/user of the reachability services is required to submit, on

its own initiative, new Legal Opinions replacing those already submitted if, during its

participation in BI-COMP/use of the reachability services, any changes occur in the

regulatory framework applicable to the participant/user of the reachability services that

make them no longer correct. The non-submission of new Legal Opinions may lead to

the participant/user’s exclusion from BI-COMP/the reachability services.

26 See Article 3 of Council Regulation (EC) No 3603/93 of 13 December 1993, in the Official Journal of

the European Communities L332 of 31 December 1993.

27 ‘Public undertaking’ means any undertaking over which the State or other regional or local authorities

may directly or indirectly exercise a dominant influence by virtue of their ownership of it, their financial

participation therein or the rules which govern it. Dominant influence shall be presumed when public

authorities, directly or indirectly, hold the majority of the undertaking’s subscribed capital or control the

majority of the votes attaching to shares issued by the undertaking, or can appoint more than half of the

members of the undertaking’s administrative, management or supervisory body (see Article 8 of the

regulation referred to in the previous footnote).

28 See interoperability, interlinking and intermediation in STEP2 services – Section B.

29 See previous paragraph.

https://context.reverso.net/traduzione/inglese-italiano/state+administrations

17

1.3 Technical requirements

In order to participate in BI-COMP, operators shall have at least one

identification code assigned by Banca d’Italia30 and comply with the technical standards

of this Guide.

The identification code is unique for each legal entity; Banca d’Italia may

exceptionally authorize a legal entity to use more than one identification code to

participate in BI-COMP.

1.4 Settlement in TARGET2

To participate in BI-COMP it is a requirement to hold a PM account in

TARGET2,31 in which to settle BI-COMP multilateral balances.32 The use of cycle 0 is

conditional on the opening of a dedicated sub-account in TARGET2 for those participants

who intend to opt for Full status (see Chapter I, section 3.1).

2. FINALIZATION OF THE PARTICIPATION PROCESS

To learn how to finalize the participation process, exchange documentation and

communications, please refer to the Italian version of the Guide.

3. CHANGES TO THE PARTICIPATION ARRANGEMENTS

Changes concerning participation arrangements shall be communicated to Banca

d’Italia as set out in the Italian version of the Guide.

30 A code of 5 digits, usually identical to the mechanical code assigned to the registered banks referred to

in Article 13 of Legislative Decree No 385 of 1 September 1993, as amended (Consolidated Law on

Banking).

31 Direct participation in TARGET2 – see TARGET2 Guideline.

32 With the exception of interoperable system operators, which may use a third party (settlement bank) to

settle through BI-COMP in its PM account the funds intended for PSPs reachable in interoperable systems

(see Section B, Chapter I, section 1).

18

CHAPTER III

FEES, INTEREST AND PENALTIES

1. FEES AND INTEREST

BI-COMP participants33 are required to pay an annual advance fee of EUR

25,000.0034, which is applied irrespective of the actual months of participation. The

participant PM account in TARGET2 is debited by Banca d’Italia for the full amount of

the annual fee:

when the participation process is finalized;

on 15 January of each year or, if it is not a TARGET2 business day, on the next

TARGET2 business day, for those operators already participating in BI-COMP on

1 January.

Participants are notified when the fees are debited.

No refund is granted in the event of exclusion or withdrawal from BI-COMP.

Banca d’Italia reserves the right to credit/debit fee balances35 at the end of the

year, after notifying the concerned participants of the amount and the crediting/debiting

date. The possible fee balances are credited/debited including in the event of withdrawal

from BI-COMP.

No fee is charged to use the pre-funding service to settle SCT Insts,36 pre-

funding accounts are subject to TARGET2 Guideline provisions regarding interest.37 Any

(positive or negative) interest is reimbursed/recovered by Banca d’Italia to/from the

clearing system operators using Banca d’Italia’s pre-funding service. It is their sole

responsibility to reimburse/recover these amounts to/from their members, with criteria

and arrangements autonomously defined. On the date of publication of this Guide, the



33 The interoperable system operators participating in BI-COMP and their settlement banks shall not be

subject to the annual fee (see Section B, Chapter I, section 1).

34 The applicable fee until 31.12.2020 is EUR 22,000.00.

35 In line with the principle of cost recovery and taking into account that Banca d’Italia offers the services

covered by this Guide as a public and non-profit service.

36 See Chapter I, section 1.1.

37 See the TARGET2 Guideline.



19

2. PENALTIES

If participants, for their own reasons, cannot settle their debit balance resulting

from each daily cycle (see Chapter I, paragraph 3) at the time when settlement is due to

start, they will be charged a fixed penalty of €500.00.39

The penalty is independent of the amount of a fund’s insufficiency i.e. the

difference between the debit balance and the funds available on the PM account at the

time when the balance is due for settlement, and is applied when settlement is delayed by

more than 10 minutes. Delays are calculated with reference to the starting time of BI-

COMP debit balances settlement, as indicated in the messages that notify the PM account

holder that its balances are queued.

The penalty shall be debited by Banca d’Italia from the participant’s PM account

on the third TARGET2 business day of the second month following the month in which

the fund insufficiency occurred or, if it is not a business day, on the next TARGET2

business day. The participant will be notified thereof.

39 The penalty shall not be applied to fund insufficiencies of: pre-funding accounts (see Chapter I, section

1.1) and Banca d’Italia PM accounts for the interoperability/interlinking services (see Section B, Chapter

I, sections 1 and 2).

20

CHAPTER IV

REGISTER AND ELECTRONIC INFORMATION

1. REGISTER OF BI-COMP PARTICIPANTS AND SETTLEMENT BANKS OF

THE INTERMEDIATION SERVICE IN STEP2

The register includes information concerning BI-COMP participants40 and the

settlement banks of the intermediation service in STEP2.41 Each PSP shall indicate the

interbank procedures that is using and, for the intermediation service, the SEPA

instruments involved.

Registered BI-COMP participants and settlement banks may request to receive the

register by e-mail by writing to the functional mailbox [email protected].

2. ELECTRONIC INFORMATION

The beginning and end of the netting and settlement phases of each BI-COMP

cycle shall be communicated to participants by e-mail (a message 676), transmitted via

RNI. The message contains the BI-COMP pre- and post-settlement multilateral

balances.42 Information relating to the pre-funding accounts are transmitted through a

‘message 676’ to the relevant clearing system operators (see Chapter I, section 2.3).

At the end of the settlement phase of each cycle, BI-COMP makes available

dedicated electronic information (a message 640) containing, for each participant, the

total of debit and credit amounts settled in TARGET2 relating to each interbank procedure

used, as well as the overall total of debt and credit amounts settled in TARGET2.43 This

information is sent to the participant only if requested via the participation form (see

Chapter 2, section 2.3); messages 640 related to the pre-funding accounts are transmitted

to the relevant clearing system operators (see Chapter I, paragraph 1.1).

For more details on electronic information, please refer to the Italian version of

the Guide.

40 The register also includes information concerning the pre-funding accounts (see Chapter I, section 1.1)

as well as the interoperable system operators/their settlement banks participating in BI-COMP and Banca

d’Italia PM accounts for the interoperability/interlinking services (see Section B, Chapter I, sections 1 and

2).

41 A direct intermediated PSP or, in the case of an indirectly intermediated PSP, the BI-COMP participant

who settles the payments of the indirectly intermediated PSP related to the intermediation service (see

Section B, Chapter I, section 3).

42 The multilateral balance reported in a ‘message 676’ submitted at the beginning of the netting and

settlement phase may differ from that settled in TARGET2, indicated in the ’message 676’ submitted at the

end of the settlement phase see Chapter I, sections 3.1 and 3.2).

43 Amounts settled in TARGET2 and reported via a ‘message 640’ may differ from debit and credit amounts

fed into BI-COMP by clearing systems (see Chapter I, sections 3.1 and 3.2).

mailto:[email protected]

21

SECTION B

REACHABILITY

22

CHAPTER I

OPTIONAL REACHABILITY SERVICES

Banca d’Italia offers the following reachability services: (a) interoperability

between BI-COMP and other retail payment systems, (b) interlinking between BI-COMP

and other retail payment systems and (c) intermediation in the STEP2 system of EBA-

Clearing, to enable the exchange of SEPA payments with payment service providers

(PSPs) that do not use BI-COMP to settle such payments. Banca d’Italia also makes

available the optional ‘Transferability’ service for the SCTs processed in STEP2 to those

users of the intermediation service that request it, and notify it to EBA-Clearing.

The interoperability/interlinking services and the intermediation service in STEP2

are provided together with those clearing system operators (sections 1 and 2) and

Technical facilitators (section 3) that have been chosen by the users of the reachability

services and have finalized the required contractual arrangements with Banca d’Italia

(Section C, section 2).

The choice of clearing system operators to provide the

interoperability/interlinking services and play the role of Technical facilitator in STEP2

is at their own discretion. A list is available on Banca d’Italia’s website

www.bancaditalia.it showing:

- interoperable and interlinked systems (connected systems), indicating for each of

them their operator, the clearing system operators and the SEPA instruments

involved in the interoperability/ interlinking services;

- Technical facilitators, indicating for each of them the SEPA instruments covered

by the intermediation service in STEP2.

1. INTEROPERABILITY SERVICE

Banca d’Italia offers the interoperability service together with interested clearing

system operators that enter SEPA payments into BI-COMP. It allows the exchange of

those payments between PSPs using the corresponding interbank procedures and PSPs

reachable in other retail payment systems (‘interoperable systems’), whose operators:

1) have signed and submitted to the European Payments Council (EPC) the

‘Disclosure of Intent to be a SEPA Scheme compliant CSM’ with reference to the

relevant SEPA instrument(s);

2) are subject to the payment systems oversight referred to in Article 146 of

Legislative Decree 385/1993 (Consolidated Law on Banking) or, if its registered

office and headquarters are in a country other than the Italian Republic, are subject

to equivalent forms of oversight by the competent authorities;

3) have been designated and notified to the European Securities and Markets Authority

(ESMA)44 together with their system, pursuant to Article 10 of Legislative Decree

44 Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council

of 24 November 2010.

http://www.bancaditalia.it/

23

210/2001 transposing Article 10 of the Settlement Finality Directive (SFD)45 or,

should such systems not be Italian, under the law of the Member State of the

European Union (EU) to which their systems are subject, which transposes Article

10 of the SFD;

4) have finalized interoperability agreements with Banca d’Italia and the clearing

system operators that comply with the standards set out by the European Automated

Clearing House Association (EACHA),46 so that PSPs using the interoperability

service are not obliged to participate, join or register in interoperable systems, and

that foresee the entry into BI-COMP of the SEPA payments processed as part of

the interoperability.

The exchange with an interoperable payment system of the information relating

to the SEPA payments covered by the interoperability service shall be carried out by the

clearing system whose operator has finalized an interoperability agreement.47 These

payments are settled through BI-COMP and the interoperable system in two successive

phases.

As regards netting and settlement through BI-COMP, the clearing system operator

enters SEPA payments covered by the interoperability service into BI-COMP through the

corresponding interbank procedures;48 they are merged into BI-COMP multilateral

balances and processed in the netting and settlement cycles available for the specific

SEPA instrument (see Section A, Chapter I, section 3), as set out by the relevant

interoperability agreement.

In order to enter into BI-COMP payments debiting its participants (‘outbound

payments’), it is required that a) the interoperable system operator or b) a Eurosystem

central bank or a national central bank of an EU Member State that has not adopted the

euro connected with the TARGET2 real time gross settlement system – hereinafter

TARGET2 (‘settlement bank’) – participates in BI-COMP. If the interoperable system

operator participates in BI-COMP:

- it shall hold a PM account in TARGET2 that will be loaded through BI-COMP with

the funds intended for PSPs reachable in the interoperable system; if so, i) the PM

account shall be held in the name of the interoperable system operator and be

exclusively destined for the funds intended for PSPs reachable in the interoperable

system; and ii) the national legal system of the interoperable system operator shall

also guarantee that the funds received within the interoperability service are subject

to a system of patrimonial segregation maintaining them separate from the

operator’s assets, also in the event of insolvency proceedings;

- in the absence of or as an alternative to such provisions, funds shall be settled on

the PM account held in TARGET2 by a settlement bank.



46 See the EACHA Interoperability Framework available at www.eacha.org.

47 The exchange activity can also be carried out through another clearing system, whose operator has

finalized interoperability agreements for the SEPA instruments involved (interlaid system).

48 If the clearing system makes use of an interlaid system (see previous footnote), the entry into BI-COMP

of the interoperability service payments shall be made by the interlaid system.

http://www.eacha.org/

24

To settle payments crediting BI-COMP participants (‘inbound payments’),

Banca d’Italia shall make available PM accounts/sub-accounts opened in TARGET2-

Banca d’Italia in the name of Banca d’Italia and dedicated to individual clearing systems

and to the interoperability/interlinking services, on which to receive from the

interoperable systems the funds intended for PSPs using the interbank procedures.

The aforementioned Banca d’Italia PM accounts cannot show negative balances

and their funds shall not be eligible to fulfil the reserve requirements referred to in Article

19 of the Statute of the ESCB of participants or third parties. Those accounts shall be

subject to the TARGET2 Guideline provisions regarding interest;49 any (positive or

negative) interest shall not be credited to/debited from the above-mentioned accounts, but

shall be reimbursed/recovered by Banca d’Italia as shown in Chapter II.

On the date of publication of this Guide, the TARGET2 Guideline envisages that

such interest is ‘zero percent or the deposit facility rate,50 whichever is lower’.

The arrangements for carrying out the interoperability service for SCT and SDD

Core and B2B are described in sections 1.3 and 1.4.51

1.1 Requirements for using the interoperability service

A BI-COMP participant may use the interoperability service for one or more SEPA

instruments provided that it:

adheres to the EPC schemes relating to the SEPA instruments for which the

interoperability service is requested;52

uses the interbank procedures for those SEPA instruments;

uses a clearing system whose operator has finalized an interoperability and/or

interlinking agreement with Banca d’Italia and interoperability arrangements for

those SEPA instruments.

1.2 Administrative procedures for adhering to the service

In order to use the interoperability service, a BI-COMP participant shall select this

option in the BI-COMP participation form, along with the SEPA instruments for which it

requires the service. For all other administrative procedures needed to adhere to the

service, please refer to Section A, Chapter II.

49 See ‘Guideline of the European Central Bank of 5 December 2012 on a Trans-European Automated Real-

time Gross settlement Express Transfer system (TARGET2)’ (ECB/2012/27), as subsequently amended

and supplemented, hereinafter referred to as ‘TARGET2 Guideline’.



51 On the date of publication of this Guide, Banca d’Italia has not finalized any interoperability agreement

for the SCT Inst instrument.

52 See www.europeanpaymentscouncil.eu.

https://www.europeanpaymentscouncil.eu/

25

1.3 SCT interoperability

The following paragraphs illustrate the operating model of the interoperability

service for outbound and inbound credit transfers/Returns.

1.3.1 Outbound payments

The exchange between PSPs using the SCT interbank procedure and the PSPs

reachable in the interoperable system of SCT/Return payment information crediting the

latter and the settlement of the related payment instructions, consists of the following

steps:53

A) First settlement stage

1. PSPs using the SCT interbank procedure enter into the clearing system the

SCTs/Returns crediting PSPs reachable in the interoperable system;

2. the clearing system enters into BI-COMP (SCT interbank procedure) the bilateral

balances debiting BI-COMP participants54 relating to the aforementioned

SCTs/Returns for their netting and settlement within a BI-COMP cycle for

processing SCTs. The clearing system shall enter bilateral debt balances into

cycle 0 only for Full status participants and after successful completion of the

coverage verification referred to in Section A section. 3.1;

3. and 4. BI-COMP performs the netting and sends participants’ multilateral

balances to TARGET2 for their settlement, by settling them on the PM

accounts/sub-accounts dedicated to BI-COMP’s night-time cycle and crediting

the total amount of the bilateral balances referred to in the previous point to the

PM account of the interoperable system/its settlement bank;

5. BI-COMP notifies the clearing system of the amount referred to in the previous

point that has been credited to the PM account of the interoperable system

operator/its settlement bank.

B) Second settlement stage

6. The clearing system verifies the correspondence between the notified amount

referred to in the previous point and the SCTs/Returns amounts entered into the

clearing system by PSPs using the SCT interbank procedure and, in the event of

a positive result, enters the abovementioned SCTs/Returns into the interoperable

system, up to the notified amount referred to in point 5;

7. and 8. the interoperable system performs the clearing and sends the SCTs/Returns

referred to in the previous point to settlement, by debiting them from its PM

account/its settlement bank account and settling them on the PM accounts of its

reachable PSPs /their settlement banks;

9. the interoperable system sends the payment information on the SCTs/Returns

referred to in the previous point to the PSPs reachable in its system.

53 The illustrated model assumes that the interoperable system carries out the clearing of Credit

Transfers/Returns and sends them to TARGET2 for settlement, using the Ancillary System Interface (ASI)

– procedure 4. For transactions other than Credit Transfers or Returns (e.g. Recall) the process described

does not include steps 2 to 5, the verification referred to in step 6, or steps 7 to 8.

54 BI-COMP participants using the SCT interbank procedure to settle their SCTs and/or the SCTs of other

PSPs.

26

1.3.2 Inbound payments

The exchange between PSPs reachable in the interoperable system and PSPs using

the SCT interbank procedure of the SCTs/Returns payment information crediting the

latter and the settlement of the related payment instructions consists of the following

steps:55


1. PSPs reachable in the interoperable system enter into the interoperable system

the SCTs/Returns crediting PSPs using the SCT interbank procedure;

2. and 3. the interoperable system performs the clearing and sends the SCTs/Returns

referred to in the previous point for settlement, by settling them on the PM

accounts of the PSPs reachable within their system/their settlement banks and

by crediting their total amount to the Banca d’Italia PM account dedicated to the

clearing system and functional to the interoperability/interlinking services;


point that has been credited to the Banca d’Italia PM account dedicated to the


5. the interoperable system sends the payment information relating to the above-

mentioned SCTs/Returns to the clearing system.



referred to in point 4 and the SCT/Returns amounts resulting from the payment

information referred to in the previous point and, in the event of a positive result,

enters into the BI-COMP – SCT interbank procedure the bilateral balances

crediting BI-COMP participants56 relating to the abovementioned SCTs/Returns

for their netting and settlement in the first BI-COMP daytime cycle processing

SCTs available, up to the notified amount referred to in point 4;


balances to TARGET2 for their settlement, by settling them on their PM

accounts and debiting the total amount of the bilateral balances referred to in the

previous point from the Banca d’Italia PM account dedicated to the clearing

system and functional to the interoperability/interlinking services;

9. the clearing system sends the payment information on the aforementioned

SCTs/Returns to PSPs using the SCT interbank procedure.

55 The illustrated model assumes that the interoperable system carries out the clearing of Credit

Transfers/Returns and sends them to TARGET2 for settlement, using ASI – procedure 4. For transactions

other than Credit Transfers or Returns (e.g. Recall), the process described does not include the steps from

2 to 4 and from 6 to 8.

56 BI-COMP participants using the SCT interbank procedure to settle their SCTs and/or the SCTs of other

PSPs.

27

1.4 SDD interoperability

The following sections illustrate the operating model of the interoperability

Service for outbound and inbound SEPA Direct Debits (SDDs)/Returns/Refunds. The

model applies to both SDD Core and SDD B2B.57


The exchange between PSPs reachable in the interoperable system and PSPs using

the SDD Core or SDD B2B interbank procedure of the SDDs/Returns/Refunds payment

information debiting the latter and the settlement of the related payment instructions

consists of the following steps.58


1. PSPs reachable in the interoperable system enter the SDDs/Returns/Refunds

debiting PSPs using the SDD Core SDD B2B interbank procedure.

2. the interoperable system enters into the clearing system the payment information

relating to the SDDs/Returns/Refunds referred to in the previous point;

3. the clearing system sends the payment information on the SDD Core or SDD

B2B referred to in the previous point to PSPs using the SDD Core or SDD B2B

interbank procedure;

4. the clearing system enters into BI-COMP (SDD Core or SDD B2B interbank

procedure) the bilateral balances debiting BI-COMP participants59 relating to the

SDDs/Returns/Refunds referred to in point 2 for their netting and settlement in

BI-COMP cycle 3 that is available for processing SDD Core or SDD B2B;

5. and 6. BI-COMP performs the netting and send participants’ multilateral


accounts and crediting the total amount of the bilateral balances referred to in

the previous point to the PM account of the interoperable system/its settlement

bank;


point that has been credited to the PM account of the interoperable system/its

settlement bank;

8. the clearing system verifies the correspondence between the notified amount

referred to in the previous point and the amounts of the SDDs/Returns/Refunds

referred to in point 2 and, in the event of a positive result, sends confirmation of

the settlement referred to in points 5 and 6 to PSPs using the SDD Core or SDD

B2B interbank procedure and to the interoperable system, up to the notified

amount referred to in the previous point.

57 The operating model of the SDD interoperability service for debt and credit Reversal of PSPs using the

SDD CORE (SEPA Core Direct Debit) or SDD B2B (SEPA Direct Debit) interbank procedures coincides

with that of the SCT interoperability service for outbound and inbound payments respectively (see sections

1.3.1 and 1.3.2).

58 The illustrated model assumes that the interoperable system carries out the clearing process for Direct

Debits/Returns/Refunds and sends them to TARGET2 for settlement, using ASI – procedure 4. For

Cancellation/Reject/Refusal operations, the process includes the steps for exchanging the relevant payment

information, but not those relating to settlement.

59 BI-COMP participants using the SDD CORE (SEPA Core Direct Debit) or SDD B2B (SEPA B2B Direct

Debit) interbank procedure to settle their SDD Core or SDD B2B and/or those of other PSPs.

28


9. and 10. the interoperable system performs the clearing and sends the

SDDs/Returns/Refunds referred to in point 2 for which it received settlement

confirmation as referred to in the previous point, by debiting them from its/its

settlement bank PM account and settling them on the PM accounts of the PSPs

reachable within its system/their settlement banks;

11. the interoperable system notifies the PSP reachable within that system that the

SDDs/Returns/Refunds have been settled.


The exchange between PSPs using the SDD Core or SDD B2B interbank

procedure and PSPs reachable in the interoperable system of the payment information for

SDDs/Returns/Refunds and the settlement of the related payment instructions consists of

the following steps:60


1. PSPs using the SDD Core or SDD B2B interbank procedure enter into the

clearing system the SDDs/Returns/Refunds that debit PSPs reachable in the

interoperable system;

2. the clearing system enters into the interoperable system the payment information

relating to the SDDs/Returns/Refunds referred to in the previous point;

3. the interoperable system sends the payment information relating to SDDs

referred to in the previous point to the PSPs reachable within its system;

4. and 5. the interoperable system performs the clearing and sends the

SDDs/Returns/Refunds referred to in point 2 for their settlement, by settling

them on the PM accounts of the PSPs reachable within its system/their settlement

banks and by crediting the total amount to the Banca d’Italia PM account

dedicated to the clearing system and functional to the

interoperability/interlinking services;




7. the interoperable system sends confirmation of the settlement referred to in points

4 and 5 to the PSPs reachable within its system and to the clearing system.



referred to in point 6 and the amounts of the SDDs/Returns/Refunds referred to

in point 2 for which it received settlement confirmation as referred to in the

previous point and, in the event of a positive result, up to the notified amount

referred to in point 2, enters into BI-COMP (SDD Core or SDD B2B interbank

procedure) the bilateral balances crediting BI-COMP participants61 relating to

60 The illustrated model assumes that the interoperable system carries out the clearing process of Direct

Debits/Returns/Refunds and sends them to TARGET2 for settlement, using ASI – procedure 4. For

Cancellation/Reject/ Refusal operations, the process includes the steps for exchanging the relevant payment

information, but not those relating to settlement.

61 BI-COMP participants using the SDD CORE (SEPA Core Direct Debit) or SDD B2B (SEPA B2B Direct

Debit) interbank procedure to settle their SDD Core or SDD B2B and/or those of other PSPs.

29

Direct Debits/Returns/Refunds (BI-COMP) for the netting and settlement in BI-

COMP cycle 3 available for the SDD Core or SDD B2B Direct Debit (BI-

COMP);






11. the clearing system notifies PSPs using the interbank procedure SDD Core or

SDD B2B that the SDDs/Returns/Refunds have been settled.

2. INTERLINKING SERVICE

Banca d’Italia provides the interlinking service together with interested clearing

system operators that enter SEPA payments into BI-COMP. It allows the exchange of

these payments between PSPs using the corresponding interbank procedures and PSPs

reachable in other retail payment systems (‘interlinked systems’), whose operators:

1) have signed and submitted to the EPC the ‘Disclosure of Intent to be a SEPA

Scheme compliant CSM’ with reference to the relevant SEPA instrument(s);





3) have been designated and notified to ESMA, together with their system, pursuant

to Article 10 of Legislative Decree 210/2001 transposing Article 10 of the SFD, or,

should such systems not be Italian, under the law of the EU Member State to which

their systems are subject, which transposes Article 10 of the SFD;

4) are not willing to finalize with Banca d’Italia and the interested clearing system

operators interoperability arrangements that comply with the standards set out by

the EACHA62 and require PSPs using the interlinking service to participate, join or

register in the interlinked systems.

The interlinking service requires that:

- the clearing system operator intending to provide it together with Banca d’Italia has

chosen a bank, authorized to conduct banking business in an EU Member State, to

exchange with the interlinked system the payment information related to the SEPA

payments covered by the interlinking service (‘interlinking bank’);63

- Banca d'Italia, the clearing system operator and the interlinking bank have finalized

an interlinking agreement, that: i) sets out how to exchange SEPA payments

between PSPs using the corresponding interbank procedures and PSPs reachable in


63 It is the sole responsibility of the clearing system operator to choose the interlinking bank and define the

terms and conditions – to be agreed bilaterally with the interlinking bank – for the latter to exchange with

the interlinked system the payment information relating to the SEPA payments covered by the interlinking

service. The operator may: i) use different interlinking banks for each interlinked system and SEPA

instrument covered by the relevant interlinking agreement; and ii) take on the role of interlinking bank

itself, if it meets the requirements (see Section C, paragraph 1.4).

www.eacha.org

30

the interlinked system; and ii) foresees the entry into BI-COMP of SEPA payments

covered by the interlinking service;

- the interlinking bank has taken on the direct participant role in the interlinked

system64 to implement the interlinking agreement.

The exchange with an interlinked payment system of the information relating to

the SEPA payments covered by the interlinking service shall be carried out by the

interlinking bank. These payments are settled through BI-COMP and the interlinked

system in two successive phases.


enters SEPA payments covered by the interlinking service into BI-COMP via the

corresponding interbank procedures; they are merged into BI-COMP multilateral

balances and processed in the netting and settlement cycles available for the specific

SEPA instrument (see Section A, Chapter I, section 3), as set out by the relevant

interlinking agreement.

To settle BI-COMP participants’ debt (‘outbound’)/credit (‘inbound’) payments,

Banca d’Italia shall make available PM accounts/sub-accounts opened in TARGET2-

Banca d’Italia in the name of Banca d’Italia and dedicated to individual clearing systems

and to the interoperability/interlinking services; the funds intended for PSPs reachable in

the interlinked system/PSPs using the interbank procedures will be paid into those

accounts/sub-accounts through BI-COMP/received from the interlinked systems.

Banca d’Italia PM accounts cannot show negative balances and their funds shall

not be eligible to fulfil the reserve requirements of participants or third parties referred to

in Article 19 of the Statute of the ESCB. Those accounts shall be subject to the TARGET2

Guideline provisions regarding interest;65 any (positive or negative) interest shall not be

credited to/debited from the abovementioned accounts, but shall be reimbursed/recovered

by Banca d’Italia as shown in Chapter II. On the date of publication of this Guide, the



The arrangements for carrying out the interlinking service for SCTs is described

in section 2.3.67

64 A participant in the interlinked system that, according to the system’s rules, carries out the exchange with

the interlinked system of payment information relating to SEPA payments of other participants/ PSPs

registered in the interlinked system.




67 At the date of publication of this Guide, Banca d’Italia has not finalized interlinking agreements for SDD

Core and B2B and SCT Insts.

31

2.1 Requirements for using the interlinking service

A BI-COMP participant may use the interlinking service for one or more SEPA

instruments provided that it:

adheres to the EPC schemes relating to the SEPA instruments for which the

interoperability service is requested;68

uses the interbank procedures for those SEPA instruments;

uses a clearing system whose operator has finalized an interoperability and/or

interlinking agreement with Banca d’Italia and interlinking arrangements for those

SEPA instruments;

participates/joins/registers in the interlinked systems and appoints the interlinking

bank as its direct participant in the interlinked system, as set out by its operators.


In order to use the interlinking service, a BI-COMP participant shall select this

option and the SEPA instruments for which it is required on the BI-COMP participation

form. For all other requirements for adhering to the service, please refer to Section A,

Chapter II.

2.3 SCT interlinking

The following paragraphs illustrate the operating model of the interlinking service

for outbound and inbound credit transfers/Returns.


The exchange between PSPs using the SCT interbank procedure and the PSPs

reachable in the interlinked system of the SCT/Return payment information crediting the

latter and the settlement of the related payment instructions consists of the following

steps:69


1. PSPs using the SCT interbank procedure enter into the clearing system the

SCTs/Returns crediting PSPs reachable in the interlinked system;

2. the clearing system enters into BI-COMP (SCT interbank procedure) the bilateral

balances debiting BI-COMP participants70 relating to the aforementioned

SCTs/Returns for their netting and settlement within a BI-COMP cycle for

processing SCTs. The clearing system shall only enter bilateral debt balances

into cycle 0 for Full status participants and after successful completion of the

coverage verification referred to in Section A section 4.1;


69 The illustrated model assumes that the interlinked system carries out the clearing process of Credit

transfers/Returns and sends them to TARGET2 for settlement, using ASI – procedure 4. For transactions

other than Credit transfers or Returns (e.g. Recalls) the process described does not include steps 2 to 5, the

verification referred to in step 6 and steps 8 to 9.

70 BI-COMP participants using the SCT interbank procedure to settle their SCTs and/or those of other PSPs.

http://www.europeanpaymentscouncil.eu/

32


balances to TARGET2 for their settlement, by settling them on the PM

accounts/sub-accounts dedicated to the BI-COMP night-time cycle and crediting

the total amount of the bilateral balances referred to in the previous point to the

Banca d’Italia PM account dedicated to the clearing system and functional to the




clearing system and functional to the interoperability/interlinking services.



referred to in the previous point and the SCTs/Returns amounts entered into the

clearing system by PSPs using the SCT interbank procedure and, in the event of

a positive result, sends to the interlinking bank the information flows containing

the payment information on the abovementioned SCTs/Returns up to the notified

amount referred to in the previous point;

7. the interlinking bank enters into the interlinked system the payment information

on the SCTs/Returns contained in the information flows referred to in the

previous point;

8. and 9. the interlinked system performs the clearing and sends the SCTs/Returns

referred to in the previous point to settlement, by debiting them from the Banca

d’Italia PM account dedicated to the clearing system and functional to the

interoperability/interlinking services and by settling them on the PM accounts of

the PSPs reachable in its system/their settlement banks;

10. the interlinked system sends the payment information on the SCTs/Returns

referred to in the previous point to the PSPs reachable in its system.


The exchange between PSPs reachable in the interlinked system and PSPs using

the SCT interbank procedure of the SCTs/Returns payment information crediting the

latter and the settlement of the related payment instructions consists of the steps described

in the following sections 2.3.2.a and 2.3.2.b, depending on whether their settlement takes

place in a night-time or a daytime cycle in the interlinked system.71

2.3.2.a Inbound payments settled in a night-time cycle in the interlinked system72


1. PSPs reachable in the interlinked system enter into the interlinked system the

SCTs/Returns crediting PSPs using the SCT interbank procedure;


referred to in the previous point to be settled in the night-time cycle, by settling

them on the PM sub-accounts of the PSPs reachable within its system/their

71 The illustrated model assumes that the interlinked system carries out the clearing process of Credit

transfers/Returns and sends them to TARGET2 for settlement, using ASI – procedure 6 for night-time

cycles and ASI – procedure 4 for daytime cycles.

72 For transactions other than Credit transfers/Return (e.g. Recalls), the process described does not include

steps 2 to 5 and 8 to 10.

33

settlement banks and by crediting their total amount to a sub-account of the



4. after settlement, this amount shall be transferred from the sub-account into the






6. the interlinked system sends the payment information relating to the above-

mentioned SCTs/Returns to the interlinking bank.


7. The interlinking bank sends the payment information referred to in the previous

point to the clearing system;


referred to in point 5 and the SCT/Return amounts resulting from the payment


enters into BI-COMP (SCT interbank procedure) the bilateral balances crediting

BI-COMP participants73 relating to the abovementioned SCTs/Returns for their

netting and settlement in the first BI-COMP daytime cycle available for

processing SCTs, up to the notified amount referred to in point 5;








2.3.2.b Inbound payments settled in a daytime cycle in the interlinked system74


1. PSPs reachable in the interlinked system enter into the interlinked system the

SCTs/Returns crediting PSPs using the SCT interbank procedure;


referred to in the previous point to be settled in a daytime cycle, by settling them

on the PM accounts of the PSPs reachable within its system/their settlement

banks and by crediting their total amount to the Banca d’Italia PM account

dedicated to the clearing system and functional to the






74 For transactions other than Credit transfers/Return (e.g. Recalls), the process described above does not

include steps 2 to 4 and 7 to 9.

34

5. the interlinked system sends the payment information relating to the above-

mentioned SCTs/Returns to the interlinking bank.


6. The interlinking bank sends the payment information referred to in the previous

point to the clearing system;


referred to in point 4 and the SCT/Return amounts resulting from the payment


enters into BI-COMP (SCT interbank procedure) the bilateral balances crediting

BI-COMP participants75 relating to the abovementioned SCTs/Returns for their

netting and settlement in the first BI-COMP daytime cycle available for

processing SCTs, up to the notified amount referred to in point 4;








3. INTERMEDIATION SERVICE IN STEP2

Banca d'Italia provides the intermediation service in the STEP2 system owned and

managed by EBA-Clearing to enable the exchange of SCTs, SDDs Core and SDDs B2B

with PSPs reachable in that system that are not using the interbank procedures in which

the SEPA instruments covered by the intermediation service are processed.76

The service is provided to PSPs (‘intermediated PSPs’) meeting the requirements

set out in section 3.1.1 (‘directly intermediated PSPs’) or 3.1.2 (‘indirectly

intermediated PSPs’), and requires them to be Reachable BICs in STEP2 for the SEPA

instrument for which the service is requested, to be formalized through Banca d’Italia. In

addition, the use of the intermediation service for SDDs Core and/or B2B is conditional

on the pledging of appropriate assets (please refer to section 3.4.2).

The intermediated PSPs shall appoint a Technical facilitator to exchange their

transactions with STEP2.

The SEPA payments covered by the intermediation service are not merged into

BI-COMP multilateral balances. The payments crediting intermediated PSPs are settled

on the settlement bank’s PM account (owned by the directly intermediated PSP or, for

an indirectly intermediated PSP, the PM account of the BI-COMP participant, referred to

in section 3.1.2, which has agreed to settle the payments of the indirectly intermediated


76 For SDD Core and B2Bs, intermediated PSPs are registered in STEP2 with the ‘Creditor and Debtor’

status, which allows their credit and debt SDDs and R-messages to be settled. As specified in the EBA-

Clearing normative framework, ‘an R-message is a message sent by one of the four parties of a transaction

(Creditor, Creditor Agent, Debtor, Debtor Agent), which has the effect of diverting the direct debit

instruction to which it relates from its normal execution’ (e.g. Reversal, Return, Refund).

35

PSP covered by the intermediation service); the payments debiting the intermediated

PSPs are settled on the aforementioned PM account and/or on its dedicated sub-accounts.

The activation of the intermediation service, as well as its termination, are

conditioned by EBA-Clearing’s deadlines for appointing Reachable BICs in STEP2. To

this end, any requests to use the service and the relative documentation shall be submitted

to Banca d'Italia at least ten TARGET2 business days before those deadlines.

3.1 Requirements and administrative procedures for using the STEP2

intermediation service

BI-COMP participants using the interbank procedures for the SEPA instruments

for which they require the intermediation service (directly intermediated PSPs) as well as

PSPs not participating in BI-COMP for the settlement of those SEPA payments for which

they require the intermediation service (indirectly intermediated PSPs) may adhere to the

intermediation service, provided that they meet the requirements set out in the following

sections 3.1.1 and 3.1.2 respectively.

3.1.1 Direct intermediation

To use the STEP2 intermediation service, a BI-COMP participant shall:

a) adhere to the EPC schemes relating to the SEPA instruments for which the

intermediation service is requested;

b) use the interbank procedures for those SEPA instruments;

c) complete the registration process in TARGET2 to benefit from the liquidity reserve

features by submitting the documentation listed in the Italian version of the Guide;

d) if its PM account is held in a TARGET2 component system other than TARGET2-

Banca d’Italia, have submitted the documentation listed in the Italian version of the

Guide to the central bank in charge of that system;

e) comply with the conditions set out in the ‘STEP2 General Terms and Conditions’

document and any additional requirements for being appointed as a Reachable BIC

for payments made with the SEPA instruments for which the intermediation service

is requested; for SDD Core and B2B this appointment shall be with the Creditor

and Debtor status.

3.1.2 Indirect intermediation

The intermediation service is provided to banks, Electronic Money Institutions

and Payment Institutions not participating in BI-COMP for the settlement of those SEPA

payments for which they require the intermediation service, provided that they:

- adhere to the EPC schemes relating to the SEPA instruments for which the

intermediation service is requested;

- have entrusted, totally or in part, a BI-COMP participant with the interbank

activities to exchange, clear and/or settle SEPA payments for which the

intermediation service is requested; the BI-COMP participant needs to: fulfil the

requirements as per section 3.1.1, letters b), c) and d); and agree to settle the

36

payments of the PSP requesting the intermediation service, taking on the role of

settlement bank of the indirectly intermediated PSP;77

- comply with the conditions set out in the document ‘STEP2 General Terms and

Conditions’ and any additional requirements for being appointed as a Reachable

BIC for payments made with the SEPA instruments for which the intermediation

service is requested; for SDD Core and B2B that appointment shall be with the

Creditor and Debtor status;

- submit specific legal opinions (Capacity Opinion and Country Opinion) to attest

that the fulfilment of all obligations arising from the provisions of the

intermediation service in STEP2 is not contrary to any provisions of any law,

regulation or statute applicable to such entities or any agreement to which they are

bound.

For the abovementioned purposes:

1. banks are entities:

i. having their registered office in the Italian Republic, authorized under Article

14(1) of Legislative Decree 385/1993, as subsequently amended and

supplemented (hereinafter referred to as the Consolidated Law on Banking), to

conduct banking activity (Italian banks);

ii. having their registered office and headquarters in a Member State of the

European Union (EU) other than the Italian Republic, authorized under the law

of the State of origin, which transposes Article 8(1) of Directive 2013/36/EU of

the European Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of credit institutions

and investment firms (hereinafter the Banking Directive), to conduct banking

activity by the competent authority of that State (EU banks);

iii. having their registered office in a State outside the EU, authorized to conduct

banking activity in that State in accordance with national legislation and having

one or more branches in at least one EU Member State (non-EU banks,

established in the EU with one or more branches), provided that:

in the case of branches established in the Italian Republic, their establishment

has been authorized in accordance with Article 14(4) or Article 15(4) of the

Consolidated Law on Banking;

in the case of branches established in an EU Member State other than the

Italian Republic:

1) they are subject to forms of prudential supervision equivalent to the

harmonized one provided for in the Banking Directive by the competent

authorities of the State in which they have their registered office;

2) the establishment of such branches has been authorized by the competent

authority of the host State in accordance with the law applicable in that

State and in compliance with Article 47 of the Banking Directive;

2. Electronic Money Institutions are entities other than banks:

i. having their registered office in the Italian Republic, authorized to issue

electronic money – in accordance with Article 114 quinquies (1), (1a) or (4) of

the Consolidated Law on Banking (Italian EMIs);

ii. having their registered office and headquarters in an EU Member State other

than the Italian Republic, authorized to issue electronic money by the competent

77 The use of the intermediation service in STEP2 by that BI-COMP participant is not a condition for its

indirectly intermediated PSPs to use the intermediation service in STEP2.

37

authority of that State – in accordance with the applicable law of the State of

origin, transposing Title II of Directive 2009/110/EC of the European Parliament

and of the Council of 16 September 2009 on the taking up, pursuit and prudential

supervision of the business of electronic money institutions, as amended (EU

EMIs);

iii. having their registered office in a State outside the EEA, authorized in that State

to issue electronic money in accordance with national law and established with

one or more branches in at least one EU Member State (non-EU EMIs,

established in the EU with one or more branches), provided that:

in the case of branches established in the Italian Republic, their establishment

has been authorized in accordance with Article 114 quinquies (8) of the

Consolidated Law on Banking;

in the case of branches established in an EU Member State other than the

Italian Republic:

1) they are subject to forms of prudential supervision equivalent to the

harmonized one provided for in the EMI directive by the competent

authorities of the State in which they have their registered office;

2) the establishment of such branches has been authorized by the

competent authority of the host State in accordance with the law

applicable in that State and in compliance with the provisions of Title

II of the EMI directive;

3. PIs means entities other than banks and EMIs:

i. Having their registered office in the Italian Republic, authorized under Article

114-novies (1), (1bis) or (4) of the Consolidated Law on Banking – to provide

payment services (Italian PIs);

ii. Having their registered office and headquarters in an EU Member State other

than the Italian Republic, authorized to provide payment services by the

competent authority of that State – in accordance with the applicable law of the

State of origin, transposing Article 11 of Directive (EU) 2015/2366 of the

European Parliament and of the Council of 25 November 2015 on payment

services in the internal market, as amended (hereinafter referred to as PSD2),

(EU PIs).

Banca d’Italia reserves the right to assess any requests by PSPs other than banks,

EMIs and PIs,78 which meet the above requirements, to use the intermediation service in

STEP2 as indirectly intermediated PSPs.

With regard to the legal opinions, please note that:

a) The Capacity Opinion shall be written by an internal or external legal counsel; it

should not be provided if the applicant is a bank, an EMI or a PI having its registered

office in the Italian Republic, or if it is the central bank of an EU Member State or

the European Central Bank, if allowed to use the service as a PSP other than a bank,

EMI or PI (see above);

b) The Country Opinion must be drawn up by an external legal counsel; it should not

be provided if the applicant has its registered office in an EU Member State.

78 See Article 1(1) of PSD2.

38

The indirectly intermediated PSP is required to submit, on its own initiative, new

Legal Opinions replacing those already submitted if, during its use of the intermediation

service in STEP2, any changes occur in the regulatory framework applicable to the

intermediated PSP that make the opinions no longer correct. The non-submission of new

Legal Opinions may lead to exclusion from the use of the intermediation service in

STEP2.


Please refer to the Italian version of the Guide.

3.3 SCT intermediation

For the operational model for SCT intermediation, please refer to the Italian

version of the Guide.

3.4 SDD Core and SDD B2B intermediation

For the operational model for SDD Core and SDD B2B intermediation, please

refer to the Italian version of the Guide.

4. STEP2 ‘TRANSFERABILITY’ OPTIONAL SERVICE

To enable participants to use the ‘Routing of the SEPA Credit Transfer’

Additional Optional Service (AOS),79 EBA-Clearing provides the optional

‘Transferability’ service for the SCTs processed in STEP2.

In order to use this service, direct participants in STEP2 shall communicate the

adherence also on behalf of their Reachable BICs. Banca d’Italia, as a direct participant

in STEP2, communicates to EBA-Clearing the Reachable BICs of the intermediated PSPs

that request it.

With reference to the administrative procedures for adhering to the service, please

refer to the Italian version of the Guide.

79 The service enables a customer to ask a bank (‘new bank’) to automatically transfer (routing of payments)

into the account held by the customer at that bank (‘new account’) all payment orders for which the account

holder is either the payer or the payee on a different current account (‘original account’) held at another

bank (‘original bank’).

39

CHAPTER II

FEES, INTEREST AND PENALTIES

1. INTEROPERABILITY SERVICE

The fees charged by Banca d’Italia to the users of the interoperability service shall

be proportionate to the fees charged by the operators of the interoperable systems. The

interoperability agreements finalized at the date of publication of this Guide do not require

Banca d’Italia to pay any fee and, therefore, Banca d’Italia currently does not charge its

users any fees.

Banca d’Italia PM accounts dedicated to the individual clearing systems that have

finalized interoperability agreements and are functional to the

interoperability/interlinking services are subject to the TARGET2 Guideline provisions

regarding interest.80 Any (positive or negative) interest shall be reimbursed/recovered by

Banca d’Italia to/from the relevant clearing system operators and the clearing system

operators shall, under their own responsibility, reimburse/recover these amounts to/from

their members, using their own criteria and modalities. On the date of publication of this

Guide, the TARGET2 Guideline envisages that such interest is ‘zero per cent or the

deposit facility rate,81 whichever is lower’.

There are no penalties connected to the use of the interoperability service.

2. INTERLINKING SERVICE

The fees charged by Banca d’Italia to the users of the interlinking service shall be

proportionate to the fees charged by the operators of the interlinked systems. At the date

of publication of this Guide, there are no fees to be paid by Banca d’Italia in the provisions

of the interlinking service and, therefore, Banca d’Italia currently does not charge its users

any fees.

Banca d’Italia PM accounts dedicated to the individual clearing systems that have

finalized interlinking agreements and are functional to the interoperability/interlinking

services are subject to the TARGET2 Guideline provisions regarding interest.82 Any

(positive or negative) interest shall be reimbursed/recovered by Banca d’Italia to/from the

relevant clearing system operators and the clearing system operators shall, under their

own responsibility, reimburse/recover these amounts to/from their members, using their

own criteria and modalities. On the date of publication of this Guide, the TARGET2

80 See Chapter I, section 1 and the TARGET2 Guideline.



82 See Chapter I, section. 2 and the TARGET2 Guideline.

40

Guideline envisages that such interest is ‘zero per cent or the deposit facility rate,83

whichever is lower’.

There are no penalties connected to the use of the interlinking service.

3. INTERMEDIATION SERVICE IN STEP2

3.1. Fees

Currently, the intermediated PSP and the settlement banks of the indirectly

intermediated PSP pay no fees to Banca d’Italia for the use of the intermediation service

(please refer to section 3.1.2 of the previous chapter).

Banca d’Italia shall recover the fees from the Technical facilitators:

– invoiced by EBA-Clearing, functional for providing the intermediation service;

– connected to the use of the network chosen by the Technical facilitators to exchange

the payment information of the intermediated PSPs with STEP2.

Technical facilitators shall, under their own responsibility, recover these costs from the

intermediated PSPs, using their own criteria and modalities.

3.2 Penalties for the fund insufficiency of settlement banks in SDD intermediation

A penalty of €500 is charged to the settlement banks of the SDD (Core or B2B)

intermediated PSPs,84 if they are not able to settle, for reasons attributable to themselves,85

the debt R-message balances of their intermediated PSPs initiated by their STEP2

counterparties, at the time when their settlement starts.

The penalty is also charged if the settlement delay concerns R-messages initiated

by the counterparties of the intermediated PSPs to be debited after their termination of

the use of the SDD Core and B2B intermediation service.

The penalty is independent of the amount of the fund’s insufficiency and shall be

debited by Banca d’Italia to the PM account of the settlement bank on the third TARGET2

business day of the second month following that in which the fund insufficiency occurred

or, if it is not a business day, on the next TARGET2 business day. The participant will be

notified thereof.



84 A directly intermediated PSP or the settlement bank of an indirectly intermediated PSP (see sections 3.1.1

and 3.1.2 of the previous chapter).

85 The balances arising from the intermediation cycle S (for the SDD Core intermediation) or L (for SDD-

B2B intermediation), which are sent to settlement by Banca d’Italia through MT204 – see section 3.4.1 in

the previous chapter.

41

4. STEP2 ‘TRANSFERABILITY’ OPTIONAL SERVICE

Banca d’Italia recovers from Technical facilitators the fees charged by EBA-

Clearing for the use of the STEP2 ‘Transferability’ service by the intermediated PSPs.

Technical facilitators shall, under their own responsibility, recover such costs from the

intermediated PSPs, using their own criteria and modalities.

42

SECTION C

CLEARING SYSTEMS OPERATORS

AND

TECHNICAL FACILITATORS

43

1. ACTIVITY OF CLEARING SYSTEM OPERATORS AND TECHNICAL

FACILITATORS86

1.1 Input of payment information into BI-COMP

Clearing system operators intending to send payment information to BI-COMP

shall:

a) have their registered office in a State of the European Economic Area (hereinafter

referred to as the EEA);87

b) be subject to the payment systems oversight referred to in Article 146 of Legislative

Decree 385/1993 (Consolidated Law on Banking) or, if its registered office and

headquarters are in a country other than the Italian Republic, be subject to

equivalent forms of oversight by the competent authorities;

c) have signed and submitted to the European Payments Council (EPC), the

Disclosure of Intent to be a SEPA Scheme compliant CSM’ with reference to the

relevant SEPA instrument(s),88 if they intend to enter BI-COMP payment

information related to the interbank procedures processing those instruments;

d) finalize a specific agreement with Banca d’Italia as the manager of BI-COMP.

The agreement referred to in point d) regulates the input of payment information

(single items and/or bilateral balances) in BI-COMP and the Banca d’Italia’s pre-funding

service to settle SCT Inst (see paragraph 1.2 below). Payment information referring to

above may relate to operations carried out:

- through payment instruments, both domestic and SEPA, between payment service

providers (‘PSPs’) making use of the related interbank procedures merging into BI-

COMP;

- through SEPA payment instruments between PSPs that use the related BI-COMP

interbank procedures and PSPs reachable in other retail payment systems that are

interoperable or interlinked with BI-COMP (‘connected systems’ – see below

sections 1.3 and 1.4).

86 The provisions of this Guide referring to clearing systems operators apply to Banca d'Italia in its role of

CABI operator (Centro Applicativo Banca d'Italia), with no need for contractual formalization.

87 The EEA comprises the Member States of the European Union (hereinafter ‘EU’), the Republic of

Iceland, the Principality of Liechtenstein and the Kingdom of Norway.



44

1.2 Banca d’Italia’s pre-funding service for the settlement of SCT Insts

The clearing system operators that enter payment information for the interbank

procedure SCT Inst (SEPA Instant Credit Transfer) in BI-COMP may use Banca

d’Italia’s pre-funding service to settle SCT Insts in order to mitigate the inherent credit

risk of a deferred net settlement model (known as ‘deferred net settlement’) in any

central bank money that they may adopt. The service allows BI-COMP participants to

fund a PM account opened in the real time gross settlement system TARGET2 by Banca

d’Italia (‘pre-funding account’) with the necessary funds to settle SCTs Inst and their

related Return via BI-COMP.89

The pre-funding service is optional; its use may only be requested by a clearing

system operator that processes SCTs Insts and has been designated and notified to the

European Securities and Markets Authority (hereinafter ESMA)90 together with its

system pursuant to Article 10 of Legislative Decree 210/2001 that transposes the

Settlement Finality Directive (hereinafter SFD).91 If the system is not Italian, both the

clearing system and its operator must have been designated and notified to ESMA under

the applicable law of the EU Member State to which that system is subject, which

transposes Article 10 of the SFD.

In order to avoid confusion between the pre-funding accounts of different clearing

systems, Banca d’Italia makes available a single pre-funding account for each clearing

system exclusively dedicated to settling the SCT Inst/ Returns exchanged within that

clearing system via BI-COMP. The pre-funding account opened in the TARGET2-Banca

d’Italia system cannot show negative balances.92 Funding and de-funding operations93

can only be executed by participants through the clearing system they belong to, which

enter payment information in BI-COMP for this purpose.94 The funds deposited into the

89 See Section A, Chapter I, section 2.3.

90 Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council

of 24 November 2010. ESMA shall publish a list of designated systems and operators on its website

www.esma.europa.eu.



92 The pre-funding account is opened in TARGET2 as a ‘credit-based only’ PM account and is not listed in

the TARGET2 Directory shared with operators. It is listed by Banca d’Italia in the register of BI-COMP

participants, associated with the interbank procedure SCT Inst ( SEPA Inst Credit Transfer ), to enable the

settlement through BI-COMP of payment information (single items and/or bilateral balances) related to this

interbank procedure and entered in BI-COMP against the pre-funding account itself. The administrative

process for opening a pre-funding account in TARGET2 and its registration in BI-COMP are the

responsibility of Banca d’Italia, as the account holder; the latter will recover from BI-COMP participants

any fees, tariffs and/or commissions it has been charged for opening and using the pre-funding account in

TARGET2 and BI-COMP. The identification code of the pre-funding account (5-digit code assigned by

Banca d’Italia and BIC) is disclosed to the relevant clearing system operator in the letter with which Banca

d’Italia notifies the approval of its request to use the pre-funding held by Banca d’Italia (see section 2

below).

93 Operations to charge and credit the participants’ PM accounts against the pre-funding account.

94 The possibility for participants to fund/defund the pre-funding account in TARGET2 directly, e.g. with

MT202 messages, remains excluded. If transactions not coming from BI-COMP were wrongly credited to

http://www.esma.europa.eu/

45

pre-funding account shall be covered by Article 1834 of the Civil Code. They shall not

be eligible to fulfil the reserve requirements referred to in Article 19 of the Statute of the

European System of Central Banks and of the European Central Bank by the participants

who have deposited them or by third parties. The pre-funding account shall be subject to

the TARGET2 Guideline provisions regarding interest;95 any (positive or negative)

interest shall not be credited to/debited from the above-mentioned account, but shall be

reimbursed/recovered by Banca d’Italia as described in paragraph 4 below. On the date

of publication of this Guide, the TARGET2 Guideline envisages that such interest is ‘zero

per cent or the deposit facility rate,96 whichever is lower’.

The clearing system operator using Banca d’Italia’s pre-funding service shall

communicate to Banca d’Italia, subject to the arrangements set out in section 2.2 below,

the share of the balance of the pre-funding account actually pertaining to each BI-COMP

participant.97 Such notifications shall be sent daily and whenever requested by Banca

d’Italia. The information in these communications shall refer to 00:00 hours of each

calendar day98 and to the time (day, hour and minute) indicated by Banca d’Italia in its

request.

Banca d’Italia relies exclusively on such communications also in relation to its

obligations when it is subject to measures of any nature that impede access to funds

deposited by BI-COMP into a ‘pre-funding account’ by a BI-COMP participant. If Banca

d’Italia is notified of an impediment that is to the detriment of a BI-COMP participant

using the pre-funding service:

1) Banca d’Italia shall transmit a copy of the measure without delay to the clearing

system operator;

2) immediately upon receipt of such a copy, the clearing system operator shall:

- reject any SCT/Return the execution of which alters the share of the balance of

the pre-funding account actually pertaining to the participant subject to the

measure (‘freezing’);

- notify Banca d’Italia, as described in Section 2.2, of the balance of the pre-

funding account actually pertaining to the concerned participant; this

information should refer to the moment (day, hour and minute) of the freezing,

which should be indicated in the notification referred to above;

3) on the basis of the communication referred to in point 2, Banca d’Italia secures the

funds to which the measure relates into a dedicated account, notifying the certified

e-mail box indicated by the clearing system operator;

4) upon receipt of the notification referred to in point 3), the clearing system operator

shall:

the pre-funding account, the operator of the clearing system concerned must notify Banca d’Italia without

any delay at the e-mail address [email protected], asking Banca d’Italia – as the holder of the

pre-funding account – to write off these transactions.

95 See ‘Guideline of the European Central Bank of 5 December 2012 on a Trans-European Automated Real-

time Gross settlement Express Transfer system (TARGET2)’ (ECB/2012/27), as subsequently amended

and supplemented, hereinafter referred to as the ‘TARGET2 Guideline’.



97 The amount of funds on the pre-funding account for which a BI-COMP participant has the right to claim

a refund under Article 1834 of the Civil Code.

98 Public holidays are included.

46

- update the share of the balance of the pre-funding account actually pertaining to

the participant subject to the measure, reducing it by the same amount secured

by Banca d’Italia;

- unfreeze the account.

The clearing system operator shall be accountable to Banca d’Italia and to third parties

for any possible damage resulting from a delay in the execution of the freezing with

respect to the time when the relevant document was received in the certified email box.

A clearing system operator using Banca d’Italia’s pre-funding service shall:

- reject the SCTs Inst/Returns that are not covered by the share of the balance of the

pre-funding account actually pertaining to the BI-COMP participant moment-to-

moment;

- enter payment information in BI-COMP – such as single items and/or bilateral

balances – concerning a SCT/Return that, having passed the coverage verification,

has been processed by the clearing system – only if the related transfer orders and

the corresponding balances resulting from the clearing process carried out by the

clearing system itself are – under the rules of that system – irrevocable and final

within the meaning and for the purposes of, respectively, Articles 4 and 2 of the

aforementioned Legislative Decree 210/2001, or, if the clearing system is not

Italian, within the meaning and for the purposes of the law of the EU Member State

to which that system is subject, which transposes Articles 5 and 3 of the Settlement

Finality Directive.

Payment information (single items and/or bilateral balances) for funding and de-

funding operations and/or SCT Inst/ Return transactions processed by a clearing system

that uses the Banca d’Italia’s pre-funding service must be entered in the BI-COMP by the

clearing system itself, thereby debiting/crediting its pre-funding account. BI-COMP

determines the multilateral balance of the pre-funding account and sends it to TARGET2

for settlement. The settlement of the multilateral balance of the pre-funding account is

conditional on the availability of sufficient funds on this account.99

In order to preserve the smooth functioning of BI-COMP, the clearing system

operator using Banca d’Italia’s pre-funding service is required to ensure that the

multilateral debit balance of its pre-funding account, determined by BI-COMP as a result

of the netting of payment information input by the clearing system itself, is covered by

the balance of this account. To enable the clearing system to have reliable information on

the operations (funding/defunding/crediting/debiting) and balance of its pre-funding

account, used for the pre- and post-settlement verification and reconciliation activities,

BI-COMP sends the messages relating to its pre-funding account to the clearing system

(as specified in the Italian version of the Guide).

99 If there are insufficient funds in the pre-funding account, Banca d’Italia reserves the right to write off all

the single items and/or bilateral balances input in BI-COMP by the concerned clearing system, debiting and

crediting its pre-funding account, to run the netting process again excluding such single items and/or

bilateral balances (‘unwinding’). These items/balances are not independently re-entered by Banca d’Italia

into BI-COMP. Any fund insufficiency on the pre-funding account shall not be subject to the application

of the penalty referred to in Chapter III, section 2.

47

It is the responsibility of each clearing system operator to set out the rules,

operating arrangements and risk mitigation measures of its own system, such as:

- management arrangements for funding/defunding operations, preparatory to

entering the corresponding payment information in BI-COMP;100

- criteria and operational arrangements for prior verification of the coverage of each

SCT Inst/Return instruction against the balance of the pre-funding account actually

pertaining to the BI-COMP participant moment-to-moment and for the rejection of

those instructions in the event of non-coverage;

- the deadline after which the SCT Inst/Return transfer orders cannot be withdrawn

from the clearing system, within the meaning of Article 4(1) of the aforementioned

Legislative Decree 210/2001, or, where the clearing system is not an Italian clearing

system, within the meaning of the law of the EU Member State to which that system

is subject, transposing Article 5(1) of the Settlement Finality Directive;

- the time when the SCT Inst/Return transfer orders are entered into the clearing

system, within the meaning of Article 2(2) of the aforementioned Legislative

Decree 210/2001, or, if the clearing system is not Italian, within the meaning of the

law of the EU Member State to which that system is subject, which transposes

Article 3(3) of the Settlement Finality Directive;

- the operational functionalities to ensure that the multilateral debit balance of the

pre-funding account dedicated to the clearing system, as determined by BI-COMP

as a result of the netting of payment information submitted to BI-COMP by the

clearing system itself, is covered by the balance of that account.

1.3 Interoperability service

In order to allow for the exchange of SEPA payments also with PSPs not using

BI-COMP to settle such payments, Banca d’Italia offers the interoperability service

together with interested clearing system operators that enter SEPA payments into BI-

COMP.

The service allows these payments to be exchanged between PSPs using the

corresponding interbank procedures and PSPs reachable in other retail payment systems

(hereinafter referred to as interoperable systems), whose operators:



2) are subject to the payment systems oversight referred to in Article 146 of the


office and headquarters are in a country other than the Italian Republic, are subject-


3) have been designated and notified to ESMA, together with their systems, pursuant

to Article 10 of Legislative Decree 210/2001 transposing the SFD, or, should such

100 E.g. technical and operational standards for communication between participants and the clearing system

to enter the funding/defunding operations in such a system, the discretionary and/or automatic nature of the

funding /de-funding operations initiated by participants and/or the clearing system in the name and on

behalf of the participants (e.g. funding mechanisms automatically triggered by the clearing system to

replenish – partially or totally – the pre-funding at the same time as it is used in the settlement phase of the

BI-COMP in TARGET2), the criteria to be followed in the selection among multiple funding/defunding

operations from the same participant and so on.

48

systems not be Italian, under the applicable law of the EU Member State to which


4) have finalized interoperability agreements with Banca d’Italia and the clearing

system operators that (i) regulate the exchange of SEPA payments between PSPs

using the corresponding interbank procedures and PSPs reachable in interoperable

systems; (ii) comply with the standards set out by the European Automated

Clearing House Association (EACHA);101 (iii) do not oblige PSPs using the

interoperability service to participate in, join or register with interoperable

systems; and iv) provide for entry of the SEPA payments processed within the

interoperability system in BI-COMP.

The provision of the interoperability service is optional and the choice to carry it

out is at the discretion of each clearing system operator; the concerned clearing system

operator should finalize an interoperability and/or interlinking agreement with Banca

d’Italia.102

The clearing system operator that has chosen to provide the interoperability

service together with Banca d’Italia is obliged to make it available to any PSP adhering

to its clearing system that uses the interbank procedures for the SEPA payments covered

by the interoperability service, meets the requirements to use it and intends to use it. The

requirements set out by Banca d’Italia to use the interoperability service for BI-COMP

participants using the interbank procedures covered by interoperability arrangements are

described in Section B, Chapter I, section 1.1. It is the sole responsibility of the clearing

system operator:

- to define further requirements for the use of the interoperability service by PSPs

that participate in this system and use the interbank procedures relating to the SEPA

instruments covered by that service;

- to ensure the compliance of these requirements with the provisions on access to

payment systems set out by Article 30 of Legislative Decree 11/2010, or, if the

clearing system is not Italian, by the law of the EU Member State to which the

clearing system is subject, which transposes Article 35 of PSD2 Directive

(hereinafter ‘PSD2’).103

The activity of exchanging payment information related to the SEPA payments

with an interoperable system covered by the interoperability service shall be carried out

by the clearing system whose operator has finalized an interoperability agreement.104


102 See section 2.1 below.

103 Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on

payment services in the internal market, as amended.

104 The clearing system operator shall disclose to the PSPs using the interoperability service which PSPs

are reachable in the interoperable system. If a PSP that uses the interoperability, interlinking and/or

intermediation in STEP2 services (see 1.4 and 1.5 below) orders a SEPA payment to credit/debit a PSP that

does not use the corresponding interbank procedure, but is reachable in more than one system

(interoperable/interlinked /STEP2), the clearing system operator – that performs the role of Technical

Facilitator in STEP2 – is required to forward the payment to the system (interoperable/interlinked/STEP2)

chosen by the PSP that ordered the payment. The choice of network for the exchange of payment

information between those systems shall be at the discretion of the clearing system and the interoperable

system operators.


49

Those payments are settled through BI-COMP and the interoperable system in two

successive phases.


enters the SEPA payments covered by the interoperability service into BI-COMP as

bilateral balances through the corresponding interbank procedures; they are merged into

BI-COMP multilateral balances and processed in the netting and settlement cycles

available for the specific SEPA instrument (see Section A, Chapter I, section 3), as set

out by the relevant interoperability agreement. The clearing system operator shall ensure

that the SEPA payments covered by the interoperability service and entered into BI-

COMP:

- only relate to the SEPA instruments covered by the relevant interoperability

arrangements;

- are exchanged between i) PSPs using the corresponding interbank procedures and

using the interoperability service; and ii) PSPs reachable in interoperable systems.

The clearing system operator may only enter SEPA payments covered by the

interoperability service crediting/debiting BI-COMP participants using the corresponding

interbank procedures if these participants have indicated to Banca d’Italia that they intend

to use the interoperability service. Banca d’Italia shall disclose the names of those

participants to the clearing system operator, by means of communications to the e-mail

addresses in the list of contacts.

In order to enter payments debiting its participants into BI-COMP (‘outbound

payments’), it is required that a) the interoperable system operator or b) a Eurosystem

central bank or a national central bank of an EU Member State connected to TARGET2

that has not adopted the euro (so-called ‘settlement bank’) participates in BI-COMP. If

the interoperable system operator participates in BI-COMP:

- it shall hold a PM account in TARGET2 to be loaded through BI-COMP with the

funds intended for PSPs reachable in the interoperable system; if so, i) the PM

account shall be held in the name of the interoperable system operator and be

exclusively destined for the funds intended for PSPs reachable in the interoperable

system; and ii) the national legal system of the interoperable system operator shall

also guarantee that the funds received within the interoperability service are subject

to a system of patrimonial segregation that keeps them separate from the operator’s

assets, also in the event of insolvency proceedings;

- in the absence of or as an alternative to such provisions, funds shall be settled on

the PM account held in TARGET2 by a settlement bank.

Settlement of outbound payments through the interoperable system shall remain

conditional on the availability of sufficient funds on the interoperable system

operator/settlement bank PM account. Therefore, the clearing system operator who has

entered such payments into BI-COMP shall check that they have been settled through BI-

COMP on that PM account before submitting the relevant payment information to the

interoperable system. In order to enable the clearing system to perform verification and

reconciliation activities before that input, Banca d’Italia shall notify the clearing system

itself (as specified in the Italian version of the Guide) of the amounts credited through BI-

COMP to the interoperable system operator/settlement bank PM account; in any case, the

clearing system operator shall not enter payment information in the interoperable system

relating to outbound payments exceeding the amounts notified by that message.

50

To settle payments crediting BI-COMP participants (hereinafter referred to as

‘inbound payments’), Banca d’Italia shall make available PM accounts/sub-accounts

opened in TARGET2-Banca d’Italia in the name of Banca d’Italia, dedicated to individual

clearing systems and to the interoperability/interlinking services, on which to receive

from the interoperable systems the funds intended for PSPs using the interbank

procedures.105 The aforementioned Banca d’Italia PM accounts cannot show negative

balances and their funds shall not be eligible to fulfil the reserve requirements of

participants or third parties referred to in Article 19 of the Statute of the ESCB. These

accounts shall be subject to the TARGET2 Guideline provisions regarding interest;106 any

(positive or negative) interest shall not be credited to/debited from the above-mentioned

accounts, but shall be reimbursed/recovered by Banca d’Italia as described in paragraph

4 below. On the date of publication of this Guide, the TARGET2 Guideline envisages

that such interest is ‘zero percent or the deposit facility rate, whichever is lower’.107

Settlement of inbound payments through BI-COMP remains conditional on the

availability of sufficient funds on Banca d’Italia PM accounts dedicated to the

interoperability/interlinking services. Therefore, before submitting the relevant payment

information to BI-COMP, the clearing system operator shall check that those payments

have been settled through the interoperable system on those PM accounts, In order to

enable the clearing system to perform verification and reconciliation activities before that

input, Banca d’Italia shall notify the clearing system itself (as specified in the Italian

version of the Guide) of the amounts credited through the interoperable system to Banca

d’Italia PM accounts dedicated to the interoperability/interlinking services. In any case,

the clearing system operator shall:

- not enter payment information into BI-COMP relating to inbound payments

exceeding the amounts notified in the aforementioned message;

- ensure that the multilateral debit balances of the aforementioned PM accounts, as

determined by BI-COMP as a result of the netting process relating to the payment

information on inbound payments entered by the clearing system operator itself into

BI-COMP, are covered by the funds available on those accounts.108

105 Banca d’Italia PM accounts for the interoperability service are opened in TARGET2 as ‘credit-based

only’ PM accounts and are not listed in the TARGET2 Directory shared with operators. They are listed by

Banca d’Italia in the register of BI-COMP participants, associated with the interbank procedures processing

the SEPA instruments covered by the interoperability agreements, in order to allow the settlement through

BI-COMP of the bilateral balances related to these interbank procedures and entered into BI-COMP to

credit BI-COMP participants. The administrative processes for opening the Banca d’Italia PM

accounts/sub-accounts in TARGET2 for the interoperability service and for registering those PM accounts

in BI-COMP are the responsibility of Banca d’Italia, as the holder of those accounts/sub-accounts; the

corresponding identification codes (five-digit codes assigned by Banca d’Italia and/or BIC) shall be

indicated in the interoperability agreements.


107 Interest rate applicable to ‘a Eurosystem standing facility which counterparties may use to make

overnight deposits with a National Central Bank at the pre-specified deposit rate’.

108 Should a Banca d’Italia PM account for the interoperability/interlinking services have a fund

insufficiency, Banca d’Italia reserves the right to write off all the bilateral balances entered into BI-COMP

by the clearing system concerned, debiting that PM account, and to run the netting process again, excluding

such bilateral balances (‘unwinding’). These balances are not independently re-entered by Banca d’Italia in

BI-COMP. Any fund insufficiency of the PM accounts for the interoperability/interlinking services shall

not be subject to the application of the penalty referred to in Chapter III, section 2.

51

The operating model of the interoperability service for SCTs and SDDs Core and

B2B109 is illustrated in Section B, Chapter I, sections 1.3 and 1.4.

It is the sole responsibility of the clearing system operator that has finalized

interoperability agreements to set out the rules, operating arrangements and risk

mitigation measures for its own system to carry out the interoperability service. The

clearing system operator shall in any case be obliged to:

- ensure full compliance of its system rules regarding interoperability with the rules

contained in the relevant contract for the interoperability and/or interlinking

services and interoperability agreements finalized with Banca d’Italia;

- cover all costs, including any fees, tariffs and/or commissions charged by the

interoperable systems operators, as well as the costs of infrastructure and network

services necessary to implement such agreements and recover the relevant amounts

from their members, with criteria and arrangements defined autonomously;110

- be accountable to PSPs using the interbank procedures for the SEPA payments

covered by such agreements, BI-COMP participants, interoperable system

operators, PSPs reachable in such systems or third parties for the activities carried

out under such agreements, absolving Banca d’Italia from any blame in the event

of damage occurring to those subjects as a result of any of the aforementioned

activities.

A clearing system operator intending to offer the interoperability service with

Banca d’Italia may exchange with the interoperable systems the payment information

relating to the SEPA payments covered by the interoperability service and enter them in

BI-COMP using another clearing system, whose operator has finalized interoperability

agreements for the SEPA instruments concerned (hereinafter referred to as the ‘interlaid

system’). Banca d’Italia – as BI-COMP operator – is not involved in the relationship

between the clearing system operator and the interlaid system operator.

1.4 Interlinking service

In order to allow for the exchange of SEPA payments also with PSPs not using

BI-COMP to settle such payments, Banca d’Italia offers the interlinking service together

with the clearing systems operators involved that enter SEPA payments into BI-COMP.

The service allows those payments to be exchanged between PSPs using the

corresponding interbank procedures and PSPs reachable in other retail payment systems

(hereinafter referred to as ‘interlinked systems’), whose operators:





109 On the date of publication of this Guide, Banca d’Italia has not finalized any interoperability agreement

for the SCT Inst instrument.

110 Banca d’Italia shall recover from BI-COMP participants any fees, tariffs and/or commissions it has been

charged with for opening and using Banca d’Italia PM accounts/sub-accounts for the

interoperability/interlinking services in TARGET2 and BI-COMP.

52



3) have been designated and notified to ESMA, together with their systems, pursuant

to Article 10 of Legislative Decree 210/2001 transposing the SFD, or, should such

systems not be Italian, under the applicable law of the EU Member State to which


4) are not willing to finalize interoperability arrangements with Banca d’Italia and the

interested clearing system operators that comply with the standards set out by the

EACHA111 and require PSPs using the interlinking service to participate in, join or

register in the interlinked systems.

The provision of the interlinking service is optional and the choice to carry it out

is at the discretion of each clearing system operator; it requires that:

- the concerned clearing system operator has: i) finalized an interoperability and/or

interlinking agreement with Banca d’Italia; and ii) chosen a bank to exchange with

the interlinked system the payment information relating to the SEPA payments

covered by the interlinking service, agreeing bilaterally on terms and conditions

(‘interlinking bank’);

- Banca d'Italia, the clearing system operator and the interlinking bank have

finalized an ‘interlinking agreement’, that: i) sets out how to exchange SEPA

payments between PSPs using the corresponding interbank procedures and PSPs

reachable in the interlinked system; and ii) foresees the entry into BI-COMP of

SEPA payments covered by the interlinking service;

- the interlinking bank has taken on the direct participant role in the interlinked

system112 to implement the interlinking agreement.

It is the sole responsibility of the clearing system operator to choose the

interlinking bank and define the terms and conditions – to be agreed bilaterally with the

interlinking bank – for the latter to exchange with the interlinked system the payment

information relating to the SEPA payments covered by the interlinking service. The

operator may:

i) use different interlinking banks for each interlinked system and SEPA instrument

covered by the relevant interlinking agreement;

ii) take on the role of interlinking bank itself, if it meets the requirements set out below.

To take on the role of interlinking bank, it must:

a) have its registered office in the Italian Republic and be authorized – in accordance

with Article 14(1) of the Consolidated Law on Banking – to conduct banking

business (Italian banks) or have its registered office and headquarters in a EU

Member State other than the Italian Republic and be authorized to conduct banking

business by the competent authority of that State (EU banks) – in accordance with

the applicable law of the State of origin, transposing Article 8(1) of Directive

2013/36/EU of the European Parliament and of the Council of 26 June 2013 on

111 See previous section and the EACHA Interoperability Framework available on the website

www.eacha.org.

112 A participant to the interlinked system that, according to the system’s rules, carries out the exchange

activity with the interlinked system of payment information related to SEPA payments of other participants/

/PSPs registered in the interlinked system.


53

access to the activity of credit institutions and the prudential supervision of credit

institutions and investment firms, as amended (hereinafter referred to as the

Banking Directive);

b) adhere to the EPC schemes related to the SEPA instruments covered by the

interlinking agreement,113 meet the requirements to take on the role of

member/direct participant for such instruments in the interlinked system, as well as

take on this role to implement the interlinking agreement for its entire duration;

c) agree to be appointed as a member/direct participant in the interlinked system by

PSPs that: i) adhere to the clearing system; ii) use the interbank procedures relating

to the SEPA instruments covered by the interlinking agreement; and iii) intend to

use the interlinking service, as it meets the requirements;

d) complete the tasks set by the interlinked system operator to enable the

abovementioned PSPs to participate/join/register in the interlinked system and

appoint the interlinking bank as their member/direct participant in that system;

e) commit not to withdraw from the interlinking agreement with Banca d’Italia and

the clearing system operator with less than six months’ notice.

Without prejudice to the rules set out in the relevant contract for the

interoperability and/or interlinking services and in the interlinking agreements finalized

by Banca d’Italia (see above), the latter – as a BI-COMP operator – is not involved in:

- any agreement between the clearing system operators and their interlinking banks

on the terms and conditions for interlinking banks to exchange with the interlinked

system the payment information relating to the SEPA payments covered by the

interlinking service, including any economic agreement between them for the

activities covered by the interlinking agreements;

- the choice of the network to be used to exchange payment information with the

interlinked systems from among those approved by the system operators.

The clearing system operator that has chosen to provide the interlinking service

together with Banca d’Italia is obliged to make it available to any PSP that: i) adheres to

its clearing system; ii) uses the interbank procedures for the SEPA payments covered by

this service; and iii) meets the requirements to use it and intends to use it. The

requirements set out by Banca d’Italia to use the interlinking service for BI-COMP

participants using the interbank procedures covered by interlinking arrangements are

described in Section B, Chapter I, section 2.1. It is the sole responsibility of the clearing

system operator:

- to define further requirements for the use of the interlinking service by PSPs that

participate in their own system and use the interbank procedures relating to the

SEPA instruments covered by that service;

- to ensure compliance of these requirements with the provisions on access to

payment systems set out by Article 30 of Legislative Decree 11/2010, or, if the

clearing system is not Italian, by the law of the EU Member State to which the

clearing system is subject, which transposes Article 35 of PSD2.

The exchange activity with an interlinked system of the payment information

relating to the SEPA payments covered by the interlinking service shall be carried out by

113 Cfr. www.europeanpaymentscouncil.eu.


54

the interlinking bank.114 Those payments are settled through BI-COMP and the

interlinked system in two successive phases.

As regards netting and settlement through BI-COMP, the clearing system

operator enters the SEPA payments covered by the interlinking service into BI-COMP as

bilateral balances, through the corresponding interbank procedures; they are merged into

BI-COMP multilateral balances and processed in the netting and settlement cycles

available for the specific SEPA instrument (see Section A, Chapter I, section 3), as set

out by the relevant interlinking agreement.

The clearing system operator shall ensure that the SEPA payments covered by the

interlinking service and entered into BI-COMP:

- are related to the SEPA instruments covered by the relevant interlinking agreements

only;

- are exchanged between i) PSPs using the corresponding interbank procedures and

using the interlinking service; and ii) PSPs reachable in interlinked systems.

The clearing system operator may only enter SEPA payments covered by the

interlinking service crediting/debiting BI-COMP participants using the corresponding

interbank procedures if these participants have indicated to Banca d’Italia that they intend

to use the interlinking service. Banca d’Italia shall disclose the names of those participants

to the clearing system operator, by means of communications to the e-mail addresses in

the list of contacts.

To settle payments crediting BI-COMP participants (‘inbound

payments’)/debiting BI-COMP participants (‘outbound payments’), Banca d’Italia

shall make available PM accounts/sub-accounts opened in TARGET2-Banca d’Italia in

the name of Banca d’Italia, dedicated to individual clearing systems and to the

interoperability/interlinking services, to be loaded through BI-COMP with/ on which to

receive from the interlinked systems the funds intended for PSPs reachable in the

interlinked systems/PSPs using the interbank procedures.115 The aforementioned Banca

d’Italia PM accounts cannot show negative balances and their funds shall not be eligible

to fulfil the reserve requirements referred to in Article 19 of the Statute of the ESCB of

participants or third parties. Those accounts shall be subject to the TARGET2 Guideline

114 The clearing system operator shall disclose which PSPs are reachable in the interlinked system to PSPs

using the interlinking service. When a PSP that uses the interoperability, interlinking and/or intermediation

in STEP2 services (see sections 1.3 and 1.5) orders a SEPA payment to credit/debit a PSP that does not use

the corresponding interbank procedure, but is reachable in interoperable/connected/STEP2 systems, the

clearing system operator – that performs the role of Technical Facilitator in STEP2 – is required to forward

the payment to the interoperable/ interlinked/STEP2 system chosen by the PSP that ordered the payment.

115 Banca d’Italia PM accounts for the interlinking service are opened in TARGET2 as ‘credit-based only’

PM accounts and are not listed in the TARGET2 Directory shared with operators. They are listed by Banca

d’Italia in the register of BI-COMP participants, associated with the interbank procedures processing the

SEPA instruments covered by the interlinking agreements, in order to allow the settlement through BI-

COMP of the bilateral balances relating to these interbank procedures and enter crediting BI-COMP

participants in BI-COMP. The administrative process to open the Banca d’Italia PM accounts/sub-accounts

in TARGET2 for the interlinking service and for registering those PM accounts in BI-COMP are the

responsibility of Banca d’Italia, as the holder of those accounts/sub-accounts; the corresponding

identification codes (five-digit codes assigned by Banca d’Italia and/or BIC) shall be indicated in the

interlinking agreements.

55

provisions regarding interest;116 any (positive or negative) interest shall not be credited

to/debited from the above-mentioned accounts, but shall be reimbursed/recovered by

Banca d’Italia as described in section 4 below. On the date of publication of this Guide,

the TARGET2 Guideline envisages that such interest is ‘zero percent or the deposit

facility rate,117 whichever is lower’.

Settlement of outbound/inbound payments through the interlinked system/BI-

COMP remains conditional on the availability of sufficient funds on Banca d’Italia PM

accounts dedicated to the interoperability/interlinking services. Therefore, the clearing

system operator shall check that those payments have been settled through BI-COMP/the

interlinked system on those PM accounts, before submitting the payment information

relating to the outbound payments in the interlinked system through the interlinking bank

/the inbound payments in BI-COMP. In order to enable the clearing system to perform

verification and reconciliation activities before that input, Banca d’Italia shall notify the

clearing system itself (as specified in the Italian version of the Guide) of the amounts

credited through BI-COMP/the interlinked system to Banca d’Italia PM accounts

dedicated to the interoperability/interlinking services. In any case, the clearing system

operator shall:

- not enter any payment information related to outbound payments, via the

interlinking bank, in the interlinked system/payment information relating to

inbound payments into BI-COMP exceeding the amounts notified in the

aforementioned message;

- ensure that the multilateral debit balances of the aforementioned PM accounts, as

determined by BI-COMP as a result of the netting process of the payment

information relating to inbound payments entered by the clearing system operator

itself into BI-COMP, are covered by the funds available on those accounts.118

The operating model for the interlinking service for SCTs119 is illustrated in

Section B, Chapter I, section 2.3.

It is the sole responsibility of:

1) the clearing system operator that has finalized the interlinking arrangements to set

out the rules and operating arrangements of its own system for carrying out the

interlinking service;

2) the clearing system operator that has finalized the interlinking arrangements and its

interlinked bank to set out, as per their competencies, the risk mitigation measures




118 Should a Banca d’Italia PM account for the interoperability/interlinking services have a fund

insufficiency, Banca d’Italia reserves the right to write off all bilateral balances entered into BI-COMP by

the clearing system concerned, debiting that PM account, and to run the netting process again, excluding

such bilateral balances (‘unwinding’). These balances are not independently re-entered by Banca d’Italia

into BI-COMP. If any of the PM accounts have insufficient funds for the interoperability/interlinking

services, they will not be subject to the application of the penalty referred to in Chapter III, section 2.

119 At the date of publication of this Guide, Banca d’Italia has not finalized any interlinking agreement for

SDD Core and B2B and SCT Inst instruments.

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of the respective systems, applications and procedures that allow the interlinking

service to be carried out.

In any case:

1) the clearing system operator is obliged to ensure full compliance of its system rules

regarding interlinking with the rules contained in the relevant contract for the

interoperability and/or interlinking services and interlinking agreements finalized

with Banca d’Italia;

2) the interlinking bank is obliged to take all the responsibilities for:

- its direct participation/participation in interlinked systems in order to implement

such agreements;

- as a direct participant/participant in interlinked systems, completing the tasks

requested by the operators of such systems to enable PSPs participating in the

clearing system using the interbank procedures relating to the SEPA instruments

covered by the interlinking arrangements and intending to use the interlinking

service and fulfilling its requirements, to participate/join/register in interlinked

systems and appoint the interlinking bank as their member/direct participant in

those systems;

3) the clearing system operator and the interlinking bank, as per their competencies,

shall:

- cover all costs, including any fees, tariffs and/or commissions charged by the

interlinked system operators, as well as the costs of infrastructure and network

services necessary to implement such agreements and recover the relevant

amounts from their members, with the criteria and arrangements autonomously

defined;

- be accountable to PSPs using the interbank procedures relating to the SEPA

payments covered by such agreements, BI-COMP participants, interlinked

system operators, PSPs reachable in such systems or third parties for the

activities carried out by the clearing system operator and the interlinking bank

themselves under those agreements, and jointly absolve Banca d’Italia from any

blame in the event of damage occurring to these subjects as a result of any of the

aforementioned activities.120

1.5 Intermediation service in STEP2

To extend reachability throughout the SEPA, Banca d’Italia also provides an

intermediation service in the STEP2 system of EBA-Clearing for SCTs, SDDs Core

and SDDs B2B. For SDDs Core and B2B, the service allows intermediated PSPs to settle

credit and debit SDDs and R-messages121 (‘Creditor and debtor’ status).

The exchange of payment information relating to this service is carried out by

Technical facilitators that have finalized a dedicated contract with Banca d'Italia. The

120 Banca d’Italia shall recover from BI-COMP participants any fees, tariffs and/or commissions it has been

charged with for opening and using the PM accounts/sub-accounts for the interoperability/interlinking

services in TARGET2 and BI-COMP.

121 As specified in the EBA-Clearing normative framework, an ‘R-message is a message sent by one of the

four parties of a transaction (Creditor, Creditor Agent, Debtor, Debtor Agent), which has the effect of

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exchange follows the operational model and timetable described in this Guide. The

detailed operational model of the intermediation service in STEP2 is set out in Section B,

Chapter I, section 3.

2. CONTRACTUAL AGREEMENTS AND COMMUNICATIONS WITH BANCA

D’ITALIA

With respect to the administrative procedures for finalizing the contractual

arrangements with Banca d’Italia, exchange documents and communications, please refer

to the Italian version of the Guide.

3. BUSINESS DAYS AND OPERATING HOURS

The clearing systems operators/Technical facilitators shall submit to Banca

d’Italia the payment information referred to in section 1 according to the provisions on

days and operating hours set out by this Guide. In the event of extraordinary

circumstances, Banca d'Italia may modify such business days and operating hours, and

will communicate such information to the counterparties concerned.

4. INTEREST ON PRE-FUNDING ACCOUNTS AND BANCA D’ITALIA PM

ACCOUNTS FOR THE INTEROPERABILITY/INTERLINKING SERVICES

Banca d’Italia reimburses each clearing system operator using the Banca d’Italia’s

Pre-funding service to settle SCTs Insts and/or carrying out with Banca d’Italia the

interoperability/interlinking services with any interest on the funds deposited by the

participants on the pre-funding account and on Banca d’Italia PM accounts for the

interoperability/interlinking services, if positive; the operator is obliged to pay Banca

d’Italia the aforementioned interest, if negative.

Each clearing system operator to/from which interest has been reimbursed/paid

shall, under their own responsibility, reimburse it to/recover it from their system

participants, using their own criteria and modalities.

On the date of publication of this Guide, the TARGET2 Guideline122 envisages

that such interest is ‘zero percent or the deposit facility rate,123 whichever is lower’.

In order to recover interest (see Section 2.1):

a) Banca d’Italia charges it on the PM account of the clearing system operator or, if it

has no PM account, on the PM account of another entity authorized for that purpose

(known as the ‘settlement bank for interest/fees’); the charge is notified through an

accounting note to the clearing system operator/its settlement bank for interest/fees;

diverting the direct debit instruction to which it relates from its normal execution’ (e.g. Reversal, Return,

Refund).




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b) if the clearing system operator has declared that these fees cannot be charged on its

PM account in TARGET2 or on the PM account of any third parties and has

committed to pay them by SCT:

- Banca d’Italia notifies the amount of such interest to the clearing system operator

and, if the interest is positive, reimburses it with an SCT crediting the account of

the clearing system operator and identified by the IBAN code specified by the

clearing system operator in the C.13 Form;

- if the interest is negative, the clearing system operator must pay them within five

business days according to the TARGET2 calendar of the date of receipt of that

notice, by means of an SCT to Banca d’Italia – IBAN code

IT28R0100003204000000000827, and communicate by e-mail the payment

details to the mailboxes [email protected] and

[email protected].

If the clearing system operator stops using Banca d’Italia’s pre-funding service

for the settlement of SCT Insts and/or withdraws from the interoperability/linking

services, Banca d’Italia and the clearing system operator remain respectively obliged –

even after the termination date – to reimburse any positive interest and to pay any negative

interest accrued up to the closing date of the pre-funding account and/or Banca d’Italia

PM accounts for the interoperability/interlinking services.

5. INTERMEDIATION SERVICE IN STEP2 – FEES FROM EBA-CLEARING

AND NETWORK FEES

Each Technical facilitator shall pay Banca d’Italia the fees invoiced:

- by EBA-Clearing, for providing the intermediation service to intermediated PSPs

using this technical facilitator and for their use of the STEP2 ‘Transferability’

service;

- for the use of the network chosen by the Technical facilitator to exchange payment

information on the PSPs intermediated with STEP2.

These fees shall be entirely recovered by Banca d’Italia, irrespective of the

number of months for which the service has been provided and at the same time of receipt

of the relevant invoices. The Technical facilitator shall, under its own responsibility,

recover such costs from the intermediated PSPs using their own criteria and modalities.

The choice of the network, among those approved by EBA-Clearing, to be used for the

exchange of the payment information for the intermediation in STEP2 is at the discretion

of the Technical facilitator.

To recover the fees (see Section 2.1):

a) Banca d’Italia shall charge them to the PM account of the Technical facilitator or,

if it has no PM account, on the PM account of any other entity authorized for that

purpose (known as the ‘settlement bank for interest/fees’); the charge is notified

through an accounting note to the Technical facilitator /its settlement bank for

interest/fees; a copy of the invoices is attached to the accounting note;

b) if the Technical facilitator has declared that these fees cannot be charged to its PM

account in TARGET2 or on the PM account of any third parties and has committed

to pay them by SCT:

- Banca d’Italia shall send a copy of the relevant invoices to the Technical

facilitator;



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- the Technical facilitator must pay the fees within five business days according

to the TARGET2 calendar of the date of receipt of that notice, by means of an

SCT to Banca d’Italia, IBAN code IT02W0100003250000000000907, and

communicate by e-mail the payments details to the mailboxes

[email protected] and [email protected].

No amount shall be reimbursed in the event of withdrawal from/termination of the

contract signed by the Technical facilitator for carrying out the intermediation service or

of termination of this service with respect to each SEPA payment instruments. In these

cases, the Technical Facilitator shall also pay the fees invoiced to Banca d’Italia after the

withdrawal/termination date.



BI-COMP - Banca d'Italia

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