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This section gives an overview of the next SSP releases in TARGET2, going beyond the first upcoming release. In addition, future evolutions which would extend over more than one release are covered under a separate tab, currently “ISO 20022 strategy”.
Defining the release content is subject to a pre-agreed change management process. User communities can submit change requests in a 1st User consultation. On the basis of these change requests the Eurosystem shortlists those requests which can be envisaged for the release. In a 2nd User consultation users can express their support for these change requests. The Eurosystem decides on the final release content on the basis of the user consultations and on a cost-benefit analysis for each change request.
The release content for the SSP release 8.0 – going live in November 2014 – is foreseen as very limited due to concurrent activities related to the connection of TARGET2 to T2S and the implementation of ISO 20022 compliant messages in TARGET2 which impact both the Eurosystem’s and banks’ side.
The Eurosystem is currently reviewing the ISO 20022 strategy for TARGET2 which was developed over 2010-2011 and which is documented hereafter. The Eurosystem considers a review on the strategy needed given changes in some variables like the timing of the T2S project, the SEPA migration end date Regulation and the progress at SWIFT community level in the developments towards ISO 20022 compliant MX messaging for Large Value Payment Systems. The Eurosystem will consult the TARGET2 community in due time on the reviewed ISO 20022 strategy for TARGET2.
ISO 20022 has been at the core of discussions in the financial industry for the past few years, as it aims to increase both the efficiency and interoperability of financial institutions, market infrastructures and end-users. In this sense, ISO 20022 has obtained the support of the European authorities.
In the cash area, TARGET2 can already be considered fairly advanced, as it already makes use of formats that are very close to ISO 20022 XML messages for its Ancillary System Interface (ASI) and Information and Control Module (ICM). In light of this, in 2010, the Eurosystem started to reflect on the benefits that TARGET2 participants could gain from extending the use of ISO 20022 standards in the system.
Besides the general advantages that the ISO 20022 may bring in terms of efficiency and interoperability, the Eurosystem considered additional elements, e.g. the interface of TARGET2 with other Eurosystem projects, such as TARGET2 Securities, or the SEPA context, both projects based on ISO 20022.
The Eurosystem brought together these elements in a “step-by-step” strategy aimed at expanding the use of ISO 20022 in TARGET2 in the medium term. The move to ISO 20022 is considered to be of strategic importance for the system and should be seen as a cornerstone in the development of TARGET2. A market consultation was held in October and November 2010 in order to help elaborate a strategy that creates synergies for all stakeholders and makes the industry more efficient.
In this consultation, banks acknowledged the advantages associated with the use of ISO 20022 and, in general, expressed their support for its use in TARGET2. However, some concerns were expressed about the timing for the different phases, in particular regarding the migration of retail payments to ISO 20022. Furthermore, some banks insisted that TARGET2 should not be seen as an isolated system and commented that the Eurosystem should take into account the evolution of the other infrastructures and communities worldwide.
The Eurosystem takes into account market feedback, as well as the strategic importance of the move to ISO for TARGET2. The strategy, to be implemented in the context of the annual releases, includes three subsequent steps:
