Benefits of sub-participation

Minimal liquidity requirements

The payments sent by a sub-participant are included in the total payment value of the participant. The payments sent by a sub-participant benefit from the liquidity of the participant and the efficient multilateral net functionality of EURO1.

Sub-Participation model

Sub-Participation model

Reachability

As part of the EURO1/STEP1 community, a sub-participant can directly exchange payments with all the EURO1 Participants and Sub-Participants and STEP1 Banks. A sub-participant can also list its client banks in the EURO1/STEP1 Directory, increasing the percentage of payments it sends and receives on behalf of these client banks through this highly efficient and cost-effective intraday payment channel.

Favourable transaction fees

As the higher volume tiers have favourable transaction fees, the integration of sub-participant traffic may quickly lead to a significant decrease of the average price per payment for the banking group as a whole.

Liquidity-neutral use for intra-group payments

EURO1 can be used for intra-group payments (i.e. between a EURO1 Participant and its Sub-Participants). These payments are liquidity-neutral in the system and will not be queued for liquidity reasons.

Flexible reporting options

In order to accommodate different banking group policies with regard to intraday and end-of-day balance reporting, the system offers different reporting options: 

  • A decentralised approach where the total value of each sub-participant’s payments is shown as one net amount to the participant while the sub-participant receives a detailed statement. 
  • A centralised approach where the sub-participant’s traffic is reported in detail on the participant’s statement while the sub-participant receives a consolidated statement. 

In order to qualify as a sub-participant in EURO1 a bank has to be: 

  • A consolidated affiliate subsidiary of a participant in the EURO1 system as evidenced by the accounts of the participant, or 
  • A foreign branch of a participant in the EURO1 System established in an EU or EEA location; 
  • Participants may also include branches as sub-addresses. 

Sub-participation enables banks to directly send and receive payments to/from all participants and sub-participants in the EURO1 system, with reachability to all STEP1 Banks. Payments sent and received by a sub-participant are included in the position of the participant and covered by the liquidity of the participant. 

Sub-participants benefit from the same service features (cut-off times, MT usage, etc.) as the participant. 

In case of a merger or acquisition, sub-participation allows banking groups to quickly and easily include entities under one liquidity position. The participation mode thereby enables banks to centralise their liquidity management and directly connect their branches and subsidiaries to a pan-European single payment platform. It further allows EURO1 Participants to leverage their liquidity in the system.