How does EURO1 work?

Processing payment messages

Payment messages are processed on an individual basis. Processing consists of checking the sending and the receiving participant's positions and, if possible, adjusting their positions. Should the adjustment of the positions lead to a breach of the sending participant's debit cap or the receiving participant's credit cap, the payment message would not be processed, but put into an on-hold queue. The on-hold queue is revisited continuously to check whether further processing of payment messages is possible. The system follows the principle of "by-passing FIFO". A payment message can be cancelled by the sending participant as long as it is not processed.

Message types and features

The system processes MT 103 (including MT 103+ and MT 103REMIT), MT 202 (including MT 202COV), MT 400 and MT 204 (bilaterally agreed).  Payment messages are received by the central system using SWIFT's FIN-Copy service, using partial copy of required information.

System processing time

The processing starts at 7:30 CET. Cut-off time stands presently at 16:00 CET.

Information management

All participants and sub-participants have access to the Interactive Workstation (IWS) which provides the following real-time information online and via an API:

  • the bank’s position, limits and any on-hold payments
  • intraday and end-of-day position reports and statements for processed, queued and held-over payment messages
  • pre-advice statements of payments for future value dates

In addition, numerous possibilities to use customised queries are also available.

The settlement process

The current cut-off time for sending payment messages is set at 16:00 CET. This enables all participants to have sufficient time to complete the settlement process prior to the closing time of TARGET2 at 18:00 CET.

The EURO1 settlement uses the Ancillary System Interface, module 4 (ASI 4) of the TARGET2 system.

At cut-off time, the EURO1 system completes the processing of all payment messages sent before cut-off and informs each participant of their final position resulting from all payment messages processed during the day.

Upon receipt of the final positions for EURO1 participants, from the central system, EBA CLEARING sends a file to TARGET2/ASI4 with the amounts to be debited from and credited to the Participants’ RTGS accounts:

  • The settlement first debits the RTGS accounts in TARGET2, of the participants with a negative final position, against the Technical Account of the EURO1 system.
  • After all debit transactions have been processed, the credit transactions are processed: the RTGS accounts in TARGET2, for participants with a final credit position are credited against the Technical Account of the EURO1 system.

Once all debit and credit transactions have been processed, EBA CLEARING receives confirmation from TARGET2/ASI4 that the settlement is completed. Upon receipt of this confirmation, EBA CLEARING notifies all participants that the settlement has been completed. Settlement is normally completed within 7 minutes.