Settlement and processing cycles

Clearing and Settlement cycle arrangements

The STEP2 SDD B2B settlement takes place between 13:00 and 13:45 CET. The STEP2 SDD B2B Service validates in real-time from 08:00 to 12:00 CET and from 14:30 to 22:00 CET.

SDD notification files are delivered to debtor banks six times a day.

STEP2 separates the SDD transactions in order to deliver collections and cancellations/ rejects/returns in different files. This allows participants to first process transactions with same-day value (R-transactions) and then transactions with future settlement dates (collections).

Sending cut-off times: participants can send collections for the following business date until 15:00 CET. The sending cut-off for sending R-transactions is at 12:00 CET.

Functioning of the clearing and settlement process

Clearing and settlement phases

Each payment cycle can be divided into three standard phases:

  • Validation phase: From the opening time of the cycle until the sending cut-off time, incoming and warehoused payments for this cycle are validated and stored.
  • Settlement phase: From settlement opening time until settlement cut-off time, STEP2 calculates what each direct participant owes to every other direct participant, and sends the results to the multilateral netting module for settlement in TARGET2.
  • Output phase: When settlement has been completed, STEP2 delivers the payments and reconciliation reports to the direct participants.

Settlement of STEP2 in TARGET2

Participating banks settle their STEP2 obligations by paying a net calculated amount in TARGET2. STEP2 first creates bilateral gross obligations and reports them to the banks, calculates the multilateral net positions and sends these multilateral net amounts to TARGET2 using the Ancillary System Interface.

Direct participants in the STEP2 SEPA Services have the possibility to request MT 900 / MT 910 and MT 940 / MT 950 messages from TARGET2 for reconciliation purposes.