TARGET2

TARGET (Trans-European Automated Real-time Gross settlement Express Transfer) was launched in 1999 and comprised the national real-time gross settlement (RTGS) systems of EU Member States participating in the Economic and Monetary Union (EMU), the ECB payment mechanism and an interlinking mechanism.

TARGET2 is the new trans-European payment system which replaced TARGET. 

 The new system was developed to cater for the needs generated both by the enlargement of the European Union (EU) and by technological advances, as well as to meet market participants’ demands for safe and efficient payment systems across Europe.

TARGET2 is based on a technically centralized platform (Single Shared Platform – SSP), which is provided by the central banks of Germany, France and Italy and replaces the decentralized structure of the original TARGET system. With TARGET2, the Eurosystem provides participant Member states with payment services based on a single price structure for both domestic and cross-border payments. 

TARGET2-NL The Dutch component of the ESCB’s TARGET2 RTGS system.

TARGET2 was introduced in the Netherlands on 18 Feb 2008. The difference vis-à-vis the previous version of TARGET is that it uses one central technical platform for payments, eliminating the need to maintain national large-value payment systems. Financial institutions send their large-value payments directly to the platform. Most Dutch credit institutions participate in TARGET2-NL.

 

 

 

 

 

DEBT BOMB

 

Debt Bomb occurs when a major financial institution,

such as a multinational bank, 

 

defaults on its obligations that causes disruption not only in the financial system 

of the institution's home country,

 

but also in the global financial system as a whole.

 

A debt bomb can occur also if consumer spending is based heavily on debt. For example, if a nation incurred huge credit card debt, individual debt holders could default in mass and create trouble for creditors.

 

 

 

Central counterparty clearing house (CCP)

Central counterparty clearing house (CCP) is an organization that exists in various countries that helps facilitate trading done in derivatives and equities markets.   These clearing houses are often operated by the major banks in the country.   CCPs benefit both parties in a transaction because they bear most of the credit risk.   If two individuals deal with one another, the buyer bears the credit risk of the seller, and vice versa.   There are two main processes that are carried out by CCPs: clearing and settlement of market transactions.   -       Clearing relates to identifying the obligations of both parties on either side of a transaction.   -       Settlement occurs when the final transfer of securities and funds occur.
In Europe:
		European Association of CCP Clearing Houses (EACH) represents the interests of CCPs in Europe since 1992. EACH currently has 18 members from 14 different European countries. EACH works with public authorities and industry stakeholders in order to:  ·         Offer the consolidated opinion of our membership in regulatory discussions and consultations ·         Help member CCPs to agree appropriate standards and guidelines for the industry

In Netherlands:
Holland Clearing House (HCH) is a central counterparty for derivatives. They deliver CCP Services for the derivatives Multilateral Trading Facility (MTF), TOM MTF.   HCH is regulated and supervised in the Netherlands by Netherlands Authority for the Financial Markets (AFM) and De Nederlandsche Bank (the Dutch Central Bank; DNB).
As of December 2014, Intercontinental Exchange (ICE Clear Europe), a leading global network of exchanges and clearinghouses, has completed the previously announced acquisition of a majority stake in Holland Clearing House (HCH).

Netting

Netting is consolidating the value of two or more transactions, payments or positions  in order to create a single value. Netting entails offsetting the value of multiple positions, and can be used to determine which party is owed remuneration in a multiparty agreement.   In the context of credit risk, there are at least three specific types of netting   Close-out netting – A special form of netting which follows certain contractually agreed events (such as the opening of insolvency proceedings), whereby all existing obligations are accelerated such that they become due immediately.   Netting by novation – The legal obligations of the parties to make required payments under one or more series of related transactions are canceled and a new obligation to make only the net payments is created. The parties to the new obligation may be  the same as the parties to the existing obligation. Alternatively, in the context of some clearing house arrangements, there may be some substitution of parties.   Position netting - Also called as Payment/Advisory/Settlement netting, is netting of orders in respect of obligations between one or more parties which neither satisfies nor discharges those original individual obligations. This can be applied either bilaterally or multilaterally and on related or unrelated transactions.   -     Bilateral Netting, the process of consolidating swap agreements       between two parties into a single agreement.       As a result, instead of each swap agreement leading to a stream       of individual payments by either party,       all of the swaps are netted together        so that only one net payment is being made to one party based on the flows of the combined swaps.   -     Multilateral Netting, an arrangement among multiple parties that transactions be summed,       rather than settled individually.       Multilateral netting not only streamlines       the settlement process, it also reduces risk by       specifying that, in the event of a default or some other termination event,        all outstanding contracts are likewise terminated.              Generally speaking, multilateral netting is enabled via a membership organization like an exchange.
Financial Facts:
·         Starbucks has operations in more countries than both Goldman Sachs & JP Morgan Chase. ·         If you invested $100 in Microsoft in 1986, instead of buying a version of Windows 1.0, it would be worth $46,400 today.