Definitions

For the purposes of this Regulation, the following definitions apply:

‘payment system’ means a formal arrangement between three or more participants, not counting possible settlement banks, central counterparties, clearing houses or indirect participants, with common rules and standardised arrangements for the execution of transfer orders between the participants;

‘financial market infrastructure’ (FMI) means a multilateral system among participating institutions, including the system operator, used to clear, settle, or record payments, securities, derivatives, or other financial transactions;

‘Eurosystem SIPS’ means SIPS owned and operated by a Eurosystem central bank;

‘collateral’ means an asset or third-party commitment that is used by a collateral provider to secure an obligation vis-à-vis a collateral taker. Collateral includes both domestic and cross-border collateral;

‘investment risk’ means the risk of loss faced by a SIPS operator or participant when the SIPS operator invests its own or its participants’ resources, e.g. collateral;

‘SIPS operator’ means:

the legal entity established in the euro area that is responsible for operating a SIPS; or

exceptionally, the branch established in the euro area that is responsible for operating a SIPS, and which is a legally dependent part of a legal entity established outside the euro area;

‘competent authority’ means:

the Eurosystem national central bank with primary oversight responsibility identified as such pursuant to Article 3(3); or

in relation to a payment system which is a SIPS that meets the criteria in Article 3(1), point (iii), ‘competent authority’ means either:

the ECB; or

where a Eurosystem national central bank was entrusted with primary oversight responsibility for a period of five or more years immediately before the decision referred to in Article 3(3) was taken, both the ECB and that national central bank;

‘branch’ means an undertaking that has no legal personality and forms a legally dependent part of an existing entity;

‘the Board’ means: (a) in a unitary board system, the single board of a SIPS operator; (b) in a dual board system, the supervisory or equivalent board of a SIPS operator, appointed in accordance with national law; and (c) where a branch is identified as a SIPS operator, the board of the legal entity of which the branch is a legally dependent part;

‘the Management’ means executive directors, e.g. in a unitary board system, the members of the Board of the SIPS operator who are engaged in the daily management of the SIPS and any other executive officers appointed by the Board who are engaged in the daily management of the SIPS or, in a dual board system, the members of the management board of the SIPS operator and any other executive officers appointed by the Board or by the management board who are engaged in the daily management of the SIPS;

‘the Branch Management’ means, in cases where a branch is identified as a SIPS operator, the managing directors formally appointed to be responsible for the branch and to whom the conduct of the daily management of the SIPS is duly delegated;

‘relevant authorities’ means authorities who have a legitimate interest in accessing information from a SIPS to fulfil their statutory requirements, e.g. resolution authorities and supervisors of major participants;

‘legal risk’ means the risk arising from the application of law or regulation, usually resulting in a loss;

‘credit risk’ means the risk that a counterparty, whether a participant or other entity, will be unable to fully meet its financial obligations when they fall due or at any time in the future;

‘liquidity risk’ means the risk that a counterparty, whether a participant or other entity, will have insufficient funds to meet its financial obligations when they fall due, although it may have sufficient funds to do so in the future;

‘operational risk’ means the risk that deficiencies in information systems or internal processes, human error, management failures, or disruptions caused by external events, third parties or outsourced functions, operations and/or services will result in the reduction, deterioration or breakdown of services provided by a SIPS;

‘general business risk’ means any potential impairment of the financial position of the SIPS as a business concern as a consequence of a decline in its revenues or an increase in its expenses, such that expenses exceed revenues and result in a loss that must be charged against capital;

‘custody risk’ means the risk of incurring a loss on assets held in custody in the event of a custodian’s or sub-custodian’s insolvency, negligence, fraud, poor administration or inadequate record keeping;

‘cyber risk’ means the combination of the probability of cyber incidents occurring and their impact;

‘outsourcing’ means an arrangement in any form between the SIPS operator and a third party or intragroup entity under which that third party or intragroup entity undertakes functions, operations and/or services that otherwise would have been undertaken by the SIPS operator;

‘systemic risk’ means the risk of a participant or the SIPS operator not meeting their respective obligations in a SIPS will cause other participants and/or the SIPS operator to be unable to meet their obligations when they become due, potentially with spillover effects threatening the stability of or confidence in the financial system;

‘corrective measure’ means a specific measure or action, regardless of its form, duration or gravity, that is imposed on a SIPS operator by a competent authority to remedy, or avoid a repetition of, non-compliance with the requirements of Articles 8 to 27 and Article 29;

‘settlement bank’ means a bank holding accounts with regards to payments, where the discharge of obligations arising from a payment system takes place;

‘indirect participant’ means a legal entity that does not have direct access to the SIPS’s services and is typically not directly contractually bound by the relevant SIPS’s rules, and whose transfer orders are cleared, settled and recorded by the SIPS through a direct participant. An indirect participant has a contractual relationship with a direct participant. The relevant legal entities are limited to:

credit institutions as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council ( 7 ) ;

investment firms as defined in Article 4(1), point (1), of Directive 2014/65/EU of the European Parliament and of the Council ( 8 ) ;

any undertaking whose head office is outside the Union and whose functions correspond to those of a Union credit institution or investment firm, as defined in points (i) and (ii);

public authorities and publicly guaranteed undertakings, and central counterparties, settlement agents, clearing houses and system operators as defined in Article 2, points (c), (d), (e) and (p), of Directive 98/26/EC;

payment institutions and e-money institutions as defined in Article 4, point (4), of Directive (EU) 2015/2366 of the European Parliament and of the Council ( 9 ) and Article 2, point (1), of Directive 2009/110/EC of the European Parliament and of the Council ( 10 ) ;

‘transfer order’ means a transfer order as defined in Article 2, point (i), first indent, of Directive 98/26/EC ( 11 ) ;

‘cross-border collateral’ means collateral for which, from the perspective of the country in which the assets are accepted as collateral, at least one of the following is foreign: (a) the currency of denomination; (b) the country in which the assets are located; or (c) the country in which the issuer is established;

‘financial obligations’ means legal obligations arising, within the SIPS, between participants or between participants and the SIPS operator, as a consequence of transfer orders being entered into that SIPS;

‘cyber incident’ means any observable occurrence in an information system, including the networks that enable the transfer of information and communication, that (a) jeopardises or adversely affects cybersecurity; or (b) violates the security policies, security procedures or acceptable use policies, whether resulting from malicious activity or not;

‘direct participant’ means a legal entity that has a direct access to the SIPS’s services on the basis of a contractual relationship whereby it is bound by the relevant SIPS’s rules, is allowed to send transfer orders to that system and is capable of receiving transfer orders from it;

‘cybersecurity’ means the preservation of confidentiality, integrity and availability of information and/or information systems, including the networks that enable the transfer of information and communication;

‘business day’ means a business day as defined in Article 2, point (n), of Directive 98/26/EC;

‘cyber threat’ means any circumstance with the potential to exploit one or more vulnerabilities and that could adversely impact cybersecurity;

‘outsourcing service provider’ means a third party or intragroup entity that undertakes functions, operations and/or services in the context of an outsourcing arrangement;

‘cross-border payment’ means a payment between participants established in different countries;

‘independent director’ means, in a unitary board system, a non-executive member of the board or, in a dual board system, a member of the supervisory or equivalent board, who has no business, family or other relationship that raises a conflict of interests regarding the SIPS or SIPS operator, their controlling shareholders, their management or their participants, and who has had no such relationship during the two years preceding their membership of the Board;

‘recovery plan’ means a plan developed by a SIPS operator to re-establish the smooth operation of a SIPS;

‘orderly wind-down plan’ means a plan developed by a SIPS operator for the orderly closure of a SIPS;

‘relevant stakeholders’ means participants, FMIs that have an impact on the risk in a SIPS, and, on a case-by-case basis, other affected market actors;

‘emergency situation’ means an event, occurrence or circumstance that has the capacity to lead to the loss of or disruption to a SIPS’s functions, operations and/or services, including interfering with or preventing final settlement;

‘material’ qualifies a risk, a dependency and/or a change which may affect the ability of an entity to perform or provide services as expected;

‘liquidity provider’ means a provider of cash under Articles 10(3), 11(5), 13(1), 13(9) and 13(11) or assets under Article 13(4), including a SIPS participant or external party;

‘credit exposure’ means an amount or value at risk that a participant will not settle for full value, either when due or at any time thereafter;

‘deferred net settlement system’ (DNS system) means a system in relation to which settlement in central bank money takes place on a net basis at the end of a predefined settlement cycle, e.g. at the end of, or during, a business day;

‘affiliate’ means a company that controls, or is controlled by, or is under control with, the participant. Control of a company is defined as (a) ownership, control or holding of 20 % or more of a class of voting securities of the company; or (b) consolidation of the company for financial reporting purposes;

‘market risk’ means the risk of losses, in both on- and off-balance sheet positions, arising from movements in market prices;

‘wrong-way risk’ means risk arising from exposure to a participant or issuer when the collateral provided by that participant or issued by that issuer is highly correlated with its credit risk;

‘nostro agent’ means a bank used by the participants in a SIPS for settlement;

‘custodian bank’ means a bank holding and safeguarding the financial assets of third parties;

‘extreme but plausible market conditions’ means a comprehensive set of historical and hypothetical conditions, including the most-volatile periods that have been experienced by the markets the SIPS serves;

‘one-sided payment’ means a payment involving only one funds transfer in one currency;

‘two-sided payment’ means a payment involving two funds transfers in different currencies in an exchange-for-value settlement system;

‘intended settlement date’ means the date that is entered into SIPS as the settlement date by the sender of a transfer order;

‘principal risk’ means the risk that a counterparty will lose the full value involved in a transaction, i.e. either the risk that a seller of a financial asset will irrevocably deliver the asset, but not receive payment, or the risk that a buyer of a financial asset will irrevocably pay for, but not receive the asset;

‘services and utility provider’ means a third party or intragroup entity that provides a process, service, utility or activity, or parts thereof, to a SIPS operator;

‘threat intelligence’ means any information that has been aggregated, transformed, analysed, interpreted or enriched to provide the necessary context for decision-making to mitigate the impact of a cyber incident or cyber threat;

‘sub-outsourcing’ means a transfer by an outsourcing service provider to another third party or intragroup entity of the obligation to provide functions, operations and/or services;

‘concentration risk’ means the risk arising from an exposure to individual or multiple providers of outsourced services which creates a degree of dependency on such providers so that the unavailability, failure or other shortcoming in the service of such provider may adversely affect the SIPS and/or the SIPS operator, including by jeopardising its ability to operate and provide its services, and/or jeopardise the financial stability of the Union as a whole.

PART II

IDENTIFICATION CRITERIA AND PROCESS

REGULATION (EU) 2025/1355 OF THE EUROPEAN CENTRAL BANK of 2 July 2025 on oversight requirements for systemically important payment systems (recast) ANNEX II