T2 business continuity management

Service continuity

T2 is a systemically important payment system and helps the Eurosystem perform its statutory tasks of promoting the smooth operation of payment systems, implementing monetary policy and maintaining financial stability.

Operational risk management

During the design and development of T2, considerable attention was paid to managing operational risks. The TARGET Services benefit from a comprehensive risk management framework which is aligned with the internationally recognised standards ISO 27002 and ISO 27001.

Service continuity management model

Given its cross-system and cross-participant interdependencies, a failure in T2 could easily spread across financial markets and ultimately have systemic implications beyond the euro area. To adequately address this risk, particular emphasis was placed on implementing an effective service continuity management model.

Different locations of the operational centres

To ensure high resilience and system availability under all circumstances, T2 operates on a “two regions, four sites” principle. This means the operational facilities are located in two distinct regions of Europe, and each region hosts two separate operational sites in locations with different risk profiles. Both regions are permanently staffed, and the responsibility for live operations is periodically rotated between them.

As the system operator, the Eurosystem is committed to ensuring that, in the event of a failure in the primary region, operations can be resumed in the secondary region within two hours.

Business and service continuity procedures, along with contingency arrangements, are tested regularly.

Contingency arrangements

In the unlikely event that business continuity and resilience measures are not sufficient, the Eurosystem has developed additional contingency arrangements in close cooperation with the T2 user community. These are designed to mitigate the impact of failures at various levels and include:

• the Enhanced Contingency Solution (ECONS), which provides a separate technical solution for the settlement of (very) critical payments when T2 is unavailable due to an operational disruption;
• the exceptional payment functionality, which can be activated for a single participant who normally interacts with T2 via application-to-application (A2A) connectivity, allowing them to input instructions manually via the T2 graphical user interface (GUI);
• arrangements whereby a central bank can act on behalf of one of their national participants, or whereby the service provider (the 4CB) can act on behalf of a central bank.

The last two contingency arrangements aim to mitigate technical or operational failures at the level of a TARGET participant or a central bank.

Most contingency arrangements involve the participation of central banks, which will assist their T2 participants. The procedures participants must follow to send instructions to their central bank are agreed upon nationally. Please contact your National Service Desk (NSD) for more details.

Various contingency arrangements can be activated depending on the source and impact of the failure.

• If a T2 participant is facing issues with A2A connectivity, they can use the GUI functionality to process liquidity transfers in central liquidity management (CLM) and real-time gross settlement (RTGS).
• In addition, upon a participant’s request, the exceptional payment functionality can be activated by the corresponding central bank’s NSD, enabling participants who typically only operate via A2A connectivity to send payments through the RTGS GUI.
• If a T2 participant no longer has access to the GUI via user-to-application (U2A) connectivity, they can still process liquidity transfers, payments and queries via A2A connectivity.
• If a T2 participant is facing issues with both A2A and U2A connectivity, their central bank’s NSD can act on their behalf to enter instructions.

• Even though a partial or complete failure of a central bank will not prevent its community from accessing T2, it might hinder the central bank’s ability to exercise its functions and responsibilities related to CLM and RTGS.
• If a central bank cannot access the system, the 4CB and the TARGET Service Desks stand ready to act on behalf of the NSD to take care of monitoring and/or payment processing until the problem is resolved.

• If a failure affects only one of the NSPs, the other can be used if the T2 participant has a second NSP connection.
• If the relevant central bank is connected via a second NSP, it can enter instructions on the participant’s behalf to make use of the unaffected NSP.
• The 4CB can also act on behalf of the central bank, allowing it to enter instructions for their T2 participants.

• If T2 is unavailable due to an incident, the Eurosystem can initiate contingency processing using ECONS II, which operates from different infrastructure and region and has a different risk profile to that of T2. ECONS II can be used for contingency processing for several consecutive business days, allowing for proper business day closure and value date changes. T2 participants can connect to ECONS II and are able to submit (very) critical payments to the contingency solution. The payments need to be agreed upon by the relevant central bank in order to be accepted for processing. In addition, ECONS II allows central banks, or the T2 Service Desk acting on their behalf, to upload transaction files compatible with the RTGS ancillary system settlement procedure A for ancillary systems, upon request.
• In any scenario, Eurosystem crisis managers may decide to delay the closing of the T2 business day if they consider this to be necessary for the smooth functioning of T2, such as during or after an outage to allow for backlog processing.

Given that an operational failure by a participant could adversely affect the smooth functioning of T2 as a whole, the Eurosystem’s risk management framework also includes measures to ensure the security and operational reliability of T2 participants. In addition, T2 participants classified as critical need to comply with and test detailed business continuity, contingency and information security requirements.

The concepts of critical participants, (very) critical payments and the various contingency procedures are defined and described comprehensively in the Information Guide for TARGET participants.