Payments and markets glossary

The complete cycle of processing tasks which need to be completed in a typical business day, from start-of-day procedures to end-of-day procedures. This sometimes includes the backing-up of data.

See intraday credit (daylight credit)

A card enabling its holders to make purchases and/or withdraw cash and have these transactions directly and immediately charged to their accounts, whether these are held with the card issuer or not. See also delayed debit card, payment card

An event stipulated in an agreement as constituting a default. Generally, such events relate to a failure to complete a transfer of funds or securities in accordance with the terms and rules of the system in question. A failure to pay or deliver on the due date, a breach of agreement and the opening of insolvency proceedings all constitute such events. See also failed transaction

A loss-sharing arrangement whereby each participant is required to collateralise any exposures it creates for other participants. As a result, losses resulting from a party’s default are borne by the defaulting party. Antonym: survivors pay

A system which settles on a net basis at the end of a predefined settlement cycle (typically at the end of – but sometimes during – the business day). See also net settlement system

A card enabling its holders to make purchases and/or withdraw cash and have these transactions charged to an account held with the card issuer, up to an authorised limit. The balance of this account is then settled in full at the end of a predefined period. See also payment card

The transfer of financial instruments or commodities by means of book entry or physical exchange.

A securities settlement mechanism which links two securities transfers in such a way as to ensure that the delivery of one security occurs if – and only if – the other security in the other transfer is delivered.

A securities settlement mechanism which links a securities transfer and a funds transfer in such a way as to ensure that delivery occurs if – and only if – the corresponding payment occurs.

The elimination of physical certificates or documents of title indicating ownership of financial assets, such that the financial assets exist only as accounting records.

A standing facility of the Eurosystem which counterparties may use to make overnight deposits at a national central bank. Such deposits are remunerated at a pre-specified interest rate. See also standing facility

An agent with the primary role of recording (direct or indirect) holdings of securities. A depository may also act as a registrar (cf. custodian).

A financial contract whose value depends on the value of one or more underlying reference assets, rates or indices, on a measure of economic value or on factual events.

A system governed by the law of an EEA Member State and designated to the European Commission by the competent national authorities in accordance with Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems.

A digital representation of value backed by claims or assets denominated in euro or redeemable in euro, or referring to other digital assets that are accepted under the rules of an electronic payment instrument scheme for payment purposes or to discharge payment obligations in euro, and which enables the transfer of value between end users. Depending on the underlying design, digital payment tokens can be used to effect a transfer of value without necessarily involving a central third party and/or using payment accounts. The term digital payment token excludes the “tokenisation” of sensitive data by a surrogate value which is conducted for security reasons to protect the original data and where the token does not represent an asset or claim recorded elsewhere.

See electronic signature (digital signature)

A service that enables end users to initiate transfers of value by storing secure information related to the electronic payment instruments required to initiate the transfers. It can also be used to register and hold personalised security credentials. Depending on its design, a wallet can be used, before or during a payment process, to fund a payer account linked to the wallet and offered by the wallet provider with funds or digital payment tokens. It can also provide the payee with information related to the payment instrument without being linked to such an account.

A member of a clearing house that clears on its own behalf and on behalf of its customers. See also clearing member, general clearing member, non-clearing member

A set of procedures enabling a transfer of value by debiting a payer’s user account. A payment transaction is initiated by the payee on the basis of the consent given by the payer to the payee, to the payee’s payment service provider, or to the payer’s own payment service provider.

An arrangement for registering ownership of securities (or similar interests) whereby each and every final investor in the security is registered with a single entity (e.g. the issuer itself, a central securities depository (CSD) or a registry). In some countries, the use of direct holding systems is required by law. Antonym: indirect holding system

An account opened by a central securities depository (CSD), referred to as the “investor CSD”, in the books of another CSD, referred to as the “issuer CSD”, in order to facilitate the transfer of securities from participants in the issuer CSD to participants in the investor CSD. See also indirect link, investor CSD, operated direct link, relayed link

A participant in a transfer system that can perform all activities allowed in the system without using an intermediary (including, in particular, the direct inputting of orders in the system and the performance of settlement operations). See also indirect participant

distributed ledger technology

Settlement which takes place in the country (or currency area) in which both parties to the transaction are located. Antonym: cross-border settlement

An accounting principle whereby for each credit/debit entry made in one account, there is a corresponding entry in another account.

See delivery versus delivery (DvD)

See delivery versus payment (DvP)