EESTI PANK
GOVERNOR'S DECREE No 4
9 May 2008

Approval of TARGET2-Eesti rules

This decree shall be established based on Subsection 2(1) and Clause 14 3) of the Eesti Pank Act and Subsection 87(2) of the Credit Institutions Act.

§ 1. This decree approves the "Harmonised conditions for participation in TARGET2-Eesti" (appended).

§ 2. This decree applies as of 19 May 2008.

Andres Lipstok
Governor

Appendix
to Eesti Pank Governor’s
Decree No 4 of 9 May 2008
‘Approval of TARGET2-Eesti” rules

HARMONISED CONDITIONS FOR PARTICIPATION IN TARGET2-EESTI

TITLE I
GENERAL PROVISIONS

Article 1 – Definitions

For the purposes of the harmonised conditions for participation in TARGET2-Eesti (hereinafter HC):

’addressable BIC holder’ means an entity which: (a) holds a Bank Identifier Code (BIC); (b) is not recognised as an indirect participant; and (c) is a correspondent or customer of a direct participant or a branch of a direct or indirect participant, and is able to submit payment orders to and receive payments from a TARGET2 component system via the direct participant;

’non-settled payment order’ means a payment order that is not settled on the same business day as that on which it is accepted;

‘Settlement Finality Directive’ means 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;

‘public sector body’ means an entity within the ‘public sector’, the latter term as defined in Article 3 of Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty (now Articles 101 and 103(1));

‘CAI mode’ means the provision of consolidated account information in relation to PM accounts via the ICM;

‘CAI group’ means a group composed of TARGET2 participants that use the CAI mode;

‘CAI group manager’ means a CAI group member appointed by the other members of the CAI group to monitor and distribute the available liquidity within the CAI group during the business day;

‘Contingency Module’ means the SSP module enabling the processing of critical and very critical payments in contingency situations;

‘Eurosystem’ means the ECB and the national central banks (NCBs) of the Member States that have adopted the euro;

‘Eurosystem CB’ means the ECB or the NCB of a Member State that has adopted the euro;

‘branch’ means a branch within the meaning of Subsection 11(1) of the Credit Institutions Act;

‘ICM broadcast message’ means information made simultaneously available to all or a selected group of TARGET2 participants via the Information and Control Module (ICM);

‘investment firm’ means an investment firm within the meaning of Subsection 40(1) of the Securities Market Act, excluding the institutions specified in Subsection 47(1) of the same act, provided that the investment firm in question is:

‘indirect participant’ means a credit institution established in the European Economic Area (EEA), which has entered into an agreement with a direct participant to submit payment orders and receive payments via such direct participant’s PM account, and which has been recognised by a TARGET2 component system as an indirect participant;

’central banks (CBs)’ means the Eurosystem CBs and the connected CBs,

‘Home Account’ means an account opened outside the PM by a CB for an entity that is eligible to become an indirect participant;

‘group’ means

‘credit institution’ means a credit institution within the meaning of Subsection 3(1) of the Credit Institutions Act that is subject to supervision by a competent authority;

‘credit transfer order’ means an instruction by a payer to make funds available to a payee by means of a book entry on a PM account;

‘ancillary system (AS)’ means a system managed by an entity established in the European Economic Area (EEA) that is subject to supervision and/or oversight by a competent authority, in which payments and/or financial instruments are exchanged and/or cleared while the resulting monetary obligations are settled in TARGET2 in accordance with Guideline ECB/2007/2 and a bilateral arrangement between the ancillary system and the relevant CB;

‘Ancillary System Interface (ASI)’ means the technical device allowing an AS to use a range of special, predefined services for the submission and settlement of AS payment instructions;

‘marginal lending facility’ means a Eurosystem standing facility which counterparties may use to receive overnight credit from a Eurosystem CB at the prespecified marginal lending rate;

‘marginal lending rate’ means the interest rate applicable to the marginal lending facility;

‘liquidity transfer order’ means a payment order, the main purpose of which is to transfer liquidity between different accounts of the same participant or within a CAI group;

‘payee’ means a TARGET2 participant whose PM account will be credited as a result of a payment order being settled;

‘instructing participant’ means a TARGET2 participant that has initiated a payment order;

‘payment order’ means a credit transfer order, a liquidity transfer order or a direct debit instruction;

‘insolvency proceedings’ means insolvency proceedings within the meaning of Article 2(j) of the Settlement Finality Directive;

‘Payments Module (PM)’ means an SSP module in which payments of TARGET2 participants are settled on PM accounts;

‘PM account’ means an account held by a TARGET2 participant in the PM with a CB which is necessary for such TARGET2 participant to:

‘payer’ means a TARGET2 participant whose PM account will be debited as a result of a payment order being settled;

‘participant’ (or ‘direct participant’) means an entity that holds at least one PM account with Eesti Pank;

‘Participant Interface (PI)’ means the technical device allowing direct participants to submit and settle payment orders via the services offered in the PM;

‘direct debit instruction’ means an instruction from a payee submitted to its CB pursuant to which the CB of the payer debits the payer’s account by the amount specified in the instruction, on the basis of a direct debit authorisation;

‘direct debit authorisation’ means a general instruction by a payer to its CB entitling and obliging that CB to debit the payer’s account upon a direct debit instruction from a payee;

‘Bank Identifier Code (BIC)’ means a code as defined by ISO Standard No 9362;

‘Banking Directive’ means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast);

‘suspension’ means the temporary freezing of the rights and obligations of a participant for a period of time to be determined by Eesti Pank;

‘event of default’ means any impending or existing event, the occurrence of which may threaten the performance by a participant of its obligations under the HC or any other rules applying to the relationship between that participant and Eesti Pank or any other CB, including:

‘intraday credit’ means credit extended for a period of less than one business day;

‘entry disposition’ means a payment processing phase during which TARGET2-Eesti attempts to settle a payment order which has been accepted pursuant to Article 14, by means of specific procedures, as described in Article 20;

‘static data collection form’ means a form developed by Eesti Pank for the purpose of registering applicants for TARGET2-Eesti services and registering any changes in relation to the provision of such services;

‘TARGET2’ means Trans-European Automated Real-time Gross Settlement Express Transfer System; the entirety resulting from all TARGET2 component systems of the CBs;

‘TARGET2 CUG’ means a subset of the network service provider’s customers grouped for the purpose of their use of the relevant services and products of the network service provider when accessing the PM;

‘TARGET2 participant’ means any participant in any TARGET2 component system;

‘TARGET2 component system’ means any of the CBs’ real-time gross settlement (RTGS) systems that form part of TARGET2;

‘technical malfunction of TARGET2’ means any difficulty, defect or failure in the technical infrastructure and/or the computer systems used by TARGET2-Eesti, or any other event that makes it impossible to execute and complete the same-day processing of payments in TARGET2-Eesti or, during the migration period, payments from national RTGS systems that have not yet migrated to TARGET2 and vice versa;

‘TARGET2-Eesti’ means the TARGET2 component system of Eesti Pank;

‘Information and Control Module (ICM)’ means the SSP module that allows participants to obtain on-line information and gives them the possibility of submitting liquidity transfer orders, manage liquidity and initiate backup payment orders in contingency situations;

‘business day’ means any day on which TARGET2 is open for the settlement of payment orders, as set out in Appendix V;

‘available liquidity’ (or ‘liquidity’) means a credit balance on a TARGET2 participant’s PM account and, if applicable, any intraday credit line granted by the relevant CB in relation to such account;

‘network service provider’ means the undertaking appointed by the ECB’s Governing Council to provide computerised network connections for the purpose of submitting payment messages in TARGET2;

‘capacity opinion’ means a participant-specific opinion that contains an assessment of a participant’s legal capacity to enter into and carry out its obligations under the HC;

‘connected CB’ means a national central bank (NCB), other than a Eurosystem CB, which is connected to TARGET2 pursuant to a specific agreement;

‘multi-addressee access’ means the facility by which branches or credit institutions established in the EEA can access the relevant TARGET2 component system by submitting payment orders and/or receiving payments directly to and from the TARGET2 component system; this facility authorises these entities to submit their payment orders through the direct participant’s PM account without that participant’s involvement;

‘Single Shared Platform (SSP)’ means the single technical platform infrastructure provided by the SSP-providing CBs;

‘SSP-providing CBs’ means the Deutsche Bundesbank, the Banque de France and the Banca d’Italia in their capacity as the CBs building and operating the SSP for the Eurosystem’s benefit.

Article 2 – Appendices

(1) The following Appendices form an integral part of the HC:

(2) In the event of any conflict or inconsistency between the content of any appendix and the content of any other provision in the HC the latter shall prevail.

Article 3 – TARGET2-Eesti and general description of TARGET2-Eesti

(1) TARGET2 provides real-time gross settlement for payments in euro, with settlement in central bank money.

(2) The following payment orders are processed in TARGET2-Eesti:

(3) TARGET2 is established and functions on the basis of the SSP. The Eurosystem specifies the SSP’s technical configuration and features. The SSP services are provided by the SSP-providing CBs for the benefit of the Eurosystem CBs, pursuant to separate agreements.

(4) Eesti Pank is the provider of services under the HC. Acts and omissions of the SSP-providing CBs shall be considered acts and omissions of Eesti Pank for which it shall assume liability in accordance with Article 31 of the HC. Participation pursuant to the HC shall not create a contractual relationship between participants and the SSP-providing CBs when the latter act in that capacity. Instructions, messages or information which a participant receives from, or sends to, the SSP in relation to the services provided under the HC are deemed to be received from, or sent to, Eesti Pank.

(5) TARGET2 is legally structured as a multiplicity of payment systems composed of all the TARGET2 component systems, which are designated as ‘systems’ under the national laws implementing the Settlement Finality Directive. TARGET2-Eesti is designated as a ‘system’ under Subsection 87(3) of the Credit Institutions Act.

(6) Participation in TARGET2 takes effect via participation in a TARGET2 component system. The HC describe the mutual rights and obligations of participants in TARGET2-Eesti and Eesti Pank. The rules on the processing of payment orders (Title IV) refer to all payment orders submitted or payments received by any TARGET2 participant.

TITLE II
PARTICIPATION

Article 4 – Access criteria

(1) The following types of entities are eligible for direct participation in TARGET2-Eesti:

(2) Eesti Pank may, at its discretion, also admit the following entities as direct participants:

(3) Electronic money institutions, within the meaning of Subsection 5(1) of the Electronic Money Institutions Act, are not entitled to participate in TARGET2-Eesti.

Article 5 – Direct participants

(1) Direct participants in TARGET2-Eesti shall comply with the requirements set out in Article 8(1) and (2). They shall have at least one PM account with Eesti Pank.

(2) Direct participants may designate addressable BIC holders, regardless of their place of establishment.

(3) Direct participants may designate entities as indirect participants, provided that the conditions laid down in Article 6 are met.

(4) Multi-addressee access through branches may be provided as follows:

Article 6 – Indirect participants

(1) Credit institutions established in the EEA may each enter into a contract with one direct participant that is either a credit institution within the meaning of Article 4(1)(a) or (b), or a CB, in order to submit payment orders and/or receive payments, and to settle them via the PM account of that direct participant. TARGET2-Eesti shall recognise indirect participants by registering such indirect participation in the TARGET2 directory, the latter as described in Article 9.

(2) Where a direct participant, which is a credit institution within the meaning of Article 4(1)(a) or (b), and an indirect participant belong to the same group, the direct participant may expressly authorise the indirect participant to use the direct participant’s PM account directly to submit payment orders and/or receive payments by way of group-related multi-addressee access.

Article 7 – Direct participant’s responsibility

(1) For the avoidance of doubt, payment orders submitted or payments received by indirect participants pursuant to Article 6, and by branches under Article 5(4), shall be deemed to have been submitted or received by the direct participant itself.

(2) The direct participant shall be bound by such payment orders, regardless of the content of, or any non-compliance with, the contractual or other arrangements between that participant and any of the entities referred to in paragraph 1.

Article 8 – Application procedure

(1) To join TARGET2-Eesti, the applicant participants shall:

(2) Applicants shall apply in writing to Eesti Pank as a minimum enclosing the following documents/information:

(3) Eesti Pank may also request any additional information it deems necessary to decide on the application to participate.

(4) Eesti Pank shall reject the application to participate if:

(5) Eesti Pank shall communicate its decision on the application to participate to the applicant within one month of Eesti Pank’s receipt of the application to participate. Where Eesti Pank requests additional information pursuant to paragraph 3, the decision shall be communicated within one month of Eesti Pank’s receipt of this information from the applicant. Any rejection decision shall contain reasons for the rejection.

Article 9 – TARGET2 directory

(1) The TARGET2 directory is the database of BICs used for the routing of payment orders addressed to:

(2) Unless otherwise requested by the participant, BICs shall be published in the TARGET2 directory.

(3) Participants may only distribute the TARGET2 directory to their branches and entities with multi-addressee access.

(4) Entities specified in paragraph 1(b) and (c) shall only use their BIC in relation to one direct participant.

TITLE III
OBLIGATIONS OF THE PARTIES

Article 10 – Obligations of Eesti Pank and the participants

(1) Eesti Pank shall offer the services described in Title IV. Save where otherwise provided in the HC or required by law, Eesti Pank shall use all reasonable means within its power to perform its obligations under the HC, without guaranteeing a result.

(2) Participants shall pay to Eesti Pank the fees laid down in Appendix VI.

(3) Participants shall ensure that they are connected to TARGET2-Eesti on business days, in accordance with the operating schedule in Appendix V.

(4) The participant represents and warrants to Eesti Pank that the performance of its obligations under the HC does not breach any law, regulation or by-law applicable to it or any agreement by which it is bound.

Article 11 – Cooperation and information exchange

(1) In performing their obligations and exercising their rights under the HC, Eesti Pank and participants shall cooperate closely to ensure the stability, soundness and safety of TARGET2-Eesti. They shall provide each other with any information or documents relevant for the performance of their respective obligations and the exercise of their respective rights under the HC, without prejudice to any banking secrecy obligations.

(2) Eesti Pank shall establish and maintain a system support desk to assist participants in relation to difficulties arising in connection with system operations.

(3) Up-to-date information on the SSP’s operational status shall be available on the TARGET2 Information System (T2IS). The T2IS may be used to obtain information on any event affecting the normal operation of TARGET2.

(4) Eesti Pank may either communicate messages to participants by means of an ICM broadcast or by any other means of communication.

(5) Participants are responsible for the timely update of existing static data collection forms and the submission of new static data collection forms to Eesti Pank. Participants are responsible for verifying the accuracy of information relating to them that is entered into TARGET2-Eesti by Eesti Pank.

(6) Eesti Pank shall be deemed to be authorised to communicate to the SSP-providing CBs any information relating to participants which the SSP-providing CBs may need in their role as service administrators, in accordance with the contract entered into with the network service provider.

(7) Participants shall inform Eesti Pank about any change in their legal capacity and relevant legislative changes affecting issues covered by the country opinion relating to them.

(8) Participants shall inform Eesti Pank of:

(9) Participants shall immediately inform Eesti Pank if an event of default occurs in relation to them.

TITLE IV
MANAGEMENT OF PM ACCOUNTS AND PROCESSING OF PAYMENT ORDERS

Article 12 - Opening and management of PM accounts

(1) Eesti Pank shall open and operate at least one PM account and, if applicable, sub-accounts, for each participant.

(2) No debit balance shall be allowed on PM accounts.

(3) Interest is paid on PM accounts and their sub-accounts according to the terms and conditions stipulated by Eesti Pank, but not above the ECB’s deposit facility interest rate.

(4) In addition to the settlement of payment orders in the Payments Module, a PM account may be used to settle payment orders to and from Home Accounts, according to the rules laid down by Eesti Pank.

(5) Participants shall use the ICM to obtain information on their liquidity position. Eesti Pank shall provide a daily statement of accounts to any participant that has opted for such service.

Article 13 – Types of payment orders

The following are classified as payment orders for the purposes of TARGET2:

Article 14 – Acceptance and rejection of payment orders

(1) Payment orders submitted by participants are deemed accepted by Eesti Pank if:

(2) Eesti Pank shall immediately reject any payment order that does not fulfil the conditions laid down in paragraph 1. Eesti Pank shall inform the participant of any rejection of a payment order, as specified in Appendix I.

Article 15 – Priority rules

(1) Instructing participants shall designate every payment order as one of the following:

(2) Highly urgent payment orders may only be designated by:

(3) In the case of urgent and normal payment orders, the payer may change the priority via the ICM with immediate effect. It shall not be possible to change the priority of a highly urgent payment.

Article 16 – Liquidity limits

(1) A participant may limit the use of available liquidity for payment orders in relation to other TARGET2 participants, except any of the CBs, by setting bilateral or multilateral limits. Such limits may only be set in relation to normal payment orders.

(2) By setting a bilateral limit, a participant instructs Eesti Pank that an accepted payment order shall not be settled if the sum of its outgoing normal payment orders to another TARGET2 participant’s PM account minus the sum of all incoming urgent and normal payments from such TARGET2 participant’s PM account would exceed this bilateral limit.

(3) A participant may set a multilateral limit for any relationship that is not subject to a bilateral limit. A multilateral limit may only be set if the participant has set at least one bilateral limit. If a participant sets a multilateral limit, it instructs Eesti Pank that an accepted payment order shall not be settled if the sum of its outgoing normal payment orders to all TARGET2 participants’ PM accounts in relation to which no bilateral limit has been set, minus the sum of all incoming urgent and normal payments from such PM accounts would exceed this multilateral limit.

(4) The minimum amount of any of the limits shall be EUR 1 million. A bilateral or a multilateral limit with an amount of zero shall be treated as if no limit has been set. Limits between zero and EUR 1 million are not possible.

(5) Limits may be changed in real time with immediate effect or with effect from the next business day via the ICM. If a limit is changed to zero, it shall not be possible to change it again on the same business day. The setting of a new bilateral or multilateral limit shall only be effective from the next business day.

Article 17 – Liquidity reservation facilities

(1) Participants may reserve liquidity for highly urgent or urgent payment orders via the ICM.

(2) By requesting to reserve a certain amount of liquidity for highly urgent payment orders, a participant instructs Eesti Pank only to settle urgent and normal payment orders if there is available liquidity after the amount reserved for highly urgent payment orders has been deducted.

(3) By requesting to reserve a certain amount of liquidity for urgent payment orders, a participant instructs Eesti Pank only to settle normal payment orders if there is available liquidity after the amount reserved for urgent and highly urgent payment orders has been deducted.

(4) After receipt of the reservation request Eesti Pank shall check whether the amount of liquidity on the participant’s PM account is sufficient for the reservation. If this is not the case, only the liquidity available on the PM account shall be reserved. The rest of the requested liquidity reservation shall not be reserved automatically at any later point in time, even if the amount of liquidity available on the participant’s PM account reaches the level of the initial reservation request.

(5) The level of the liquidity reservation may be changed. Participants may make a request via the ICM to reserve new amounts with immediate effect or with effect from the next business day.

Article 18 – Predetermined settlement times

(1) Instructing participants may predetermine the settlement time of the payment orders within a business day by using the Earliest Debit Time Indicator or the Latest Debit Time Indicator.

(2) When the Earliest Debit Time Indicator is used, the accepted payment order is stored and only entered into the entry disposition at the indicated time.

(3) When the Latest Debit Time Indicator is used, the accepted payment order shall be returned as non-settled if it cannot be settled by the indicated debit time. 15 minutes prior to the defined debit time, the instructing participant shall be sent an automatic notification via the ICM. Instructing participant may also use the Latest Debit Time Indicator solely as a warning indicator. In such cases, the payment order concerned shall not be returned.
(4) Instructing participants can change the Earliest Debit Time Indicator and the Latest Debit Time Indicator via the ICM.

(5) Further technical details are contained in Appendix I.

Article 19 – Payment orders submitted in advance

(1) Payment orders may be submitted up to five business days before the specified settlement date (warehoused payment orders).

(2) Warehoused payment orders shall be accepted and entered into the entry disposition on the date specified by the instructing participant at the start of daytime processing, as referred to in Appendix V. They shall be placed in front of payment orders of the same priority.

(3) Articles 15(3), 22(2) and 29(1)(a) shall apply mutatis mutandis to warehoused payment orders.

Article 20 – Settlement of payment orders in the entry disposition

(1) Unless instructing participants have indicated the settlement time in the manner described in Article 18, accepted payment orders shall be settled immediately or at the latest by the end of the business day on which they were accepted, provided that sufficient funds are available on the payer’s PM account and taking into account any liquidity limits and liquidity reservations as referred to in Articles 16 and 17.

(2) Funding may be provided by:

(3) For highly urgent payment orders the ‘first in, first out’ (FIFO) principle shall apply. This means that highly urgent payment orders shall be settled in chronological order. Urgent and normal payment orders shall not be settled for as long as highly urgent payment orders are queued.

(4) For urgent payment orders the FIFO principle shall also apply. Normal payment orders shall not be settled if urgent and highly urgent payment orders are queued.

(5) By derogation from paragraphs 3 and 4, payment orders with a lower priority (or of the same priority but accepted later) may be settled before payment orders with a higher priority (or of the same priority which were accepted earlier), if the payment orders with a lower priority would net out with payments to be received and result on balance in a liquidity increase for the payer.

(6) Normal payment orders shall be settled in accordance with the FIFO by-passing principle. This means that they may be settled immediately (independently of other queued normal payments accepted at an earlier time) and may therefore breach the FIFO principle, provided that sufficient funds are available.
(7) Further details on the settlement of payment orders in the entry disposition are contained in Appendix I.

Article 21 – Settlement and return of queued payment orders

(1) Payment orders that are not settled immediately in the entry disposition shall be placed in the queues in accordance with the priority to which they were designated by the relevant participant, as referred to in Article 15.

(2) To optimise the settlement of queued payment orders, Eesti Pank may use the optimisation procedures described in Appendix I.

(3) The payer may change the queue position of payment orders in a queue (i.e. reorder them) via the ICM. Payment orders may be moved either to the front or to the end of the respective queue with immediate effect at any time during daytime processing, as referred to in Appendix I.

(4) Liquidity transfer orders initiated in the ICM shall be immediately returned as non-settled if there is insufficient liquidity. Other payment orders shall be returned as non-settled if they cannot be settled by the cut-off times for the relevant message type, as specified in Appendix V.

Article 22 – Entry of payment orders into the system and their irrevocability

(1) For the purposes of the first sentence of Article 3(1) of the Settlement Finality Directive and Subsection 87(5) of the Credit Institutions Act, payment orders are deemed entered into TARGET2-Eesti at the moment that the relevant participant’s PM account is debited.

(2) Payment orders may be revoked until they are entered into TARGET2-Eesti in accordance with paragraph 1. Payment orders that are included in an algorithm, as referred to in Appendix I, may not be revoked during the period that the algorithm is running.

TITLE V
LIQUIDITY POOLING

Article 23 – Liquidity pooling modes

Eesti Pank shall offer a consolidated account information (CAI) mode.

Article 24 – Consolidated account information mode

(1) The following may use the CAI mode:

(2) (a) Under the CAI mode, each member of the CAI group and their respective CBs are provided with the list of PM accounts of the group members and the following additional information consolidated at the level of the CAI group:

(3) The CAI group manager shall be entitled to initiate liquidity transfers via the ICM between the PM accounts, including their sub-accounts, forming part of the same CAI group.

Article 25 – Request for authorisation to use the CAI mode

Each CAI group shall designate a CAI group manager. In the event that the CAI group consists of only one participant, this participant shall act as the CAI group manager. The TARGET2 participant that is the CAI group manager shall address to the managing NCB a written request to use the CAI mode (containing the static data collection form as provided by Eesti Pank). The remaining CAI group members shall address their written requests (containing the static data collection form as provided by Eesti Pank) to their respective CAI NCBs. The managing NCB may request any additional information or document that it deems appropriate in order to decide on the request.

Article 26 – Grant of authorisation to use the CAI mode

The managing NCB shall verify whether the applicants fulfil the requirements to form a CAI group. To this end, the managing NCB may liaise with the other CAI NCBs. The managing NCB’s decision shall be addressed, in writing, to the CAI group manager within one month of receipt of the request referred to in Article 25 by the managing NCB, or, if the managing NCB requests additional information, within one month of receipt of such information by the managing NCB. Any rejection decision shall contain reasons for the rejection.

TITLE VI
SECURITY REQUIREMENTS AND CONTINGENCY ISSUES

Article 27 – Business continuity and contingency procedures

In the event of an abnormal external event or any other event which affects the operation of the SSP, the business continuity and contingency procedures described in Appendix IV shall apply.

Article 28 – Security requirements

(1) Participants shall implement adequate security controls to protect their systems from unauthorised access and use. Participants shall be exclusively responsible for the adequate protection of the confidentiality, integrity and availability of their systems.

TITLE VII
THE INFORMATION AND CONTROL MODULE

Article 29 – Use of the ICM

(1) The ICM:

(2) Further technical details relating to the ICM are contained in Appendix I.

TITLE VIII
COMPENSATION, LIABILITY REGIME AND EVIDENCE

Article 30 – Compensation scheme

If a payment order cannot be settled on the same business day on which it was accepted due to a technical malfunction of TARGET2, Eesti Pank shall offer to compensate the direct participants concerned in accordance with the special procedure laid down in Appendix II.

Article 31 – Liability regime

(1) In performing their obligations pursuant to the HC, Eesti Pank and the participants shall be bound by a general duty of reasonable care in relation to each other.

(2) Eesti Pank shall be liable to its participants in cases of fraud (including but not limited to wilful misconduct) or gross negligence, for any loss arising out of the operation of TARGET2-Eesti. In cases of ordinary negligence, Eesti Pank’s liability shall be limited to the participant’s direct loss, i.e. the amount of the transaction in question and/or the loss of interest thereon, excluding any consequential loss.

(3) Eesti Pank is not liable for any loss that results from any malfunction or failure in the technical infrastructure (including but not limited to Eesti Pank’s computer infrastructure, programmes, data, applications or networks), if such malfunction or failure arises in spite of Eesti Pank having adopted those measures that are reasonably necessary to protect such infrastructure against malfunction or failure, and to resolve the consequences of such malfunction or failure (the latter including but not limited to initiating and completing the business continuity and contingency procedures referred to in Appendix IV).

(4) Eesti Pank shall not be liable:

(5) Notwithstanding the provisions governing settlements under the Law of Obligations Act, paragraphs 1 to 4 shall apply to the extent that Eesti Pank’s liability can be excluded.

(6) Eesti Pank and the participants shall take all reasonable and practicable steps to mitigate any damage or loss referred to in this Article.

(7) In performing some or all of its obligations under the HC, Eesti Pank may commission third parties in its own name, particularly telecommunications or other network providers or other entities, if this is necessary to meet Eesti Pank’s obligations or is standard market practice. Eesti Pank’s obligation shall be limited to the due selection and commissioning of any such third parties and Eesti Pank’s liability shall be limited accordingly. For the purposes of this paragraph, the SSP-providing CBs shall not be considered as third parties.

Article 32 – Evidence

(1) Unless otherwise provided in these HC, all payment and payment processing-related messages in relation to TARGET2, such as confirmations of debits or credits, or statement messages, between Eesti Pank and participants shall be made through the network service provider.

(2) Electronic or written records of the messages retained by Eesti Pank or by the network service provider shall be accepted as a means of evidence of the payments processed through Eesti Pank. The saved or printed version of the original message of the network service provider shall be accepted as a means of evidence, regardless of the form of the original message.

(3) If a participant’s connection to the network service provider fails, the participant shall use the alternative means of transmission of messages laid down in Appendix IV. In such cases, the saved or printed version of the message produced by Eesti Pank shall have the same evidential value as the original message, regardless of its form.

(4) Eesti Pank shall keep complete records of payment orders submitted and payments received by participants for a period of ten years from the year following the year when such payment orders are submitted and payments are received, unless a longer storage time is stipulated by law.

(5) Eesti Pank’s own books and records (whether kept on paper, microfilm, microfiche, by electronic or magnetic recording, in any other mechanically reproducible form or otherwise) shall be accepted as a means of evidence of any obligations of the participants and of any facts and events that the parties rely on.

TITLE IX
TERMINATION OF PARTICIPATION AND CLOSURE OF ACCOUNTS

Article 33 – Duration and ordinary termination of participation

(1) Without prejudice to Article 34, participation in TARGET2-Eesti is for an indefinite period of time.

(2) A participant may terminate its participation in TARGET2-Eesti at any time giving 14 business days’ notice thereof, unless it agrees a shorter notice period with Eesti Pank.

(3) Eesti Pank may terminate a participant’s participation in TARGET2-Eesti at any time giving three months’ notice thereof, unless it agrees a different notice period with that participant.

(4) On termination of participation, the confidentiality duties laid down in Article 38 remain in force for a period of five years starting on the date of termination.

(5) On termination of participation, the PM accounts of the participant concerned shall be closed in accordance with Article 35.

Article 34 – Suspension and extraordinary termination of participation

(1) A participant’s participation in TARGET2-Eesti shall be immediately terminated without prior notice or suspended if one of the following events of default occurs:

(2) Eesti Pank may terminate without prior notice or suspend the participant’s participation in TARGET2-Eesti if:

(3) In exercising its discretion under paragraph 2, Eesti Pank shall take into account, inter alia, the seriousness of the event of default or events mentioned in subparagraphs (a) to (c).

(4)      a) In the event that Eesti Pank suspends or terminates a participant’s participation in TARGET2-Eesti under paragraph 1 or 2, Eesti Pank shall immediately inform that participant, other CBs and the other participants of such suspension or termination by means of an ICM broadcast message.
b) In the event that Eesti Pank is informed by another CB of a suspension or termination of a participant in another TARGET2 component system, Eesti Pank shall immediately inform its participants of such suspension or termination by means of an ICM broadcast message.
c) Once such an ICM broadcast message has been received by the participants, the latter shall be deemed informed of the termination/suspension of a participant’s participation in TARGET2-Eesti or another TARGET2 component system. The participants shall bear any losses arising from the submission of a payment order to participants whose participation has been suspended or terminated if such payment order was entered into TARGET2-Eesti after receipt of the ICM broadcast message.

(5) Upon termination of a participant’s participation, TARGET2-Eesti shall not accept any new payment orders from such participant. Payment orders in the queue, warehoused payment orders or new payment orders in favour of such participant shall be returned.

(6) If a participant is suspended from TARGET2-Eesti, all its incoming payments and outgoing payment orders shall be stored and only entered into the entry disposition after they have been explicitly accepted by the suspended participant’s CB.

Article 35 – Closure of PM accounts

(1) Participants may close their PM accounts at any time provided they give Eesti Pank 14 business days’ notice thereof.

(2) On termination of participation, pursuant to either Article 33 or 34, Eesti Pank shall close the PM accounts of the participant concerned, after having:

TITLE X
FINAL PROVISIONS

Article 36 – Eesti Pank’s rights of pledge and set-off

(1) Eesti Pank shall have a pledge over the participant’s existing and future credit balances on its PM accounts, thereby collateralising any current and future claims arising out of the legal relationship between the parties. Such collateral shall be established by the mere fact that the funds have been credited to the participant’s PM account.

(2) Eesti Pank shall have the right referred to in paragraph 1 even if its claims are only contingent or not yet due.

(3) The participant, acting in its capacity as a PM account holder, hereby acknowledges the creation of a pledge in favour of Eesti Pank, with whom that account has been opened; this acknowledgement shall constitute the provision of pledged assets to Eesti Pank referred to under the Law of Property Act. Any amounts paid into the PM account whose balance is pledged shall, by the mere fact of being paid in, be irrevocably pledged, without any limitation whatsoever, as collateral security for the full performance of the secured obligations.

(4) In the event of:

(5) Eesti Pank shall promptly give the participant notice of any set-off pursuant to paragraph 4 after such set-off has taken place.

Article 37 – Security rights in relation to funds on sub-accounts

(1) Eesti Pank shall have a pledge treated as financial collateral over the balance on a participant’s sub-account opened for the settlement of AS-related payment instructions under the arrangements between the relevant ancillary system and its CB. Such balance shall collateralise the participant’s obligation referred to in paragraph 7 towards Eesti Pank in relation to such settlement.

(2) Eesti Pank shall freeze the balance on the sub-account of the participant upon communication by the ancillary system (via a ‘start-of-cycle’ message). Such freezing shall expire upon communication by the ancillary system (via an ‘end-of-cycle’ message).

(3) By confirming the freezing of the balance on the participant’s sub-account, Eesti Pank guarantees to the ancillary system payment up to the amount of this particular balance. The guarantee shall be irrevocable, unconditional and payable on first demand. If Eesti Pank is not the ancillary system’s CB, Eesti Pank shall be deemed instructed to issue the abovementioned guarantee to the ancillary system’s CB.

(4) In the absence of any insolvency proceedings in relation to the participant, the AS-related payment instructions for the squaring of the participant’s settlement obligation shall be settled without drawing on the guarantee and without recourse to the security right over the balance on the participant’s sub-account.

(5) In the event of the participant’s insolvency, the AS-related payment instruction for the squaring of the participant’s settlement obligation shall be a first demand for payment under the guarantee; the debiting of the instructed amount from the participant’s sub-account (and crediting of the AS’s technical account) shall therefore equally involve the discharge of the guarantee obligation by Eesti Pank and a realisation of its collateral right over the balance on the participant’s sub-account.

(6) The guarantee shall expire upon communication by the ancillary system that the settlement has been completed (via an ‘end-of-cycle’ message).

(7) The participant shall be obliged to reimburse to Eesti Pank any payment made by the latter under such guarantee.

Article 38 – Confidentiality

(1) Eesti Pank shall keep confidential all sensitive or secret information, including when such information relates to payment, technical or organisational information belonging to the participant or the participant’s customers, unless the participant or its customer has given its written consent to disclose or such disclosure is permitted or required under law.

(2) By derogation from paragraph 1, the participant agrees that Eesti Pank may disclose payment, technical or organisational information regarding the participant or the participant’s customers obtained in the course of the operation of TARGET2-Eesti to other CBs or third parties that are involved in the operation of TARGET2-Eesti, to the extent that this is necessary for the efficient functioning of TARGET2, or to supervisory and oversight authorities of Member States and the Community, to the extent that this is necessary for the performance of their public tasks, and provided in all such cases that the disclosure is not in conflict with the applicable law. Eesti Pank shall not be liable for the financial and commercial consequences of such disclosure.

(3) By derogation from paragraph 1 and provided this does not make it possible, whether directly or indirectly, to identify the participant or the participant’s customers, Eesti Pank may use, disclose or publish payment information regarding the participant or the participant’s customers for statistical, historical, scientific or other purposes in the exercise of its public functions or of functions of other public entities to whom the information is disclosed.

(4) Information relating to the operation of TARGET2-Eesti to which participants have had access, may only be used for the purposes laid down in the HC. Participants shall keep such information confidential, unless Eesti Pank has explicitly given its written consent to disclose. Participants shall ensure that any third parties to whom they outsource, delegate or subcontract tasks which have or may have an impact on the performance of their obligations under the HC are bound by the confidentiality requirements in this Article.

(5) Eesti Pank shall be authorised, in order to settle payment orders, to process and transfer the necessary data to the network service provider.

Article 39 – Data protection, prevention of money laundering and related issues

(1) Participants shall be deemed to be aware of, and shall comply with, all obligations on them relating to legislation on data protection, prevention of money laundering and the financing of terrorism, in particular in terms of implementing appropriate measures concerning any payments debited or credited on their PM accounts. Participants shall also acquaint themselves with the network service provider’s data retrieval policy prior to entering into the contractual relationship with the network service provider.

(2) Participants shall be deemed to have authorised Eesti Pank to obtain any information relating to them from any financial or supervisory authority or trade body, whether national or foreign, if such information is necessary for the participant’s participation in TARGET2-Eesti.

Article 40 – Notices

(1) Except where otherwise provided for in the HC, all notices required or permitted pursuant to the HC shall be sent by registered post, facsimile or otherwise in writing or by an authenticated message through the network service provider. Notices to Eesti Pank shall be submitted to Head of the Clearing and Settlement Department of Eesti Pank (address: Estonia pst 13, Tallinn) or to the SWIFT address EPBEEE2XTGT. Notices to the participant shall be sent to it at the address, fax number or its SWIFT address as the participant may from time to time notify to Eesti Pank.

(2) To prove that a notice has been sent, it shall be sufficient to prove that the notice was delivered to the relevant address or that the envelope containing such notice was properly addressed and posted.

(3) All notices shall be given in Estonian and/or English.

(4) Participants shall be bound by all forms and documents of Eesti Pank that the participants have filled in and/or signed, including but not limited to static data collection forms, as referred to in Article 8(2)(a), and information provided under Article 11(5), which were submitted in compliance with paragraphs 1 and 2 and which Eesti Pank reasonably believes to have received from the participants, their employees or agents.

Article 41 – Contractual relationship with network service provider

(1) For the purposes of the HC, the network service provider is SWIFT. Each participant shall enter into a separate agreement with SWIFT regarding the services to be provided by SWIFT in relation to the participant’s use of TARGET2-Eesti. The legal relationship between a participant and SWIFT shall be exclusively governed by SWIFT’s terms and conditions.

(2) Each participant shall also participate in a TARGET2 CUG, as specified by the SSP-providing CBs acting as the SWIFT service administrator for the SSP. Admission and exclusion of a participant to or from a TARGET2 CUG shall take effect once communicated to SWIFT by the SWIFT service administrator.

(3) Participants shall comply with the TARGET2 SWIFT Service Profile, as made available by Eesti Pank.

(4) The services to be provided by SWIFT shall not form part of the services to be performed by Eesti Pank in respect of TARGET2.

(5) Eesti Pank shall not be liable for any acts, errors or omissions of SWIFT (including its directors, staff and subcontractors) as provider of SWIFT services, or for any acts, errors or omissions of network providers selected by participants to gain access to the SWIFT network.

Article 42 – Amendment procedure

Eesti Pank may at any time unilaterally amend the HC, including its Appendices. Amendments to the HC, including its Appendices, shall be announced in writing or in a format that can be reproduced in writing. Amendments shall be deemed to have been accepted unless the participant expressly objects within 14 days of being informed of such amendments. In the event that a participant objects to the amendment, Eesti Pank is entitled immediately to terminate that participant’s participation in TARGET2-Eesti and close any of its PM accounts.

Article 43 – Third party rights

(1) Any rights, interests, obligations, responsibilities and claims arising from or relating to the HC shall not be transferred, pledged or assigned by participants to any third party without Eesti Pank’s written consent.

(2) These HC do not create any rights in favour of or obligations in relation to any entity other than Eesti Pank and participants in TARGET2-Eesti.

Article 44 – Governing law, jurisdiction and place of performance

(1) The bilateral relationship between Eesti Pank and participants in TARGET2-Eesti shall be governed by the Estonian legislation,

(2) Without prejudice to the competence of the Court of Justice of the European Communities, any dispute arising from a matter relating to the relationship referred to in paragraph 1 falls under the exclusive competence of the competent courts of Estonia.

(3) The place of performance concerning the legal relationship between Eesti Pank and the participants shall be the place of the seat of Eesti Pank.

Article 45 - Severability

If any provision in the HC is or becomes invalid, this shall not prejudice the applicability of all the other provisions of the HC.

Article 46 – Binding nature

By participating in TARGET2-Eesti, participants automatically agree to the HC between themselves and in relation to Eesti Pank

Appendix I

TECHNICAL SPECIFICATIONS FOR THE PROCESSING OF PAYMENT ORDERS

In addition to the Harmonised Conditions, the following rules shall apply to the processing of payment orders:

1. Technical requirements for participation in TARGET2-Eesti regarding infrastructure, network and formats

(1) TARGET2 uses SWIFT services for the exchange of messages. Each participant therefore needs a connection to SWIFT’s Secure IP Network (SIPN). Each participant’s PM account shall be identified by an eight- or 11-digit BIC. Furthermore, each participant shall pass a series of tests to prove its technical and operational competence before it may participate in TARGET2-Eesti.

(2) For the submission of payment orders and the exchange of payment messages in the PM the SWIFTNet FIN Y-copy service shall be used. A dedicated SWIFT Closed User Group (CUG) shall be set up for this purpose. Payment orders within such TARGET2 CUG shall be directly addressed to the receiving TARGET2 participant by entering its BIC in the header of the SWIFTNet FIN message.

(3) For the information and control services the following SWIFTNet services may be used:

(4) The security of the message exchange between participants shall rely exclusively on SWIFT’s Public Key Infrastructure (PKI) service. Information on the PKI service is available in the documentation provided by SWIFT.

(5) The ‘bilateral relationship management’ service provided by SWIFT’s Relationship Management Application (RMA) shall only be used with the central destination BIC of the SSP and not for payment messages between TARGET2 participants.

2. Payment message types

(1) The following SWIFTNet FIN/SWIFT system message types are processed:

MT 011, MT 012 and MT 019 are SWIFT system messages.

(2) When they register with TARGET2-Eesti, direct participants shall declare which optional message types they will use, with the exception of MT 011 and MT 012 messages in relation to which direct participants shall decide from time to time whether or not to receive them with reference to specific messages.

(3) Participants shall comply with the SWIFT message structure and field specifications, as defined in the SWIFT documentation and under the restrictions set out for TARGET2, as described in Chapter 9.1.2.2 of the User Detailed Functional Specifications (UDFS), Book 1.

(4) Field contents shall be validated at the level of TARGET2-Eesti in accordance with the UDFS requirements. Participants may agree among each other on specific rules regarding the field contents. However, in TARGET2-Eesti there shall be no specific checks as to whether participants comply with any such rules.

3. Double-entry check

1) All payment orders shall pass a double-entry check, the aim of which is to reject payment orders that have been submitted more than once by mistake.

2) The following fields of the SWIFT message types shall be checked:

3) If all the fields described in subparagraph 2 in relation to a newly submitted payment order are identical to those in relation to a payment order that has already been accepted, the newly submitted payment order shall be returned.

4. Error codes

If a payment order is rejected, the instructing participant shall receive an abort notification (MT 019) indicating the reason for the rejection by using error codes. The error codes are defined in Chapter 9.4.2 of the UDFS.

5. Predetermined settlement times

1) For payment orders using the Earliest Debit Time Indicator, the codeword ‘/FROTIME/’shall be used.

2) For payment orders using the Latest Debit Time Indicator, two options shall be available:

3) If the codeword ‘/CLSTIME/’ is used, the payment shall be treated in the same way as a payment order referred to in subparagraph 2(b).

6. Settlement of payment orders in the entry disposition

1) Offsetting checks and, if appropriate, extended offsetting checks (both terms as defined in paragraphs 2 and 3) shall be carried out on payment orders entered into the entry disposition to provide quick, liquidity-saving gross settlement of payment orders.

2) An offsetting check shall determine whether the payee’s payment orders that are at the front of the highly urgent or, if inapplicable, the urgent queue are available to be offset against the payer’s payment order (hereinafter ‘offsetting payment orders’). If an offsetting payment order does not provide sufficient funds for the respective payer’s payment order in the entry disposition, it shall be determined whether there is sufficient available liquidity on the payer’s PM account.

3) If the offsetting check fails, Eesti Pank may apply an extended offsetting check. An extended offsetting check determines whether offsetting payment orders are available in any of the payee’s queues regardless of when they joined the queue. However, if in the queue of the payee there are higher priority payment orders addressed to other TARGET2 participants, the FIFO principle may only be breached if settling such an offsetting payment order would result in a liquidity increase for the payee.

7. Settlement of payment orders in the queue

1) The treatment of payment orders placed in queues depends on the priority class to which it was designated by the instructing participant.

2) Payment orders in the highly urgent and urgent queues shall be settled by using the offsetting checks described in paragraph 6, starting with the payment order at the front of the queue in cases where there is an increase in liquidity or there is an intervention at queue level (change of queue position, settlement time or priority, or revocation of the payment order).

3) Payments orders in the normal queue shall be settled on a continuous basis including all highly urgent and urgent payment orders that have not yet been settled. Different optimisation mechanisms (algorithms) are used. If an algorithm is successful, the included payment orders will be settled; if an algorithm fails, the included payment orders will remain in the queue. Three algorithms (1 to 3) shall be applied to offset payment flows. By means of Algorithm 4, settlement procedure 5 (as defined in Chapter 2.8.1 of the UDFS) shall be available for the settlement of payment instructions of ancillary systems. To optimise the settlement of highly urgent ancillary system transactions on participants’ sub-accounts, a special algorithm (Algorithm 5) shall be used.

4) Payment orders entered into the entry disposition after the start of any of algorithms 1 to 4 may nevertheless be settled immediately in the entry disposition if the positions and limits of the TARGET2 participants’ PM accounts concerned are compatible with both the settlement of these payment orders and the settlement of payment orders in the current optimisation procedure. However, two algorithms shall not run simultaneously.

5) During daytime processing the algorithms shall run sequentially. As long as there is no pending simultaneous multilateral settlement of an ancillary system, the sequence shall be as follows:

6) The algorithms shall run flexibly by setting a pre-defined time lag between the application of different algorithms to ensure a minimum interval between the running of two algorithms. The time sequence shall be automatically controlled. Manual intervention shall be possible.

7) While included in a running algorithm, a payment order shall not be reordered (change of the position in a queue) or revoked. Requests for reordering or revocation of a payment order shall be queued until the algorithm is complete. If the payment order concerned is settled while the algorithm is running, any request to reorder or revoke shall be rejected. If the payment order is not settled, the participant’s requests shall be taken into account immediately.

8. Use of the ICM

1) The ICM may be used for obtaining information and managing liquidity. SWIFT’s Secure IP Network (SIPN) shall be the underlying technical communications network for exchanging information and running control measures.

2) With the exception of warehoused payment orders and static data information, only data in relation to the current business day shall be available via the ICM. The screens shall be offered in English only.

3) Information shall be provided in ‘pull’ mode, which means that each participant has to ask to be provided with information.

4) The following modes shall be available for using the ICM:

5) Each participant shall have at least one SWIFT Alliance WebStation to have access to the ICM via U2A.

6) Access rights to the ICM shall be granted by using SWIFT’s ‘Role Based Access Control’. The SWIFT ‘Non Repudiation of Emission’ (NRE) service, which may be used by participants, allows the recipient of an XML message to prove that such message has not been altered.

7) If a participant has technical problems and is unable to submit any payment order, it may generate preformatted backup lump sum and backup contingency payments by using the ICM. Eesti Pank shall open such functionality upon request of the participant.

8) Participants may also use the ICM to transfer liquidity:

9. The UDFS and the ICM User Handbook

Further details and examples explaining the above rules are contained in the UDFS and the ICM User Handbook, as amended from time to time and published on Eesti Pank’s website and the ECB’s website in English.

Appendix II

TARGET2 COMPENSATION SCHEME

1. General principles

a) If there is a technical malfunction of TARGET2, direct participants may submit claims for compensation in accordance with the TARGET2 compensation scheme laid down in this Appendix.

b) Unless otherwise decided by the ECB’s Governing Council, the TARGET2 compensation scheme shall not apply if the technical malfunction of TARGET2 arises out of external events beyond the reasonable control of the CBs concerned or as a result of acts or omissions by third parties.

c) Compensation under the TARGET2 compensation scheme shall be the only compensation procedure offered in the event of a technical malfunction of TARGET2. Participants may, however, use other legal means to claim for losses. If a participant accepts a compensation offer under the TARGET2 compensation scheme, this shall constitute the participant’s irrevocable agreement that it thereby waives all claims in relation to the payment orders concerning which it accepts compensation (including any claims for consequential loss) it may have against any CB, and that the receipt by it of the corresponding compensation payment constitutes full and final settlement of all such claims. The participant shall indemnify the CBs concerned, up to a maximum of the amount received under the TARGET2 compensation scheme, in respect of any further claims which are raised by any other participant or any other third party in relation to the payment order or payment concerned.
d) The making of a compensation offer shall not constitute an admission of liability by Eesti Pank or any other CB in respect of a technical malfunction of TARGET2.

2. Conditions for compensation offers

a) A payer may submit a claim for an administration fee and interest compensation if, due to a technical malfunction of TARGET2:

b) A payee may submit a claim for an administration fee if due to a technical malfunction of TARGET2 it did not receive a payment that it was expecting to receive on a particular business day. The payee may also submit a claim for interest compensation if one or more of the following conditions are met:

3. Calculation of compensation

a) With respect to a compensation offer for a payer:

b) With respect to a compensation offer for a payee:

4. Procedural rules

a) A claim for compensation shall be submitted on the claim form available on the website of Eesti Pank in English (see www.bankofestonia.info). Payers shall submit a separate claim form in respect of each payee and payees shall submit a separate claim form in respect of each payer. Sufficient additional information and documents shall be provided to support the information indicated in the claim form. Only one claim may be submitted in relation to a specific payment or payment order.

b) Within four weeks of a technical malfunction of TARGET2, participants shall submit their claim form(s) to Eesti Pank. Any additional information and evidence requested by Eesti Pank shall be supplied within two weeks of such request being made.

c) Eesti Pank shall review the claims and forward them to the ECB. Unless otherwise decided by the ECB’s Governing Council and communicated to the participants, all received claims shall be assessed no later than 14 weeks after the technical malfunction of TARGET2 occurs.

d) Eesti Pank shall communicate the result of the assessment referred to in subparagraph (c) to the relevant participants. . If the assessment entails a compensation offer, the participants concerned shall, within four weeks of the communication of such offer, either accept or reject it, in respect of each payment or payment order comprised within each claim, by signing a standard letter of acceptance in the form available on the website of Eesti Pank (see www.bankofestonia.info). If such letter has not been received by Eesti Pank within four weeks, the participants concerned shall be deemed to have rejected the compensation offer.

e) Eesti Pank shall make compensation payments on receipt of a TARGET participant’s letter of acceptance of compensation. No interest shall be payable on any compensation payment.

Appendix III

TERMS OF REFERENCE FOR CAPACITY AND COUNTRY OPINIONS

Terms of reference for capacity opinions for participants in TARGET2-Eesti

Eesti Pank
Estonia pst 13
15095
Estonia

[place], [date]

Dear Sir or Madam,

We have been asked to provide this Opinion as [in-house or external] legal advisers to [specify name of Participant, name of Applicant in TARGET2-Eesti or their branch] in respect of issues arising under the laws of [jurisdiction in which the Participant is established] (hereinafter the ‘jurisdiction’) in connection with the participation of [specify name of Participant] (hereinafter the ‘Participant’) in TARGET2-Eesti (hereinafter the ‘System’).

This Opinion is confined to the laws of [jurisdiction] as they exist as on the date of this Opinion. We have made no investigation of the laws of any other jurisdiction as a basis for this Opinion, and do not express or imply any opinion in this regard. Each of the statements and opinions presented below applies with equal accuracy and validity under the laws of [jurisdiction], whether or not the Participant acts through its head office or one or more branches established inside or outside of [jurisdiction] in submitting payment orders and receiving payments.

I.    DOCUMENTS EXAMINED

For the purposes of this Opinion, we have examined:

For the purposes of this Opinion, we have also examined:

The Rules and the Accession Agreement shall be referred to hereinafter as the ‘System Documents’ (and collectively with the Participant Documents as the ‘Documents’).

II.    ASSUMPTIONS

For the purposes of this Opinion we have assumed in relation to the Documents that:

III.    OPINIONS REGARDING THE PARTICIPANT

A. The Participant is a corporation duly established and registered or otherwise duly incorporated or organised under the laws of [jurisdiction].

B. The Participant has all the requisite corporate powers to execute and perform the rights and obligations under the System Documents to which it is party.

C. The adoption or execution and the performance by the Participant of the rights and obligations under the System Documents to which the Participant is party will not in any way breach any provision of the laws or regulations of [jurisdiction] applicable to the Participant or the Participant Documents.

D. No additional authorisations, approvals, consents, filings, registrations, notarisations or other certifications of or with any court or governmental, judicial or public authority that is competent in [jurisdiction] are required by the Participant in connection with the adoption, validity of enforceability of any of the System Documents or the execution or performance of the rights and obligations thereunder.

E. The Participant has taken all necessary corporate action and other steps necessary under the laws of [jurisdiction] to ensure that its obligations under the System Documents are legal, valid and binding.

This Opinion is stated as of its date and is addressed solely to Eesti Pank and [the Participant]. No other persons may rely on this Opinion, and the contents of this Opinion may not be disclosed to persons other than its intended recipients and their legal counsel without our prior written consent, with the exception of the European Central Bank and the national central banks of the European System of Central Banks and the [[jurisdiction] [NCB/relevant administrative authorities].

Yours faithfully,

[signature]

Terms of reference for country opinions for non-EEA participants in TARGET2-Eesti

Eesti Pank
Estonia pst 13
15095
Estonia

[place], [date]

Dear Sir or Madam,

We have been asked as [external] legal advisers to [specify name of Participant, name of Applicant in TARGET2-Eesti or their branch] (hereinafter the ‘Participant’) in respect of issues arising under the laws of [jurisdiction in which the Participant is established] (hereinafter the ‘jurisdiction’) to provide this Opinion under the laws of [jurisdiction] in connection with the participation of the Participant in TARGET2-Eesti (hereinafter the ‘System’). References herein to the laws of [jurisdiction] include all applicable regulations of [jurisdiction]. We express an opinion herein under the law of [jurisdiction], with particular regard to the Participant established outside EEA in relation to rights and obligations arising from participation in the System, as presented in the System Documents defined below.

This Opinion is confined to the laws of [jurisdiction] as they exist on the date of this Opinion. We have made no investigation of the laws of any other jurisdiction as a basis for this Opinion, and do not express or imply any opinion in this regard. We have assumed that there is nothing in the laws of another jurisdiction which affects this Opinion.

1.    DOCUMENTS EXAMINED

For the purposes of this Opinion, we have examined the documents listed below and such other documents as we have deemed necessary or appropriate.

The Rules and the documents listed in Clause 2 shall be referred to hereinafter as the ‘System Documents’.

2.    ASSUMPTIONS

For the purposes of this Opinion we have assumed in relation to the System Documents that:

3.    OPINION

Based on and subject to the foregoing, and subject in each case to the points set out below, we are of the opinion that:

3.1 Country-specific legal aspects [to the extent applicable]

The following characteristics of the legislation of [jurisdiction] are consistent with and in no way set aside the obligations of the Participant arising out of the System Documents: [list of country-specific legal aspects].

3.2 General insolvency issues

3.3 Enforceability of System Documents

Subject to the points set out below, all provisions of the System Documents will be binding and enforceable in accordance with their terms under the laws of [jurisdiction], in particular in the event of the opening of any Insolvency Proceedings or Proceedings with respect to the Participant.

In particular, we are of the opinion that:

3.4 Voidable preferences

We are of the opinion that no obligation arising out of the System Documents, the performance thereof, or compliance therewith prior to the opening of any Insolvency Proceedings or Proceedings in respect of the Participant may be set aside in any such proceedings as a preference, voidable transaction or otherwise under the laws of [jurisdiction].

In particular, and without limitation to the foregoing, we express this opinion in respect of any payment orders submitted by any participant in the System. In particular, we are of the opinion that the provisions of HC establishing the enforceability and irrevocability of payment orders will be valid and enforceable and that a payment order submitted by any participant and processed pursuant to HC may not be set aside in any Insolvency Proceedings or Proceedings as a preference, voidable transaction or otherwise under the laws of [jurisdiction].

3.5 Attachment

If a creditor of the Participant seeks an attachment order (including any freezing order, order for seizure or any other public or private law procedure that is intended to protect the public interest or the rights of the Participant’s creditors) – hereinafter referred to as an ‘Attachment’ – under the laws of [jurisdiction] from a court or governmental, judicial or public authority that is competent in [jurisdiction], we are of the opinion that [insert the analysis and discussion].

3.6 Collateral

3.7 Branches [to the extent applicable]