Payments and markets glossary

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safekeeping services: The holding of physical securities on behalf of other parties.
same-day funds: Funds which the recipient is entitled to transfer or withdraw from an account on the day of receipt. See also
intraday liquidity
scheduling: Technique for managing payment queues by determining the order in which payments are accepted for settlement. See also
queuing
secondary site: A location other than the primary site which systems can use to resume their business operations and other functions in the event of a disaster.
securities settlement system (SSS): A system which allows the transfer of securities, either free of payment (FOP) or against payment (delivery versus payment).
segregation: A method of protecting a client’s assets by holding them separately from those of the custodian (or other clients, as the case may be).
self-checkout terminal: A self-service device that allows customers to pay for their purchases with either cash or a payment card.
SEPA: See
Single Euro Payments Area (SEPA)
service provision: Function within an electronic payment instrument scheme that relates to any payment service, crypto-asset service or technical service provided to end users within the scheme.
set of formal, standardised and common rules: A set of rules covering all material aspects governing an electronic payment instrument scheme which is uniform throughout the scheme, irrespective of whether the rules are based on a multilateral agreement, general terms and conditions or standardised bilateral contracts. These rules typically cover a common name and/or logo.
settlement: The completion of a transaction or of processing with the aim of discharging participants’ obligations through the transfer of funds and/or securities. A settlement may be final or provisional. See also
final settlement
gross settlement
net settlement
provisional settlement
settlement account: An account held at a central bank or a central securities depository, or with a central counterparty or any other institution acting as a settlement agent, which is used to settle transactions between participants in a system.
settlement agent (settlement institution): The institution across whose books transfers between participants take place in order to achieve settlement within a settlement system. See also
bilateral net settlement system
multilateral net settlement system
settling participant
settlement asset: An asset or a claim on an asset that is accepted by a beneficiary in order to discharge a payment obligation.
settlement bank: See
settling participant (settlement bank; settling member)
settlement cycle (settlement interval): In the field of securities, the time period that elapses between the trade date and the settlement date.
settlement date: See
settlement day (settlement date)
settlement day (settlement date): The day on which settlement actually takes place.
settlement failure: The inability of a participant to meet its settlement obligations in a system. This inability may be temporary or permanent. See also
default
failed transaction
settlement institution: See
settlement agent (settlement institution)
settlement interval: See
settlement cycle (settlement interval)
settlement lag (payment lag): In a transfer system, the time lag between the acceptance of the transfer order by the system and its final settlement. In an exchange-for-value system, the time lag between entering into a trade/bargain and finally exchanging the financial asset for payment.
settlement obligation: The requirement, as a result of the settlement process, that a participant in a settlement system effect payment or deliver assets.
settlement risk: The risk that settlement in a transfer system will not take place as expected, usually owing to a party defaulting on one or more settlement obligations. This risk includes, in particular, operational risks, credit risks and liquidity risks. See also
credit risk
liquidity risk
operational risk
settlement system: A system used to facilitate the settlement of transfers of funds, assets or financial instruments. See also
funds transfer system
securities settlement system
settling member: See
settling participant (settlement bank; settling member)
settling participant (settlement bank; settling member): A participant which maintains one or more accounts with a settlement agent in order to settle funds or securities transfers on its own behalf or, potentially, for other market participants. See also
settlement agent
tiering arrangement
SFT: securities financing transaction
Single Euro Payments Area (SEPA): A process initiated by European banks and supported, inter alia, by the Eurosystem and the European Commission with a view to integrating retail payment systems and transforming the euro area into a true domestic market for the payment industry.
SIPS: See
systemically important payment system (SIPS)
smart card: See
chip card (smart card)
smart cash till: A till that may look and operate like a standard cash till but which uses additional technology that accepts, counts and authenticates euro banknotes and coins and dispenses change.
specialised depository: An entity, usually a credit institution, that provides international central securities depositories (ICSDs) with safekeeping and asset servicing for physical certificates (“individual notes”) that represent shares in international debt instruments (e.g. Eurobonds). See also
common depository
SSS: See
securities settlement system (SSS)
standing facility: A central bank credit facility available to counterparties at their own initiative. The Eurosystem offers two overnight standing facilities: the marginal lending facility and the deposit facility. See also
deposit facility
marginal lending facility
standing order: An instruction from a customer to its bank to make a regular payment of a fixed amount to a named beneficiary.
STP: See
straight-through processing (STP)
straight-through processing (STP): The automated end-to-end processing of trades/payment transfers – including, where relevant, the automated completion of confirmation, matching, generation, clearing and settlement of orders.
substitution of securities: A situation in which an institution which has provided securities as collateral recalls them and replaces them with other securities of equivalent market value.
survivors pay: A loss-sharing arrangement which, in the event of a participant’s inability to settle, requires losses to be borne by the other (non-defaulting) participants in accordance with a predetermined formula. Antonym:
defaulter pays
systemic risk: The risk that the inability of one participant to meet its obligations in a system will cause other participants to be unable to meet their obligations when they become due, potentially with spillover effects (e.g. significant liquidity or credit problems) threatening the stability of or confidence in the financial system. That inability to meet obligations can be caused by operational or financial problems.
systemically important payment system (SIPS): A payment system which has the potential to trigger systemic risks in the event of it being insufficiently protected against the risks to which it is exposed.

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Payments and markets glossary

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