Payments and markets glossary



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
Technique for managing payment queues by determining the order in which payments are accepted for settlement. See also
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).
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).
Single Euro Payments Area (SEPA)
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
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
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
failed transaction
settlement institution
settlement agent (settlement institution)
settlement interval
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
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
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.
systemically important payment system (SIPS)
smart card
chip card (smart card)
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
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.
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.