Payment Systems

Domestic payments and securities settlement system

A domestic payment system, including a securities settlement system, may not be established or operated unless the system is approved and authorised by the Central Bank of Malta, which is empowered by law to oversee the functioning of domestic payment systems in order to maintain the stability and security of those systems, and in order to ensure the confidence of the users of such systems.

By virtue of the Central Bank of Malta Act, article 34, the Bank is responsible for the regulation and oversight of domestic payment and securities settlement systems. TARGET2-Malta and MaltaClear are designated as systemically important payment and securities settlement systems, respectively, under Article 10 of the Settlement Finality Directive 98/26/EC. The following are the payments and securities settlement systems currently authorised by the Bank.

TARGET2-Malta

The payment system for predominately large-value euro interbank payments in central bank money, TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer system) was successfully launched on 19 November 2007. TARGET2 technically operates on a single shared platform (SSP) and is operated by three Eurosystem central banks, namely, the Banca d’Italia, the Banque de France and the Deutsche Bundesbank, on behalf of the Eurosystem. In Malta the services of TARGET2 are provided by the component system TARGET2-Malta.

MaltaClear

The MaltaClear system is operated by the Malta Stock Exchange plc and is designated a systemically important securities settlement system by the Central Bank of Malta in terms of Directive No. 2: Payments and Security Settlement Systems transposing EC Directive 98/26 on settlement finality in payment and securities settlement systems.

MaltaClear was set up in 2006 and approved as an authorised Securities Settlement System in terms of article 34 of the Central Bank of Malta Act. The rules of MaltaClear are incorporated under Chapter 7 of the Bye-laws of the Malta Stock Exchange plc and provide for settlement on a delivery-versus-payment (DvP) basis in respect of all securities traded on the Exchange.

The system provides for a settlement cycle of not more than three working days on a netting basis, but also allows for the possibility of gross settlement. As settlement takes place on a DvP basis, the registration of securities in the name of a buyer only occurs on the confirmation of receipt of payment, in accordance with the rules of the system and with the provisions of the Transfer of Listed Securities Regulations issued under the Financial Markets Act (Cap. 345).

TBClear

TBClear, which was set up during 2007, is operated by the Malta Stock Exchange plc, and has been set up to settle funds for individual MaltaClear transactions in Treasury bills on a gross, trade-for-trade basis. The settlement cycle of TBClear is T 0, where trading and settlement day are the same. All transactions settled through TBClear will be settled on a DvP basis, where final settlement occurs if final settlement of funds is made. The rules of TBClear are incorporated under Chapter 6 of the Bye-laws of the Malta Stock Exchange plc.