Guideline (EU) 2018/570 of the European Central Bank of 7 February 2018 amending Guideline (EU) 2015/510 on the implementation of the Eurosystem monetary policy framework (ECB/2018/3)

‘4 As regards their operational features, reverse transactions for monetary policy purposes: (a) may be conducted either as liquidity-providing or liquidity-absorbing operations; (b) have a frequency and maturity that depends on the category of open market operation for which they are used; (c) that fall into the category open market operations are executed by means of standard tender procedures, with the exception of fine-tuning operations, where they are executed by means of tender or bilateral procedures; (d) that fall into the category marginal lending facility are executed as described in Article 18; (e) are executed in a decentralised manner by the NCBs, without prejudice to Article 45(3).’;

‘6 Counterparties participating in foreign exchange swaps for monetary policy purposes shall be subject to the eligibility criteria as laid down in Part Three, depending on the applicable procedure for the relevant operation.’;

‘7 Counterparties participating in the collection of fixed term deposits shall be subject to the eligibility criteria as laid down in Part Three, depending on the applicable procedure for the relevant operation.’;

‘6 Counterparties participating in the standard tender procedure for the issuance of ECB debt certificates shall be subject to the eligibility criteria as laid down in Part Three.’;

‘4 Counterparties participating in outright transactions shall be subject to the eligibility criteria as laid down in Part Three.’;

With regard to Eurosystem monetary policy operations, subject to Article 57, the Eurosystem shall only allow participation by institutions that fulfil the following criteria: (a) they shall be subject to the Eurosystem's minimum reserve system pursuant to Article 19.1 of the Statute of the ESCB and shall not have been granted an exemption from their obligations under the Eurosystem's minimum reserve system pursuant to Regulation (EC) No 2531/98 and Regulation (EC) No 1745/2003 (ECB/2003/9); (b) they shall be one of the following: (i) subject to at least one form of harmonised Union/EEA supervision by competent authorities in accordance with Directive 2013/36/EU and Regulation (EU) No 575/2013; (ii) publicly owned credit institutions, within the meaning of Article 123(2) of the Treaty, subject to supervision of a standard comparable to supervision by competent authorities under Directive 2013/36/EU and Regulation (EU) No 575/2013; (iii) institutions subject to non-harmonised supervision by competent authorities of a standard comparable to harmonised Union/EEA supervision by competent authorities under Directive 2013/36/EU and Regulation (EU) No 575/2013, e.g. branches established in Member States whose currency is the euro of institutions incorporated outside the EEA. For the purpose of assessing an institution's eligibility to participate in Eurosystem monetary policy operations, as a rule, non-harmonised supervision shall be considered to be of a standard comparable to harmonised Union/EEA supervision by competent authorities under Directive 2013/36/EU and Regulation (EU) No 575/2013, if the relevant Basel III standards adopted by the Basel Committee on Banking Supervision are considered to have been implemented in the supervisory regime of a given jurisdiction; (c) they must be financially sound within the meaning of Article 55a; (d) they shall fulfil all operational requirements specified in the contractual or regulatory arrangements applied by the home NCB or ECB with respect to the specific instrument or operation.’;

1 By derogation from Article 64 and provided that they fulfil all other eligibility criteria, the following subordinated unsecured debt instruments issued by credit institutions or investment firms, or by their closely linked entities as referred to in Article 141(3), shall be eligible until maturity, provided that they are issued before 31 December 2018 and their subordination results neither from contractual subordination as defined in paragraph 2 nor from structural subordination pursuant to paragraph 3: debt instruments issued by recognised agencies as defined in Article 2 of Decision (EU) 2015/774 of the European Central Bank (ECB/2015/10) , debt instruments guaranteed by a Union public sector entity which has the right to levy taxes by way of a guarantee that complies with the features laid down in Article 114(1) to (4) and Article 115.

2 For the purposes of paragraph 1, contractual subordination means subordination based on the terms and conditions of an unsecured debt instrument, irrespective of whether such subordination is statutorily recognised.

3 Unsecured debt instruments issued by holding companies, including any intermediate holding companies, subject to national legislation implementing Directive 2014/59/EU or to similar recovery and resolution frameworks, shall be ineligible.

4 For unsecured debt instruments issued by credit institutions or investment firms, or by their closely linked entities as referred to in Article 141(3), other than unsecured debt instruments issued by multilateral development banks or international organisations as referred to in Article 70(4), the issuer shall be established in the Union.

5 Unsecured debt instruments which were eligible before 16 April 2018 but do not comply with the eligibility requirements set out in this Article shall remain eligible until 31 December 2018, provided that they fulfil all of the other eligibility criteria for marketable assets.

In order to be eligible, credit claims shall comply, until final redemption, with the following requirements: (a) a fixed, unconditional principal amount; and (b) an interest rate that cannot result in a negative cash flow, whereby the interest rate shall be one of the following: (i) a ‘zero coupon’; (ii) fixed; (iii) floating, i.e. linked to a reference interest rate and with the following structure: coupon rate = reference rate ± x, with f ≤ coupon rate ≤ c, where: the reference rate is only one of the following at a single point in time: a euro money market rate, e.g. Euribor, LIBOR or similar indices; a constant maturity swap rate, e.g. CMS, EIISDA, EUSA; the yield of one or an index of several euro area government bonds that have a maturity of one year or less; f (floor) and c (ceiling) are, if present, numbers that are either pre-defined at issuance, or may change over time only according to a path pre-defined at issuance. The margin, x, may vary over the life of the credit claim.’

1 A counterparty shall not submit or use as collateral unsecured debt instruments issued by a credit institution or by any other entity with which that credit institution has close links, to the extent that the value of such collateral issued by that credit institution or other entity with which it has close links taken together exceeds 2,5 % of the total value of the assets used as collateral by that counterparty after the applicable haircut. This threshold shall not apply in the following cases: (a) if the value of such assets does not exceed EUR 50 million after any applicable haircut; (b) if such assets are guaranteed by a public sector entity which has the right to levy taxes by way of a guarantee that complies with the features laid down in Article 114; or (c) if such assets are issued by an agency (as defined in point 2 of Article 2), a multilateral development bank or an international organisation.

2 If a close link is established or a merger takes place between two or more issuers of unsecured debt instruments, the threshold in paragraph 1 shall apply from six months after the date on which the close link is established or the merger becomes effective.

3 For the purposes of this Article, ‘close links’ between an issuing entity and another entity has the same meaning as ‘close links’ between a counterparty and another entity, as referred to in Article 138.’;

1 In addition to the CCBM, counterparties may use eligible links for the cross-border transfer of marketable assets. The ECB shall publish the list of eligible links on its website.

2 Assets held through an eligible link may be used for Eurosystem credit operations, as well as for any other purpose selected by the counterparty.

3 The rules on the use of eligible links are set out in Annex VI.’;

1 Counterparties may use eligible links in combination with the CCBM to mobilise eligible marketable assets on a cross-border basis.

2 When using eligible links between SSSs in combination with the CCBM, counterparties shall hold the assets issued in the issuer SSS in an account with an investor SSS directly or via a custodian

3 Assets mobilised under paragraph 2 may be issued in a non-euro area EEA SSS that the Eurosystem has assessed as compliant with the eligibility criteria laid down in Annex VIa, provided that there is an eligible link between the issuer SSS and the investor SSS.

4 The rules on the use of the CCBM in combination with eligible links are set out in Annex VI.’;

1 This Guideline shall take effect on the day of its notification to the NCBs of the Member States whose currency is the euro.

2 The NCBs of the Member States whose currency is the euro shall take the necessary measures to comply with this Guideline and apply them from 16 April 2018, except for point 24 of Article 1 in respect of which they shall take the necessary measures and apply them from 1 October 2018. They shall notify the ECB of the texts and means relating to those measures by 16 March 2018, except for the texts and means relating to the measures in respect of point 24 of Article 1 which they shall notify by 3 September 2018.

This Guideline is addressed to all Eurosystem central banks.