Instruction No. 5/2025

Instruction No. 5/2025
BO No. 5/2025 2nd Supplement • 2025/06/03
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Topics
Markets :: Money Markets
Mod. 99999940/T – 01/14
Index
Text of the Instruction
Article 1.
Article 2.
Article 3.
Article 4.
Article 5.
Article 6.
Article 7.
Article 8.
Article 9.
Article 10.
Article 11.
Article 12.
Article 13.
Article 14.
Article 15.
ELIGIBILITY CRITERIA FOR TITLE SETTLEMENT SYSTEMS AND LINKS BETWEEN TITLE SETTLEMENT SYSTEMS FOR USE IN EUROSYSTEM CREDIT OPERATIONS
Part II
ELIGIBILITY CRITERIA FOR THE USE OF THIRD-PARTY ASSET MANAGEMENT SERVICE PROVIDERS IN EUROSYSTEM CREDIT OPERATIONS
Part III
COMMON CHARACTERISTICS OF THE TERMS AND CONDITIONS FOR PARTICIPATION AS A CORRESPONDENT CENTRAL BANK FOR CREDIT RIGHTS
Part IV
COMMON CHARACTERISTICS OF THE TERMS AND CONDITIONS FOR PARTICIPATION AS AN ASSISTANT CENTRAL BANK FOR CREDIT RIGHTS OTHER PURPOSES FOR THE MOBILIZATION OF COLLATERAL ASSETS
Annex XVI – Contingency Forms in the Context of the ECMS
I – Contact Information
Form II – Request for Marginal Lending Facility in Contingency Form III – Instruction for (De)mobilization of Marketable Assets in Contingency Form IV – Instruction for Cancellation of (De)mobilization of Marketable Assets in Contingency Form V – Instruction for (De)mobilization of Cash as Collateral Asset in Contingency Form VI – Transfer Between Accounts of the Same Counterparty in Contingency Form VIII – Authorized Signatures for Submission of Act on Behalf Requests in a Contingency Scenario Form IX – Message Subscription
Annex XVII – Reporting of Free Assets
Annex XVI – Contingency Forms in the Context of the ECMS
I – Contact Information
Form II – Request for Marginal Lending Facility in Contingency Form III – Instruction for (De)mobilization of Marketable Assets in Contingency Form IV – Instruction for Cancellation of (De)mobilization of Marketable Assets in Contingency Form V – Instruction for (De)mobilization of Cash as Collateral Asset in Contingency Form VI – Transfer Between Accounts of the Same Counterparty in Contingency Form VIII – Authorized Signatures for Submission of Act on Behalf Requests in a Contingency Scenario Form IX – Message Subscription Text of the Instruction Subject: Amending Instruction of Instruction No. 3/2015 Implementation of European Central Bank (ECB) Guideline (EU) 2024/3129, (ECB/2024/22), on the management of collateral assets in Eurosystem credit operations, as amended by European Central Bank Guideline (EU) 2024/3131, (ECB/2024/36), and Guideline (EU) 2024/3132 (ECB/2024/37), which amends European Central Bank Guideline (EU) 2015/510 (ECB/2014/60) on the framework for the implementation of Eurosystem monetary policy, and repeals European Central Bank Guideline (EU) 2024/3130 (ECB/2024/23). Recalling that:

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
(1) Eligible assets for mobilization as collateral assets in Eurosystem credit operations are defined in European Central Bank Guideline (EU) 2015/510 (ECB/2014/60)1 and European Central Bank Guideline ECB/2014/312. (2) The procedures for the mobilization and management of collateral assets currently in force present differences between the national central banks (NCBs) of the Member States whose currency is the euro, and each NCB applies its own practices and manages its own systems. Consequently, counterparties face a diversity of procedures when delivering collateral assets to the Eurosystem. (3) The Eurosystem has defined harmonized rules and provisions for the management of collateral assets and developed the Eurosystem Collateral Management System (ECMS) as the single Eurosystem platform that allows NCBs to receive and turn over collateral assets and cash mobilized by counterparties, at the domestic and cross-border level, for the purposes of securing Eurosystem credit operations and for certain other purposes. (4) However, since the legal requirements for the mobilization of credit rights and additional credit rights (ACR) differ between jurisdictions, NCBs have the possibility of managing the domestic mobilization of these assets outside the ECMS. Furthermore, by their very nature, mortgage-backed securities for retail (RMBD) debt instruments must be mobilized outside the ECMS. (5) In order to align Eurosystem procedures with market-agreed standards for collateral asset management, thereby contributing to the efficiency of collateral asset management across the financial market, the provisions of this instruction aim to follow the relevant rules established in the Single Collateral Management Rulebook for Europe (SCoRE). (6) Following the adoption of Guideline (EU) 2024/3129 (ECB/2024/22) and regarding the operationalization of the ECMS, a) national global collateral systems and individual collateral systems used by NCBs to manage collateral assets will be discontinued and related rules must be repealed; b) settlement procedures and rules governing the cross-border mobilization of collateral assets must be adjusted; c) eligibility criteria for the use of i) title settlement systems (TSS), ii) links between TSS and iii) third-party asset management service providers must be amended; d) debt instruments must have a quantity expressed in nominal amount (NA) to be eligible as collateral assets and comply with market standards for the denomination of securities.

1 European Central Bank Guideline (EU) 2015/510 of 19 December 2014 on the framework for the implementation of Eurosystem monetary policy (General Documentation Guideline) (ECB/2014/60) (OJ L 91 of 2.4.2015, p. 3). 2 European Central Bank Guideline ECB/2014/31 of 9 July 2014 on additional temporary measures concerning Eurosystem refinancing operations and the eligibility of collateral assets and amending Guideline ECB/2007/9 (OJ L 240 of 13.8.2014, p. 28).

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
(7) Marketable debt instruments issued or guaranteed by non-financial corporations for which no credit assessment from an External Credit Assessment Institution (ECAI) is available must cease to be accepted as Eurosystem collateral assets. (8) Greater clarity is needed in the Eurosystem Credit Assessment Framework (ECAF) regarding the acceptance of local and foreign currency ratings by ECAIs. (9) In line with the Eurosystem's commitment to reducing its dependence on external ratings, ratings from NCB Internal Credit Assessment Systems (ICAS), when available, must take priority over ratings from other credit assessment systems for the purposes of determining the eligibility of debtors and guarantors of credit rights, as well as the applicable haircuts. In exercise of the competence attributed to it by Articles 12, 15, 16, and 24 of its Organic Law, approved by Law No. 5/98 of 31 January, the Bank of Portugal approves the following Instruction:

Article 1.
Object
This Instruction amends Bank of Portugal Instruction No. 3/2015 of 15 May.

Article 2.
Amendments

1. In Article 1, paragraph 1 shall read as follows:
   "1. This Instruction establishes uniform rules for the implementation of the Eurosystem single monetary policy.
2. Article 2 is amended as follows:
   a) Point 16(d) is repealed; b) Point 18 is repealed; c) Point 20 is repealed; d) Point 22-a) is repealed; e) In point 23), letter c) shall read as follows:
   "c) Mortgage-backed securities for retail (RMBD) issued by entities established in the Member State of their home NCB;"; f) Point 24 is repealed;

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14 g) Point 25-A) shall read as follows:
"25-a) 'eligible link', an eligible link within the meaning of Article 2, point 26) of Guideline (EU) 2024/3129] (ECB/2024/22);"; h) Point 25-b shall read as follows:
"25-b) 'eligible title settlement system (eligible TSS)', an eligible TSS within the meaning of Article 2, point 27), of Guideline (EU) 2024/3129 (ECB/2024/22);"; i) Point 54) shall read as follows:
"54) 'Additional Cover Value', a procedure related to the application of variation margins implying that, if the value of collateral assets mobilized by a counterparty, as is usual in their valuation, is lower than a certain level (insufficient collateral provision), the Eurosystem will require the counterparty to deliver additional eligible assets or cash."; j) The following point 72-a) is added:
"72-a) 'Collateral Asset Pooling System' (pooling), a collateral asset pooling system within the meaning of Article 2, point 44) of Guideline (EU) 2024/3129 (ECB/2024/22);"; k) Point 73 is repealed; l) Point 76-a) is repealed; m) Point 81 is repealed; n) Point 95 is repealed;
3. In Article 15, paragraph 1, letter c) shall read as follows:
"c) When applicable in the case of letter b), provide adequate collateral in the form of additional cover values, by means of eligible assets or cash, of sufficient value. The mobilization of cash as a collateral asset may also be initiated by an NCB in accordance with Article 11 of Guideline (EU) 2024/3129 (ECB/2024/22).";
4. In Article 19, paragraph 1 shall read as follows:
"1. Institutions that meet the eligibility criteria set out in Article 55 and that have access to an account with the Bank in TARGET-PT (the national component of TARGET, governed by Instruction No. 16/2022) where transactions can be settled may access the permanent lending facility."
5. In Article 20, paragraph 1 shall read as follows:
"1. The term of the credit granted under the permanent lending facility is overnight. The credit must be repaid the following day when TARGET is open."

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
6. In Article 49, paragraph 2 shall read as follows:
"2. Payment orders relating to counterparties' participation in open market operations for liquidity lending or for the use of the permanent lending facility are settled only after the final transfer of eligible assets as collateral for the operation."
6. In Article 50, paragraph 1 shall read as follows:
"1) The Eurosystem must attempt to settle transactions related to its open market operations with all counterparties that have provided sufficient eligible assets as collateral, simultaneously in all Member States whose currency is the euro, in accordance with the settlement procedures specified in Article 9 of Guideline (EU) 2024/3129 (ECB/2024/22). However, due to operational constraints and technical characteristics (for example, relating to TSS), the time of day when open market operations are settled may differ between Member States whose currency is the euro."
7. In Article 51, paragraph 1 shall read as follows:
"1) The Eurosystem must attempt to settle open market operations executed through normal auctions on the first subsequent day to the transaction date when TARGET is open."
8. Article 53 is amended as follows:
a) Paragraph 1 shall read as follows:
"1) Without prejudice to the requirements established in this chapter and Guideline (EU) 2024/3129 (ECB/2024/22), NCBs, or the ECB, may establish, in the contractual or regulatory acts applied by them, additional provisions regarding the settlement of the monetary policy instrument in question." b) Paragraph 2 shall read as follows:
"2) End-of-day procedures are specified in the documentation relating to the regime applicable to TARGET and in Guideline (EU) 2024/3129 (ECB/2024/22).";
9. Article 55 is amended as follows:
i. For access to Eurosystem open market operations through auction, authorization to participate in the Bank's auction information system (SITENDER, regulated by Instruction No. 2/2016) and to the Eurosystem Collateral Management System (Eurosystem Collateral Management System - ECMS), regulated by this instruction;
ii. For access to the permanent lending facility, authorization to participate in the ECMS;

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
iii. For access to the permanent deposit facility, opening of the respective account in Central Liquidity Management (CLM);
10. Article 58 is amended as follows:
a) Paragraph 1 shall read as follows:
"1) The Eurosystem must apply a single framework for eligible assets, common to all Eurosystem credit operations, as provided for in this guideline, and must manage these assets in accordance with the provisions of Guideline (EU) 2024/3129 (ECB/2024/22)."; b) Paragraph 4 shall read as follows:
"4) When counterparties deliver eligible assets as collateral, the home NCB must use global collateral to keep these assets in compliance with Article 3 of Guideline (EU) 2024/3129 (ECB/2024/22).";
11. In Article 61, paragraph 1 shall read as follows:
"1) The ECB publishes a list of eligible marketable assets on its website, according to the methodologies indicated therein, which is updated every day when TARGET is operational. Marketable assets included in the list of eligible marketable assets become eligible for Eurosystem credit operations after their publication on the list. As an exception to this rule, in the specific case of debt instruments with same-day settlement, the Eurosystem may grant eligibility from the date of issuance."
12. In Article 62, the following paragraph 4 is added:
"4) To be eligible, debt instruments must have a quantity expressed in nominal amount (NA).";
13. Article 66 is amended as follows:
a) Paragraph 1 shall read as follows:
"1) To be eligible, debt instruments must be issued in the EEA by a CSD that operates i) an eligible TSS or ii) a TSS with an eligible link to an eligible TSS."; b) Paragraph 2 is repealed. c) In paragraph 3, letter a) shall read as follows:
"a) International debt instruments issued in the form of bearer global debt certificates must be issued in the form of 'new global notes' (NGN) and must be deposited with a common safekeeper that is a CSDI or a CSD that operates i) an eligible TSS or ii) a TSS with an eligible link to an eligible TSS. This obligation does not apply to international debt instruments issued, before 1 January 2007, in the form of bearer global debt certificates as 'classical global notes', nor to 'fungible tap issues' of such securities with the same ISIN code, regardless of the date of continuous issuance."

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
14. Article 67 is amended as follows:
a) Paragraph 1 shall read as follows:
"1) The settlement procedures applicable to the mobilization of marketable assets as collateral assets are specified in Guideline (EU) 2024/3129 (ECB/2024/22). To be eligible, debt instruments must be transferable in book-entry form and settled under the law of a Member State whose currency is the euro, so that the validity and enforcement of collateral assets are subject to the law of a Member State whose currency is the euro."; b) Paragraph 1-A is repealed; c) Paragraph 2 is repealed.
15. Article 70 is amended as follows:
a) Paragraphs 1 and 2 shall read as follows:
"1) To be eligible, debt instruments must be issued by an issuer established in the EEA or in a G-10 country not belonging to the EEA, without prejudice to the exceptions provided for in paragraphs 3-A to 6 of this Article and in Article 81-A, paragraph 4. For marketable assets with more than one issuer, this requirement applies to each issuer.
2) To be eligible, guarantors of debt instruments must be established in the EEA, unless a guarantee is not used to establish compliance of that debt instrument with the credit quality requirements for specific debt instruments, subject to the exceptions provided for in paragraphs 3-A and 4. The possibility of using a guarantor rating from an ECAI to determine compliance with the relevant credit quality requirements for specific debt instruments is provided for in Article 84.";
b) Paragraph 3 is repealed.
16. Article 86 shall read as follows:
"Article 86.
Local and Foreign Currency Ratings
For the purposes of issuer and guarantor ratings assigned by ECAIs, foreign currency ratings must be accepted. If the asset is denominated in the issuer's national currency, local currency issuer ratings must also be accepted. If the asset is denominated in the guarantor's national currency, local currency guarantor ratings must also be accepted."
17. Article 87 is amended as follows:
a) Paragraph 1 shall read as follows:

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
"1) In the absence of an appropriate credit assessment by an accepted ECAI regarding the issuance, the issuer, or the guarantor, as provided for in Article 84, letters a) or b), the Eurosystem must carry out an implicit credit assessment of marketable assets (with the exception of securitized debt instruments), in accordance with the rules provided for in paragraph 2. This implicit credit assessment must meet the Eurosystem's credit quality requirements."; b) Paragraphs 3 and 4 are repealed.

Instruction No. 5/2025 BO No. 5/2025 2nd Supplement • 2025/06/03 Topics Markets :: Money Markets
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Mod. 99999940/T – 01/14
18. Article 98 shall read as follows:
"Article 98.
Handling Procedures
Credit rights must be treated in accordance with the Eurosystem procedures defined in the relevant national documentation of NCBs, if applicable, in accordance with Guideline (EU) 2024/3129 (ECB/2024/22).";
19. Article 109 is amended as follows:
a) Paragraph 1 shall read as follows:
"1) The Eurosystem assesses the credit quality of credit rights based on the credit quality of debtors or guarantors provided by the systems or credit quality assessment sources determined in accordance with the provisions of Article 110."; b) Paragraph 3 shall read as follows:
"3) Regarding debtors or guarantors of credit rights mobilized as collateral assets, counterparties are responsible for ensuring that they use the most recent credit assessments available in their systems or credit quality assessment sources, determined in accordance with the provisions of Article 110.";
20. Article 110 is amended as follows:
a) The heading shall read as follows:
"Determination of the system or source of credit quality assessment"; b) The following paragraph 1 is added:
"-1. Internal Credit Assessment Systems (ICAS) of NCBs accepted by the Eurosystem according to the general acceptance criteria set out in Part IV, Title V, must be used as the primary source for credit quality assessment of debtors and guaran"