Instruction No. 6/2023

Instruction No. 6/2023 Official Gazette No. 2/2023, 2nd Supplement • 2023/03/01 .................................................................................................................................................................................................. Topics Markets :: Money Markets Mod. 99999940/T – 01/14

Index Text of the Instruction Text of the Instruction Subject: Amendment to Instruction No. 3/2015

On March 20, 2023, the consolidation of the TARGET services will be implemented through Instruction No. 16/2022, which will impact counterparties' access to permanent facilities: the Standing Facilities Module (in which access to the two types of permanent facilities cannot be segregated) will cease to exist, and counterparties will have to request the opening of specific accounts in the CLM (Central Liquidity Management) for the settlement of permanent facilities, one for the deposit facility and another for the liquidity lending facility.

Thus, in the 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 January 31, in its current version, the Bank of Portugal determines:

Instruction No. 3/2015 (Official Gazette No. 5, of 15-05-2015) is amended as follows:

1. The expression “TARGET2” is replaced by the expression “TARGET”.
2. The expression “TARGET2-PT” is replaced by the expression “TARGET-PT”.
3. In Article 2, paragraphs 24-b), 46), and 91) are amended, to read as follows: • 24-b) “ECONS Credit”, the credit granted within the framework of the contingency processing referred to in Article 19 and Annex I, Appendix IV, point 3.2, of ECB Guidance 2022/8; • 46) “Intraday Credit”, the intraday credit as defined in Article 2, paragraph 35), of ECB Guidance 2022/8 of the European Central Bank*;

• Guidance (EU) 2022/912 of the European Central Bank of 24 February 2022 on a new generation trans-European automated real-time gross settlement system (TARGET) (OJ L 163, of 17/6/2022, p. 84) • 91) “TARGET”, relating to a new generation trans-European automated real-time gross settlement system (TARGET), governed by ECB Guidance 2022/8;

Instruction No. 6/2023 Official Gazette No. 2/2023 2nd Supplement • 2023/03/01 Topics Markets :: Money Markets .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

4. Article 19, paragraph 6, is amended, to read as follows:

5. At the end of each business day, the aggregate negative balance of the settlement accounts that enter into the fulfillment of minimum reserves, of a counterparty with the Bank, after the completion of end-of-day control procedures, is automatically considered as a request for access (“automatic request”) to the permanent liquidity lending facility. To comply with the requirement set out in Article 18, paragraph 4, counterparties must have deposited at the originating Central Bank (BCN), and at a time prior to the activation of said automatic request, eligible assets in sufficient value to guarantee the transaction. Non-compliance with this access condition is subject to the application of sanctions provided for in Articles 149 to 152. If an automatic request submitted by a counterparty whose access to the Eurosystem monetary policy operations has been limited under Article 153 results in that counterparty exceeding the defined limit, sanctions under Articles 149 to 152 apply to the amount by which the limit is exceeded.

6. Article 22, paragraph 1, is amended, to read as follows:

7. Institutions that meet the eligibility criteria set out in Article 55 of this guidance and that have access to an account with the Bank in TARGET-PT where transactions can be settled, may access the permanent deposit facility. Access to the permanent deposit facility is granted only on TARGET business days, excluding days when TARGET is not available at the end of the day due to a prolonged disruption of TARGET over several business days, as referred to in Article 182-a.

8. Article 55, letter d), is amended, to read as follows: d) Meet the following operational requirements: i. Request for access to Eurosystem monetary policy operations, which may be requested by type of operation (open market operations, permanent liquidity lending facility, and permanent deposit facility); ii. Subscription of relevant contractual documents; iii. 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 the collateral management and operations system (COLMS, regulated by Instruction No. 10/2015); iv. For access to the permanent liquidity lending facility, authorization to participate in COLMS and opening of the respective account in Central Liquidity Management (CLM); v. For access to the permanent deposit facility, opening of the respective account in CLM; the possibility of accessing this facility via COLMS remains for monetary policy counterparties who have it active; vi. Participation in TARGET-PT for the settlement of monetary policy operations;

Instruction No. 6/2023 Official Gazette No. 2/2023 2nd Supplement • 2023/03/01 Topics Markets :: Money Markets .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

vii. For the execution of operations with ECB debt certificates, access to a securities account with the SLT and national CDT, i.e., Interbolsa, either in one's own name or through a custodian.

7. Article 149, paragraph 1, letter d), is amended, to read as follows: d) regarding end-of-day procedures and access conditions to the permanent liquidity lending facility, in the event that an aggregate negative balance of the settlement accounts that enter into the fulfillment of minimum reserves, of a counterparty in TARGET, is recorded after the completion of end-of-day control procedures, and consequently it is considered that this originated an automatic request for access to the permanent liquidity lending facility as provided for in Article 19, paragraph 6, the obligation to present in advance eligible assets sufficient as collateral or, in the case of a counterparty whose access to the Eurosystem monetary policy operations has been limited under Article 158, the obligation to maintain recourse to Eurosystem monetary policy operations within the defined limit;

8. Article 182-a, paragraph 1, letter a), is amended, to read as follows:

9. The ECB may declare that a disruption of the TARGET system that hinders the normal processing of payments may be considered a “prolonged disruption of TARGET over several business days” if: a) The contingency solution referred to in Article 2, point 20), of ECB Guidance 2022/8 is activated as a result of the interruption; and

10. Article 182-b, letter a), is amended, to read as follows: a) The settlement of euro-denominated open market operations provided for in Title III, Chapter 2, of this guidance must not be processed through the contingency solution defined in Article 2, point 20) of ECB Guidance 2022/8. Consequently, the settlement of such operations may be postponed until normal TARGET functioning resumes.

11. In Annex VI-A, II, 5. Letters b), c), and d) are amended, to read as follows: b) An SLT must operate during the daily session referred to in Appendix V of Annex I of ECB Guidance 2022/8 of the European Central Bank1; c) SLTs involved in direct or chain links must allow their respective participants to present instructions for delivery versus payment settlement on the same day through the issuing and/or intermediary SLT (as applicable) to the investor SLT until at least 16:00 Central European Time (CET)2; d) SLTs involved in direct or chain links must allow their respective participants to present instructions for free of payment (FOP) settlement on the same day through the issuing or intermediary SLT (as applicable) to the investor SLT until at least 18:00 CET;

1 ECB Guidance 2022/8 of the European Central Bank of 24 February 2022 on a new generation trans-European automated real-time gross settlement system (TARGET) (OJ L 163 of 17.6.2022, p. 84). 2 The Central European Time zone takes into account the change to Central European Summer Time.

Instruction No. 6/2023 Official Gazette No. 2/2023 2nd Supplement • 2023/03/01 Topics Markets :: Money Markets .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

11. This Instruction enters into force on March 20, 2023.
12. Instruction No. 3/2015 is republished in its entirety, and is available at www.bportugal.pt/instrucao/32015.