Oversight of Market Infrastructures

Payment systems are key elements in economic and financial activity on both a national and international level, and therefore it is vital to ensure their smooth running. The available means to ensure this include oversight, one of the functions assigned to the Banco de España in its Law of Autonomy, of 1 June 1994.

The main objective of oversight is to guarantee payment systems are secure and function efficiently. To this end, the Banco de España carries out certain activities using a wide range of instruments. The way oversight is developed is explained in the document "The Banco de España and the oversight of payment systems".

Although we speak of the oversight of payment systems in general, we are not just referring to TARGET-Banco de España and the National Electronic Clearing System (SNCE) - the two payment systems that exist in Spain, but also to other elements, such as bank cards, the security of payment instruments and collaboration with other central banks for the cooperative oversight of international payment systems.

The oversight activities carried out by the Banco de España are regularly published in the Supervision Report. This report also describes any novelties that have occurred in Spanish payment systems.

Article 250 of Law 6/2023, of March 17, on Securities Markets and Investment Services, provides that, under international standards and European Union Regulation on central counterparties, central securities depositories and other financial-market infrastructures, the National Securities Market Commission (CNMV) and Banco de España shall ensure that the functioning of national securities clearing and settlement systems preserve the stability of the financial system as a whole. To this end, these authorities shall assess the degree to which Spanish market infrastructures procedures are adapted to best practices and international recommendations, and shall draw up and publish a biennial report.

Since 2007 the Spanish market was involved in a significant process for reforming the Securities Clearing, Settlement and Registration System (henceforth, the “reform”) which finalised in September 2017 with the migration of Iberclear-ARCO to TARGET2-Securities. The main reasons for this reform were the harmonisation with the rest of EU systems, the adaptation to the new European regulations in this area, and incorporation of Iberclear to TARGET2-Securities.

Banco de España acted as a catalyst in this ambitious initiative, with strong involvement from the authorities, market infrastructures and participating financial institutions.

After the reform, the securities market infrastructures in Spain are Iberclear, the central securities depository that operates the securities settlement system ARCO, and BME Clearing, the central counterparty.