The EBA Clearing Company has introduced a new category of Pre-fund Participants (PFP) to the Euro1 clearing platform and welcomed Deutsche Bundesbank and Österreichische Nationalbank as the first two adopters of PFP status.
Under PFP, newly joining Step2 banks that are neither Euro1 nor Step1 participants may directly and individually settle their daily obligations on Step2, the EBA's pan-European ACH. Unlike full Euro1 participants, PFPs do not extend bilateral credit lines to other banks on the clearing platform nor do they need to appoint a Euro1 settlement bank.
"Pre-fund Participants will fund their position on the clearing platform at their own initiative and for the amount they deem necessary for their Step2 settlement," says Gilbert Lichter, CEO of EBA Clearing. "To that effect, Pre-fund Participants will pay-in central bank funds on a special account at the ECB."
The adoption of the new category follows its recent approval by the ECB governing council.
As of 3 November 2003, the first two Pre-fund Participants on the Euro1 platform will be Deutsche Bundesbank and Österreichische Nationalbank. Pre-fund participation status will be open to all financial institutions in the EU, says the EBA, which expects to see more institutions sign up during 2004.