CCP credit facility within TARGET

Central counterparties (CCPs) are systemically important financial market infrastructures.
CCPs interpose themselves between the original buyers and sellers of financial contracts, ensuring the fulfilment of the obligations under those contracts. As such, the CCP becomes the buyer to every seller and the seller to every buyer, a process known as “clearing”.

Under normal conditions, a CCP’s liquidity inflows and outflows are balanced by the end of the day, so they do not generally encounter liquidity mismatches. However, during periods of severe financial stress, a CCP may face significant liquidity challenges that cannot be resolved through market-based solutions in a timely manner.

To address this risk, the Eurosystem has established a dedicated overnight credit facility within TARGET, known as the CCP credit facility. This serves as a crisis-related liquidity backstop for eligible euro area CCPs. The facility is governed by the TARGET Guideline and operates outside the Eurosystem’s monetary policy implementation framework.

CCP credit facility eligibility criteria

To be eligible for the CCP credit facility, euro area CCPs must meet the specific requirements outlined in Annex I, Part II, Article 10(5) of the TARGET Guideline. These requirements include:

• being ancillary systems within TARGET and authorised as CCPs under the European Market Infrastructure Regulation (EMIR; Regulation (EU) No 648/2012);
• being established in the euro area;
• having access to TARGET intraday credit.

Moreover, CCPs must adhere to safeguards outlined in Decision (EU) 2025/1734 of the European Central Bank on an ongoing basis. This makes sure that only financially sound CCPs with sound liquidity risk management can access the CCP credit facility. As the central bank of issue of the euro, the Eurosystem regularly evaluates compliance with the safeguards using a forward-looking approach.

In accordance with the safeguards, compliance with regulatory requirements established under EMIR – such as those relating to capital, margins, default funds, financial resources and liquidity risk controls – is a necessary condition. 
In addition, the Eurosystem must confirm that euro area CCPs have effective liquidity risk controls to ensure that access to overnight credit, whether through the CCP credit facility or via Eurosystem monetary policy operations (for CCPs authorised as credit institutions under the Capital Requirements Regulation (CRR; Regulation (EU) No 575/2013) features as a funding backstop within the CCP liquidity planning.