INTERBOLSA and SITEME

Two securities settlement systems are available in Portugal in two central securities depositories: INTERBOLSA and SITEME.

INTERBOLSA

INTERBOLSA – Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, SA (company responsible for the management of settlement systems and central securities depository systems) is used by the market for the physical settlement of operations involving shares, bonds and other securities. It is also used by Banco de Portugal to settle Eurosystem credit operations collateralised by Treasury Bonds and privately issued securities. In addition to its function as Central Securities Depository (registration, deposit and custody of securities) and as Settlement System, INTERBOLSA also plays the role of National Numbering Agency.
 
Two different systems may be used for the physical settlement of securities for payment in euros and for the calculation of the financial amounts of the operations:

• The general settlement system processes all operations twice a day (daily and nightly cycle), settles stock exchange operations, operations conducted in other regulated markets, in non-regulated markets, OTC and FOP.
• The real-time settlement system is used for movements and calculations of immediate effect operations, in which the central bank or the futures market management entity is one of the participants. It is also used in “over-the-counter” operations and in the administrative transfer of securities.

Intraday settlement – delivery versus payment (DVP) is possible in operations with Banco de Portugal and stock exchange operations during operating hours – from 8:30 a.m. to 4:30 p.m. for all market operations and from 6 a.m. to 5 p.m. for operations involving Banco de Portugal.
 
Financial settlement with DVP ensures that the transfer of the securities is final only when payment is made by the buyer. Securities are transferred to the account of the buyer and are blocked until the TARGET2, operated by the Eurosystem, confirms successful payment. In the case of non-payment, the operation is cancelled and the securities are returned to the seller. The risk of payment failure is minimised through intraday credit facilities inherent to the payment system.
 
Settlement risk is controlled by netting procedures and by the activity of LCH.Clearnet SA as central counterparty of Euronext Lisbon. LCH.Clearnet SA acts as clearing house and central counterparty of the operations conducted in the markets of the NYSE/Euronext group, including Euronext Lisbon, in spot and derivative markets. In the performance of its tasks as clearing house and central counterparty, LCH.Clearnet SA ensures the registration, clearing, settlement, collateralisation and risk control of the operations conducted in Euronext Lisbon.

SITEME

SITEME - Market Electronic Transfer System – is a securities settlement system held by Banco de Portugal (including a central securities depository  whose legal structure is defined in Decree-Law No 22/99 of 28 January), and managed by the Market and Reserve Management Department. This system is used by Banco de Portugal to settle its own operations, Treasury Bills-related operations in the name of the Treasury, operations between credit institutions, and any other operation involving money market securities deposited with the Central. 

Treasury Bills are presently the single securities deposited with SITEME. Commercial paper, ECB debt certificates (no such securities have been issued so far), and other money market marketable securities may also be deposited with the SITEME central securities depository. The institutions eligible for monetary policy operations and other entities authorised by Banco de Portugal may participate in SITEME.
 
SITEME is a model-1 real-time DVP system (it processes transfer orders, on an individual basis, i.e. order by order, transferring securities from the seller to the buyer with finality, while transferring funds from the buyer to the seller) that ensures intra-day settlement with finality in all operations. Security transfers (and property rights) are processed through securities accounts held with SITEME in the name of the respective owners.
 
Financial settlement of security operations in SITEME is processed by the TARGET2 payment system.
 
Concomitantly, Banco de Portugal uses the securities infra-structures (SITEME and INTERBOLSA) to settle assets used by Portuguese counterparties to collateralise Eurosystem’s credit operations, i.e. in monetary policy and intra-day credit operations, the latter associated with payment systems. 

Banco de Portugal, when assuming the role of correspondent central bank within the scope of the Correspondent Central Banking Model, also accepts to transfer securities from the accounts of custodian banks with SITEME and INTERBOLSA to its own accounts with these two systems, thus allowing other Eurosystem’s national central banks to grant credit to their counterparties.