Payments Academy
Code 05 in the RTGS Directory PAYMENT OPERATIONS STARTED LIVE 01 Code 05 in the RTGS Directory - direct participant ACTIVE 02 Code 06 in the RTGS Directory - indirect participant QUEUED 03 Indirect participant never touches T2 - directly. QUEUED 04 Code 08 in the RTGS Directory - addressable BIC holder QUEUED 05 Branch - never sends a message to T2 itself. QUEUED 06 Wrong agent addressing - bank that confuses the codes will address QUEUED A direct participant, code 05 in the RTGS Directory, is a bank that holds its own RTGS Dedicated Cash Account in T2 and connects directly to the system through ESMIG. Step 1 of 6 Code 05 in the RTGS Directory STARTED Code 05 in the RTGS Directory direct participant ACTIVE Code 06 in the RTGS Directory indirect participant QUEUED Indirect participant never touches T2 directly. QUEUED Code 08 in the RTGS Directory addressable BIC holder QUEUED Branch never sends a message to T2 itself. QUEUED Wrong agent addressing bank that confuses the codes will address QUEUED A direct participant, code 05 in the RTGS Directory, is a bank that holds its own RTGS Dedicated Cash Account in T2 and connects directly to the system through ESMIG.
Code 06 in the RTGS Directory PAYMENT OPERATIONS IN PROGRESS LIVE 01 Code 05 in the RTGS Directory - direct participant DONE 02 Code 06 in the RTGS Directory - indirect participant ACTIVE 03 Indirect participant never touches T2 - directly. QUEUED 04 Code 08 in the RTGS Directory - addressable BIC holder QUEUED 05 Branch - never sends a message to T2 itself. QUEUED 06 Wrong agent addressing - bank that confuses the codes will address QUEUED An indirect participant, code 06 in the RTGS Directory, is a bank that has no RTGS Dedicated Cash Account of its own and settles through a direct participant. Step 2 of 6 Code 06 in the RTGS Directory IN PROGRESS Code 05 in the RTGS Directory direct participant DONE Code 06 in the RTGS Directory indirect participant ACTIVE Indirect participant never touches T2 directly. QUEUED Code 08 in the RTGS Directory addressable BIC holder QUEUED Branch never sends a message to T2 itself. QUEUED Wrong agent addressing bank that confuses the codes will address QUEUED An indirect participant, code 06 in the RTGS Directory, is a bank that has no RTGS Dedicated Cash Account of its own and settles through a direct participant.
Indirect participant never touches T2 PAYMENT OPERATIONS IN PROGRESS LIVE 01 Code 05 in the RTGS Directory - direct participant DONE 02 Code 06 in the RTGS Directory - indirect participant DONE 03 Indirect participant never touches T2 - directly. ACTIVE 04 Code 08 in the RTGS Directory - addressable BIC holder QUEUED 05 Branch - never sends a message to T2 itself. QUEUED 06 Wrong agent addressing - bank that confuses the codes will address QUEUED The indirect participant never touches T2 directly. Step 3 of 6 Indirect participant never touches T2 IN PROGRESS Code 05 in the RTGS Directory direct participant DONE Code 06 in the RTGS Directory indirect participant DONE Indirect participant never touches T2 directly. ACTIVE Code 08 in the RTGS Directory addressable BIC holder QUEUED Branch never sends a message to T2 itself. QUEUED Wrong agent addressing bank that confuses the codes will address QUEUED The indirect participant never touches T2 directly.
Code 08 in the RTGS Directory PAYMENT OPERATIONS IN PROGRESS LIVE 01 Code 05 in the RTGS Directory - direct participant DONE 02 Code 06 in the RTGS Directory - indirect participant DONE 03 Indirect participant never touches T2 - directly. DONE 04 Code 08 in the RTGS Directory - addressable BIC holder ACTIVE 05 Branch - never sends a message to T2 itself. QUEUED 06 Wrong agent addressing - bank that confuses the codes will address QUEUED An addressable BIC holder, code 08 in the RTGS Directory, is a BIC that can be addressed in a payment, but that has no direct technical connection to T2 and no RTGS Dedicated Cash Account. Step 4 of 6 Code 08 in the RTGS Directory IN PROGRESS Code 05 in the RTGS Directory direct participant DONE Code 06 in the RTGS Directory indirect participant DONE Indirect participant never touches T2 directly. DONE Code 08 in the RTGS Directory addressable BIC holder ACTIVE Branch never sends a message to T2 itself. QUEUED Wrong agent addressing bank that confuses the codes will address QUEUED An addressable BIC holder, code 08 in the RTGS Directory, is a BIC that can be addressed in a payment, but that has no direct technical connection to T2 and no RTGS Dedicated Cash Account.
Branch: reachable PAYMENT OPERATIONS IN PROGRESS LIVE 01 Code 05 in the RTGS Directory - direct participant DONE 02 Code 06 in the RTGS Directory - indirect participant DONE 03 Indirect participant never touches T2 - directly. DONE 04 Code 08 in the RTGS Directory - addressable BIC holder DONE 05 Branch - never sends a message to T2 itself. ACTIVE 06 Wrong agent addressing - bank that confuses the codes will address QUEUED The branch is reachable, but it never sends a message to T2 itself. Step 5 of 6 Branch: reachable IN PROGRESS Code 05 in the RTGS Directory direct participant DONE Code 06 in the RTGS Directory indirect participant DONE Indirect participant never touches T2 directly. DONE Code 08 in the RTGS Directory addressable BIC holder DONE Branch never sends a message to T2 itself. ACTIVE Wrong agent addressing bank that confuses the codes will address QUEUED The branch is reachable, but it never sends a message to T2 itself.
Wrong agent addressing PAYMENT OPERATIONS COMPLETE LIVE 01 Code 05 in the RTGS Directory - direct participant DONE 02 Code 06 in the RTGS Directory - indirect participant DONE 03 Indirect participant never touches T2 - directly. DONE 04 Code 08 in the RTGS Directory - addressable BIC holder DONE 05 Branch - never sends a message to T2 itself. DONE 06 Wrong agent addressing - bank that confuses the codes will address ACTIVE A bank that confuses the codes will address the payment to the wrong agent and the payment will fail. Step 6 of 6 Wrong agent addressing COMPLETE Code 05 in the RTGS Directory direct participant DONE Code 06 in the RTGS Directory indirect participant DONE Indirect participant never touches T2 directly. DONE Code 08 in the RTGS Directory addressable BIC holder DONE Branch never sends a message to T2 itself. DONE Wrong agent addressing bank that confuses the codes will address ACTIVE A bank that confuses the codes will address the payment to the wrong agent and the payment will fail.

Key points of this lesson, in order.

0:00 / 3:33 Step 1 of 6

Participation Types: Direct, Indirect, Multi-Addressee and Addressable BIC (05, 06, 07, 08)

Addressing Payments in T2, Lesson 3 of 7, Narration 3:33, D05 Domestic payment systems

Indirect participantDirect participantMulti-addressee

What you will learn

Your objective. By the end of this lesson, you will be able to explain participation types: direct, indirect, multi-addressee and addressable BIC (05, 06, 07, 08). A direct participant, code 05 in the RTGS Directory, is a bank that holds its own RTGS Dedicated Cash Account in T2 and connects directly to the system through ESMIG.

Why it matters. This matters because the rail decides how fast the money moves, what it costs, when it settles and what can go wrong. Choosing the wrong rail is a product and an operations failure.

Chapter objective: Learner explains addressing in T2, distinguishes Direct, Indirect, Multi-addressee and Addressable BIC participation, and describes how the BAH and the instructed agent differ in routing. Learner uses real BIC examples and payment amounts to show how addressing works in practice.

Key learning points

  • Code 05 in the RTGS Directory
  • Code 06 in the RTGS Directory
  • Indirect participant never touches T2
  • Code 08 in the RTGS Directory
  • Branch: reachable
  • Wrong agent addressing

Key terms

Indirect participant: A bank or institution that uses a payment system through a direct participant, without holding its own settlement account.

Direct participant: A bank or institution that holds an account in a payment system and sends and receives payments directly.

Multi-addressee: A payment system arrangement where one participant, usually a bank, acts as the addressee for payments to several other institutions, such as its branches or subsidiaries.

Payment flow diagram showing Participation Types: Direct, Indirect, Multi-Addressee and Addressable BIC (05, 06, 07, 08).

Practise this lesson

Exercise

Decide which settlement model fits the scenario in this lesson and explain why.

Use the settlement models, the liquidity trade-off and the finality rules in this lesson.

  1. What to do. Name the model, state when settlement becomes final, and explain what happens if the sending bank does not have enough liquidity.

Correct result. Real time gross settlement settles each payment individually in central bank money with immediate finality, but it needs liquidity for every payment. Deferred net settlement nets payments and settles the net position, which needs less liquidity but leaves settlement risk until the net settles.

Why. Settlement is where money actually moves. The model decides the risk, the liquidity need, and when the payment is truly final.

Check your understanding

Practice question

Which of the following best describes participation types: direct, indirect, multi-addressee and addressable BIC (05, 06, 07, 08)?

Takeaway and next step

What to remember

It is listed in the directory so that other banks can address payments to it, but the settlement always happens on the direct participant RTGS DCA.

Follow EUR 10 through every stage, from instruction to beneficiary credit, and note where it can stop.

Open the Payment Lifecycle Simulator →

Builds on "The RTGS Directory and CRDM Common Reference Data Management".

Transcript and full text

Show transcript

A direct participant, code 05 in the RTGS Directory, is a bank that holds its own RTGS Dedicated Cash Account in T2 and connects directly to the system through ESMIG. It sends and receives its own payments, it manages its own liquidity, and it is responsible for its own settlement. Deutsche Bank in Frankfurt, BIC DEUTDEFFXXX, is a direct participant, and a EUR 10 million payment from Deutsche Bank settles on the Deutsche Bank RTGS DCA. Direct participation is the full form of membership, and it is the type that most large banks choose, because it gives them control over timing, liquidity and queues. An indirect participant, code 06 in the RTGS Directory, is a bank that has no RTGS Dedicated Cash Account of its own and settles through a direct participant. It is listed in the directory so that other banks can address payments to it, but the settlement always happens on the direct participant RTGS DCA. A small regional bank in Italy that settles through UniCredit, BIC UNCRITMMXXX, is an indirect participant, and a EUR 50,000 payment to that bank settles on the UniCredit RTGS DCA, with UniCredit then crediting the small bank in its own books. The indirect participant never touches T2 directly. A multi-addressee, code 07 in the RTGS Directory, is a branch or a group entity that a direct participant authorises to send and receive payments directly to and from T2, using the direct participant RTGS Dedicated Cash Account. The multi-addressee holds no RTGS DCA of its own, and it has its own BIC for addressing, but every payment it sends or receives settles on the direct participant account. Commerzbank Madrid, BIC COBAESMXXXX, can act as a multi-addressee of Commerzbank Frankfurt, BIC COBADEFFXXX, and a EUR 250,000 payment it sends settles on the Frankfurt RTGS DCA, not on any Madrid account. An addressable BIC holder, code 08 in the RTGS Directory, is a BIC that can be addressed in a payment, but that has no direct technical connection to T2 and no RTGS Dedicated Cash Account. It is usually a branch or a subsidiary that receives payments through a direct participant, which credits the funds in its own books after settlement. A branch of a French bank in Lyon, with its own BIC, may be an addressable BIC holder settled through the Paris head office, and a EUR 20,000 payment to that branch settles on the head office RTGS DCA. The branch is reachable, but it never sends a message to T2 itself. The four codes matter because a payment engine must treat each type differently. A payment to a direct participant, code 05, settles on the payee own account, and the instructed agent is the payee bank itself. A payment to an indirect participant, code 06, or to an addressable BIC, code 08, settles on the direct participant account, and the instructed agent is that direct participant, not the named payee BIC. A payment from a multi-addressee, code 07, is sent by the branch BIC, but the instructing agent is the direct participant that holds the account. A bank that confuses the codes will address the payment to the wrong agent and the payment will fail.

A direct participant, code 05 in the RTGS Directory, is a bank that holds its own RTGS Dedicated Cash Account in T2 and connects directly to the system through ESMIG. It sends and receives its own payments, it manages its own liquidity, and it is responsible for its own settlement. Deutsche Bank in Frankfurt, BIC DEUTDEFFXXX, is a direct participant, and a EUR 10 million payment from Deutsche Bank settles on the Deutsche Bank RTGS DCA. Direct participation is the full form of membership, and it is the type that most large banks choose, because it gives them control over timing, liquidity and queues.

An indirect participant, code 06 in the RTGS Directory, is a bank that has no RTGS Dedicated Cash Account of its own and settles through a direct participant. It is listed in the directory so that other banks can address payments to it, but the settlement always happens on the direct participant RTGS DCA. A small regional bank in Italy that settles through UniCredit, BIC UNCRITMMXXX, is an indirect participant, and a EUR 50,000 payment to that bank settles on the UniCredit RTGS DCA, with UniCredit then crediting the small bank in its own books. The indirect participant never touches T2 directly.

A multi-addressee, code 07 in the RTGS Directory, is a branch or a group entity that a direct participant authorises to send and receive payments directly to and from T2, using the direct participant RTGS Dedicated Cash Account. The multi-addressee holds no RTGS DCA of its own, and it has its own BIC for addressing, but every payment it sends or receives settles on the direct participant account. Commerzbank Madrid, BIC COBAESMXXXX, can act as a multi-addressee of Commerzbank Frankfurt, BIC COBADEFFXXX, and a EUR 250,000 payment it sends settles on the Frankfurt RTGS DCA, not on any Madrid account.

An addressable BIC holder, code 08 in the RTGS Directory, is a BIC that can be addressed in a payment, but that has no direct technical connection to T2 and no RTGS Dedicated Cash Account. It is usually a branch or a subsidiary that receives payments through a direct participant, which credits the funds in its own books after settlement. A branch of a French bank in Lyon, with its own BIC, may be an addressable BIC holder settled through the Paris head office, and a EUR 20,000 payment to that branch settles on the head office RTGS DCA. The branch is reachable, but it never sends a message to T2 itself.

The four codes matter because a payment engine must treat each type differently. A payment to a direct participant, code 05, settles on the payee own account, and the instructed agent is the payee bank itself. A payment to an indirect participant, code 06, or to an addressable BIC, code 08, settles on the direct participant account, and the instructed agent is that direct participant, not the named payee BIC. A payment from a multi-addressee, code 07, is sent by the branch BIC, but the instructing agent is the direct participant that holds the account. A bank that confuses the codes will address the payment to the wrong agent and the payment will fail.

Full lesson text (all scenes)

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