The Bank of England (BoE) has issued a consultation paper seeking views on the central bank’s vision for the next generation of its Real-Time Gross Settlement (RTGS) service.
The BoE’s proposals are designed to respond to a number of key strategic drivers for change over the likely lifespan of the next generation of RTGS. Such drivers include the new RTGS service:
- being capable of responding to the changing structure of the UK financial system. In particular the BoE proposes to expand access to RTGS to non-bank payment service providers, clarify its existing willingness to provide settlement facilities to new providers of financial market infrastructure and deliver much broader direct participation in CHAPS over time;
- recognising that payment system users want simpler and more resilient pathways for their payments. The BoE’s proposes include ensuring that the next generation of RTGS can interoperate directly with a much wider range of payments systems by adopting the international messaging standard ISO 20022, having the technical capacity to operate on a true 24×7 (or near 24×7) basis, and exploring the demand for new functionality allowing systems to synchronise transactions with those in RTGS;
- being capable of interfacing with a range of new technologies being used in the private sector, including distributed ledgers, if/when they achieve critical mass. Among the BoE’s proposals is that the next generation of RTGS should offer a range of more sophisticated tools for CHAPS direct participants to access richer data and control the timing of individual payments, as well as exploiting the latest advances in proven, secure technology to provide a resilient but flexible settlement platform;
- remaining resilient to the increasingly diverse range of threats to continuity of service. The BoE’s proposals include basing the design of the new RTGS on an explicit resilience framework that stresses the primacy of data integrity; and
- to have the capacity to support the future evolution of regulatory and monetary policy tools. The BoE’s proposals include reducing the risk of operational contagion by expanding direct participation of banks and broker-dealers in CHAPS through a combination of requiring direct participation for institutions of systemic importance and providing more cost effective and secure access for smaller firms.
The deadline for responding to the consultation paper is 7 November 2016. A timetable for delivery of the new service will be published in 2017, with the provisional aim of completion in 2020.
View A new RTGS service for the United Kingdom: safeguarding stability, enabling innovation, 16 September 2016