Page 92 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

For example, different from a PSP that settles vis-à-vis other PSPs, an operator of another payments system
generally only settles in the RTGS system the final balances of their participants. Hence, on one hand an
operator may only need discrete access to the RTGS system (e.g., to settle the balances of each settlement
cycle, which may be one or few per day).
13
In another example, an operator of a retail payments infrastructure will not normally undertake credit risks
vis-à-vis its participants, and will only settle the outcome of a settlement cycle once it has received all the
necessary funds from participants with a debit position at the end of that cycle, in order to credit those funds
to participants with a credit position at the end of the cycle. For this reason, an operator will only rarely need
to use features of the RTGS system such as payment instruction queuing, or using intraday credit from the
central bank.
Worldwide trends on the issues described in this Section of the report are explored in Section V. Likewise,
these aspects are further illustrated with specific country cases in Annex I.

4 Legal & regulatory, ownership and governance aspects

Access to payment infrastructures is regulated in some form in the vast majority of countries. Access issues
may be provided for in laws, general regulations and/or rules that are specific to the relevant payments
infrastructure.

The law(s) and/or regulation(s) that refers to access to a given payments infrastructure may state that access to
that infrastructure is confined to banks only, or to banks and a limited set of licensed and regulated non-bank
financial institutions (NBFIs). In some cases the applicable law(s) or regulation(s) will not limit access directly
as such, but may require for a PSP that wishes to become a direct participant of a payments infrastructure to
hold a settlement account at the national central bank. Access to a settlement account at the central bank
may in turn be limited to banks only and to selected NBFIs. In other cases, central banks that operate a RTGS
system may be forbidden by local laws to act as liquidity providers for unregulated financial entities. 14
The requirement to have a settlement account at the central bank is most common in the case of RTGS systems.
All around the world, these systems settle in the accounts that system participants hold at the central bank
(i.e., also referred as "central bank money") as this is widely recognized as a safe practice for systemically
important payment systems.

Other payment infrastructures including ACHs and payment cards switches very often settle the final participant
balances of each of their settlement cycles in central bank money as well. Hence, a PSP that does not have a
settlement account at a central bank but that is a direct participant of the ACH or the card switch will most
likely end up being sponsored into clearing and settlement. In other cases, direct participation in the ACH or
switch of a PSP lacking such an account will simply not be allowed.

A. System access rules

Payment infrastructures generally have rules that state the specific criteria to be met by any PSP that wishes
to become a direct participant. Access criteria typically include technical, financial and other requirements.

Technical requirements normally entail having a robust internal technological infrastructure to connect with
the payments infrastructure, ensuring operational reliability and business continuity, adequate handling of anti-

13 In some systems, however, the operator may need more continuous access to the RTGS system to, for example, manage collat-
eral in cash posted by its participants and which is deposited at their account with the central bank.
14 Depending on the specific system and its design, this may make the participation of such entities impossible from a practical
perspective

82