BoE Explores Demand to Introduce Synchronization to Renewed RTGS
BoE issued a call for interest from organizations, including fintech firms, to explore the demand for introducing synchronized settlement to the renewed Real-Time Gross Settlement (RTGS) service. Synchronization is referred to as the ability to synchronize cash movements in RTGS with the movement of cash or assets in other systems. BoE believes that this functionality could provide an opportunity to reduce cost and risk, improve efficiency, and support innovative new methods of settlement.
At the heart of synchronization is the concept of atomic settlement. This means that the transfer of two assets is linked in such that it ensures that the transfer of one asset occurs if and only if the transfer of the other asset also occurs—that is, the settlement is conditional. Therefore, the outcome of settlement is either both parties successfully exchanging those assets or no transfer taking place. BoE is focusing on a model, in which the renewed RTGS service could have the functionality required for a trusted third party (the Synchronization Operator) to connect and offer synchronization services to the market. The Synchronization Operator would have permissions to earmark and order the transfer of funds between participating institutions’ accounts in RTGS, but would not hold an account. The service could be used by multiple Synchronization Operators, and, if implemented, the designed functionality would be neutral regarding what asset transfer the fund movements were being synchronized with.
BoE is seeking to work with a small group of organizations to further explore the potential for this functionality. BoE is looking to engage with different types of firms—for example, a potential Synchronization Operator or a potential user who can see the benefit in synchronizing the payments they make or facilitate. Interested parties can indicate their preferred level of engagement on the topic. Level 1 includes all interested parties to complete a questionnaire on Key Survey by September 28, 2018. Level 2 of engagement involves inviting some firms to discuss the topic in further detail with BoE, via an introductory session, one-to-one sessions, and roundtable wrap-up. Parties should indicate on the questionnaire whether they are interested in engaging as a Level 2 firm.
Related Links
Keywords: Europe, UK, PMI, Synchronization, RTGS, Synchronization Operator, BoE
Related Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards