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Home > Markets and Payments > Access to accounts in RTGS
 

Access to accounts in RTGS

Access to reserves and settlement accounts

There are two main functions for accounts held in the Bank’s Real-Time Gross Settlement (RTGS) system – holding reserves and settlement of interbank obligations. If an account holder is also a direct participant of a payment system, their reserves account is used for settlement in the relevant system.

  • Holding reserves: reserves accounts are effectively sterling current accounts for participants in the Sterling Monetary Framework (SMF). Account holders must be banks or building societies authorised to take deposits in the UK, PRA-authorised investment firms, or central counterparties.
  • Settlement: accounts can be used to settle obligations arising from participation in payments systems in central bank money. A firm must be eligible for, and hold, a reserves account or be a ‘financial market infrastructure’ that provides a function that is systemically important, or an E-Money or Payment Institution authorised in the UK by the Financial Conduct Authority. The applicant must also meet criteria for being a direct participant of the relevant systems.
  • For direct participants in Bacs and Faster Payments, special accounts have been created that hold a portion of their reserves balance to cover the maximum possible net debit positions they could reach in those systems. The balance forms part of their overall reserves balance and is remunerated at the same rate. If a participant defaults, the cash set aside can be used to complete settlement. This eliminates credit risk between direct participants and removes the mutualised risk that was inherent in the previous arrangements.

For more details, including how to apply and full eligibility criteria see the Key Resources below.

Settlement services

The Bank permits certain direct participants of payment systems to settle obligations across accounts held at the Bank, including the payment system embedded within the CREST securities settlement system. Such settlement at a central bank (rather than a commercial bank) mitigates two risks – credit risk on the settlement agent and disruption risk arising from the failure of the settlement agent.

The Bank provides a standardised automated settlement service for net settlement. When deciding whether to act as settlement agent, the Bank will consider whether the system has been recognised for statutory supervision by the Bank, or for unrecognised systems, the risk reduction benefits. For more details, see the Bank’s policy document for settlement accounts under Key Resources below.

Requirements for use of RTGS accounts

Holders of accounts in RTGS must enter into Terms and Conditions. Annexes cover particular purposes for which the account is used. Copies of the standard Terms and Conditions, including annexes, are under Key Resources. Agreements that reflect the nature of the service provided are in place with the operators of payment systems that settle in RTGS.

RTGS account holders can use an online system – known as an Enquiry Link – to manage their accounts in RTGS, and for CHAPS payment queues management (the central scheduler). A detailed RTGS Reference Manual is available for RTGS account holders.

Tariff

The Bank operates the RTGS system on a full cost recovery basis over a four-year period. There are separate tariffs, paid by participants, for each system. Each tariff is reviewed annually and set in advance for the coming year.

The tariffs for CHAPS and CREST take the form of an annual membership fee for each participant and a per-item fee reflecting volume settled within RTGS. For the retail systems, the charge takes the form of an annual charge per participant; there is no per-item fee from the Bank.

For more details, see the Key Resources below.

RTGS Mandate and Annexes

 
The RTGS Reference Manual can be found here (RTGS participants only).
 

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