Payments are essential to the UK’s economy. Most payments are made through payment systems. We have been acting as a settlement agent for payment systems since the nineteenth century. We are currently in the definition phase of a renewal programme to deliver the next generation of our settlement service, which supports our role as settlement agent.
Find out more about what payment systems are and how they work:
Payment Systems Regulator
What is a payment system?
Payment systems are a set of common rules and procedures, which support the transfer of funds between people, businesses and financial institutions. Most payment systems are managed by operators, and supported by one or more infrastructure providers of hardware, software, and communication networks. Some financial institutions have direct access to each payment system and provide payment services to their customers.
Why is a settlement agent necessary?
Not all accounts are held at the same payment service provider, so when a customer makes a payment to a business that has an account with a different provider, the customer’s provider owes the business’s provider the value of the payment. This creates a level of risk, so a payment system requires an intermediary, known as a settlement agent, to use for the final settlement of funds between providers.
Banks and other institutions can hold accounts with us, which are used to settle money moved between them. We provide these accounts to support our mission of maintaining monetary and financial stability. There is a financial stability advantage for a settlement agent being a central bank like the Bank of England. As we are financially supported by the Government, this removes the risk of account holders losing money held in, or moved between, accounts held with us.
We operate the real-time gross settlement (RTGS) service, infrastructure that holds accounts for banks, building societies and other institutions. The balances in these accounts can be used to move money in real time between these account holders. This delivers final and risk-free settlement.
The Bank's RTGS infrastructure
Governance of RTGS and CHAPS
The Bank has dedicated governance arrangements for the RTGS and CHAPS Services. The RTGS/CHAPS Board provides strategic leadership for the RTGS and CHAPS Services, including the RTGS Renewal programme.
The Board has ten members:
- Chair: Dave Ramsden, Deputy Governor for Markets and Banking, and Senior Manager responsible for the implementation of strategic changes and the day-to-day operation of the RTGS and CHAPS Services under the Bank’s internal application of the Senior Managers Regime
- Andrew Hauser, Executive Director for Banking, Payments and Financial Resilience
- Michael Jones, Head of Market Services (the area that operates RTGS and CHAPS)
- Rob Elsey, Chief Information Officer
- Chris Salmon, Executive Director for Markets
- Charlotte Gerken, Director for Supervisory Risk Specialists
- Sandra ‘Sandy’ Boss (independent member)
The remaining three independent members are in the process of being appointed, which is expected to conclude by end-2017
RTGS and CHAPS risk assessment
In October 2017, we published our second self-assessment of the real-time gross settlement (RTGS) service against the CPMI-IOSCO Principles for Financial Market Infrastructures, with point of assessment 30 June 2017. These are internationally agreed standards considered essential to strengthening and preserving financial stability.
While the RTGS service is not a payment system or a financial market infrastructure, we have undertaken the assessment mostly against the principles that apply to payment systems. We have also considered the CPMI-IOSCO guidance on how the principles apply to financial market infrastructures operated by central banks.
This year we judged that of the sixteen principles which apply to RTGS, we ‘observe’ fourteen and ‘broadly observe’ the other two (governance, and risk management). While the ratings are the same as the 2016 self-assessment, there has been considerable progress made across both governance and risk management between the two self-assessments.
The self-assessment is completed in our role as operator of the RTGS service and not in our capacity as supervisor of financial market infrastructures or banks. We plan to update broadly annually.
CHAPS Co, the previous operator of the CHAPS system, also completed self-assessments against the PFMIs.
Resilience of the RTGS service
The RTGS service needs to be extremely operationally reliable to support final settlement between accounts that providers hold with us. The service is managed within a clear governance framework. This covers strategy, delivery and risk management.
Changes to the RTGS service are carefully considered and tested, because of the potential for impact on our mission of maintaining monetary and financial stability. We engage on potential changes with account holders and the operators of the payment systems that settle in RTGS.
The RTGS service operates on fault-tolerant computer hardware which is replicated on a second site. The business operation is conducted on a split site basis. We have the option of using a third site and alternative technology in the form of SWIFT’s ‘Market Infrastructure Resiliency Service’.
Enhancing the resilience of the Bank's RTGS infrastructure
RTGS service statistics
We publish monthly updates on the availability of our real-time gross settlement (RTGS) service and the volume and values of transactions.
Average daily RTGS settlement volumes and values
|Q4 2016||Q1 2017||Q2 2017||Q3 2017||YTD|
|CHAPS values (£mn)||£312,106||£313,515||£338,736||£334,430||£328,737|
|CREST DvP values (£mn)||£234,179||£252,560||£269,405||£276,443||£266,084|
|CREST DvP volumes||12,466||12,571||12,449||11,547||12,185|
|FPS net values (£mn)||£686||£781||£761
|Bacs net values (£mn)||£3,081||£3,101||£3,442||£3,275||£3,270|
|C&CC net values (£mn)||£141||£162||£142||£127||£144|
|Link net values (£mn)||£333||£299||£341||£325||£321|
|Visa Europe net values (£mn)||£1,610||£1,594||£1,741||£1,668||£1,666|
RTGS service availability statistics
1. RTGS infrastructure for ‘urgent’ CHAPS settlement
|2. RTGS infrastructure for ‘non-urgent’ CHAPS settlement||100%||100%||99.64%||100%||100%||100%||100%||99.92%||100%||100%
|3. Ability of RTGS and the RTGS-CREST link to support settlement in CREST||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|4. Delays to net settlement of retail payment systems (minutes)||0||0||0||0||0||0||0||0||0||0|
|5. RTGS Enquiry Link||100%||100%||100%||100%||100%||99.67%||100%||100%||100%||100%|
On 4 August 2017, ’non-urgent’ CHAPS settlement was unavailable for 12 minutes from 06:07, due to a minor issue with some of the Bank’s connections to the SWIFT network. Non-urgent CHAPS settlement resumed at 06:19. Settlement of urgent CHAPS payments was unaffected. All other RTGS services were unaffected.
On 5 June 2017, the RTGS Enquiry Link was unavailable for external users between 5.05am and 6.06pm due to a minor internal issue. CHAPS payment processing and CREST settlement were unaffected.
On 13 March 2017, infrastructure for urgent CHAPS settlement and non-urgent CHAPS settlement was unavailable from 2.30pm, due to a SWIFT network issue. Urgent settlement was resumed after 40 minutes at 3.10pm. Non-urgent settlement was resumed after 60 minutes at 3.30pm. All other services were unaffected.