On 29 April, the Bank of England published two consultation documents relating to RTGS (Real Time Gross Settlement System) Renewal - the RTGS / CHAPS tariff consultation, and the Roadmap for Real-Time Gross Settlement service beyond 2024.
The Bank’s RTGS infrastructure is critical for the UK economy. It makes payments work by enabling banks, and other payment providers, to move money around the financial system seamlessly. It underpins the financial system: every card payment, bill payment or online purchase ultimately depends on RTGS running smoothly. It settles over £720bn on average every working day, turning over the equivalent of UK GDP every three days.
RTGS is crucial to the UK financial system, so running an operationally resilient RTGS that is able to process payments safely, efficiently, and effectively is a priority for the Bank. The current RTGS was built in 1996 but how we pay for goods and services has transformed dramatically since then. We need an RTGS service that is in tune with the changing payments landscape: risks posed to the system have changed; demand for the service has increased, more money flows through RTGS than ever before; and, the number of organisations and the way that they use – and want to engage with – RTGS has changed.
The Bank has embarked on a multi-year project to renew RTGS to make sure that it remains fit for purpose and is able to keep pace with change, whilst continuing to operate safely and securely. This project is essential to keeping payments flowing around the system.
In addition to even greater resilience, the renewed RTGS is being developed to enhance innovation and competition in the payments industry, ultimately leading to better services for the end users and the public.
The Bank is developing a renewed RTGS service that is fit for the future, and will deliver a wide range of benefits and value for money.
On 29 April, the Bank published the RTGS / CHAPS tariff consultation document that sets out the Bank’s proposals for updating the RTGS and CHAPS tariff framework from 2024 once the renewed RTGS core settlement engine has been launched. The cost of RTGS is recovered by the Bank from industry, via the RTGS Tariff. How the Tariff is calculated has not been substantively reviewed since RTGS was first built. With more users of the system and more services available, the Bank is seeking views on how the costs of building and running RTGS are recovered in a proportionate, fair and competitive way. The consultation proposes a new framework for how the Bank will recover the costs from industry.
The renewed RTGS is being built in a modular way to make it easier to add new functionality, and is a platform for future innovation. The Roadmap for Real-Time Gross Settlement service beyond 2024 consultation seeks views on what the future functionality of RTGS could include once the new core settlement engine has been introduced in spring 2024. It asks for industry views, from both current and potential users, on what features they would find most useful from a menu of options. This includes a range of ambitious new features, such as linking RTGS with other platforms to achieve synchronised settlement, new ways to connect to RTGS, and extended operating hours. Following the consultation, the Bank would plan to introduce any new functionality over time so that the renewed RTGS, and payments landscape in the UK, is world-leading in terms of competitiveness, innovation, and benefits to end-users.
To note that the Tariff consultation does not take into account the outcome of and costs arising from the Roadmap for Real-Time Gross Settlement service beyond 2024 consultation.
How to respond
Each consultation document includes a link to an online survey, designed to quickly and easily gather responses to the topics covered in each consultation. The Bank welcomes views from a wide range of current and future users of the RTGS and CHAPS service as well as other stakeholders. This includes banks and building societies, payment service providers, technology providers, other financial market infrastructures, end-users of payment services, and trade associations. Responses should ideally include collated views from colleagues across their organisations, including those responsible for organisation budgets, setting customer tariffs, and strategic investment in payment services. Responses are encouraged by the deadline of 30 June 2022.
- We launched a consultation on Purpose Codes – we are working with Pay.UK on the creation of a ISO 20022 purpose code list.
- We published a Policy Statement implementing enhanced data (LEIs, purpose codes, structured addresses and remittance information).
- We published our ISO 20022 revised approach and final schemas.
- We also held our first virtual RTGS Renewal Programme all Industry Event.
RTGS Renewal Programme sets up new working groups for CHAPS Direct Participants
The Programme has set-up industry working groups for CHAPS Direct Participants to support industry readiness work. These groups bring together expertise from the industry to better understand risk management, testing and business or technical change. The groups will continue to meet on a quarterly basis throughout 2020.
The Bank of England responds to BEIS on the Corporate Transparency and Register Reform Consultation
Our response focussed on how the use of Legal Entity Identifiers (LEI) may provide a solution for the Department for Business, Energy and Industrial Strategy (BEIS). In turn, this could have benefits for the real economy. This comes as part of the Bank’s effort to champion the LEI as a globally recognised and unique identifier for all businesses in the UK.
The Standards Advisory Panel (SAP) held its first meeting
Procurement for a Technology Delivery Partner commenced
The Bank published a contract notice in the Official Journal of the European Union (OJEU) inviting potential providers to express their interest. The chosen Technology Delivery Partner will be announced in Summer 2020.
- Start of the Design, Enable and Procure phase of the Programme
- ISO 20022 consultation response
Proof of Concept
The Bank has completed a Proof of Concept (PoC) to understand how a renewed RTGS service could be capable of supporting settlement in systems operating on innovative payment technologies.
Publication of ISO 20022 consultation
Delivery of CHAPS
One of the earliest deliverables of the RTGS renewal programme was the move to a direct delivery model for CHAPS.
External Advisory Body
External Advisory Body is set up to support an ongoing and effective dialogue between the Bank and its stakeholders during the renewal Programme.
A Blueprint for a new RTGS Service for the United Kingdom is published.
Start of RTGS Renewal Programme
The Bank of England announces it will develop a blueprint to modernise the UK’s sterling settlement infrastructure to respond to changing needs.