Principles for financial market infrastructures – New consultative report published

The BIS’ Committee on Payment and Settlement Systems (CPSS) has just published, in conjunction with the Technical Committee of the International Organization of Securities Commissions (IOSCO), a new consultative report on financial market infrastructures.

The report “Principles for financial market infrastructures” contains new and more demanding international standards for payment, clearing and settlement systems. Issued for public consultation by the CPSS and, the new standards (called "principles") are designed to ensure that the essential infrastructure supporting global financial markets is even more robust and thus even better placed to withstand financial shocks than at present.

The report contains a single, comprehensive set of 24 principles designed to apply to all systemically important payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories (collectively "financial market infrastructures" or "FMIs"). These FMIs collectively record, clear and settle transactions in financial markets.

When finalized, the new principles will replace the three existing sets of CPSS and CPSS-IOSCO standards,

• the Core Principles for Systemically Important Payment Systems (2001)
• the Recommendations for Securities Settlement Systems (2001), and 
• the Recommendations for Central Counterparties (2004).

The CPSS and IOSCO believe that a single set of principles will provide greater consistency in the oversight and regulation of FMIs worldwide.

Robust and efficient FMIs help to ensure that markets continue to function effectively even in times of crisis and are an essential prerequisite for financial stability. Although FMIs have generally performed well, there are nevertheless lessons to be learnt both from the recent crisis and from the years of more normal operation since the current standards were issued.

Compared with the current standards, the new principles introduce more demanding requirements in many important areas including;

• the financial resources and risk management procedures an FMI uses to cope with the default of participants
• the mitigation of operational risk, and
• the links and other interdependencies between FMIs through which operational and financial risks can spread.

There are also principles covering issues that are not fully addressed by the existing standards. These include new principles on segregation and portability, tiered participation and general business risk.

Published along with the report is a cover note which sets out some specific issues on which the committees are seeking comments during the public consultation period.

Comments on the principles have been invited from all interested parties and should be sent by no later than 29 July 2011 to both the CPSS secretariat (cpss@bis.org) and the IOSCO secretariat (fmi@iosco.org). The comments will be published on the websites of the BIS and IOSCO unless commentators request otherwise.

After the consultation period, the CPSS and IOSCO will review all comments received and publish a final report in early 2012. As set out in the cover note, the proposal is that relevant authorities will then strive to include the principles in their legal and regulatory framework by the end of 2012 and to apply the principles as part of their regulatory, supervisory and oversight activities as soon as possible. FMIs will be expected to take appropriate and swift action in order to meet the principles.

The consultative report as well as the covering note may be downloaded from the BIS website - http://www.bis.org/publ/cpss94.htm

Sweden looking at mobile postage payment system

The Swedish postal service, Posten AB, is said to be seriously considering replacing the traditional paper postage stamps with a new text massage based postage payment system. It's a rather simple concept (as long as you have a mobile phone). Customers will send a text payment and will then receive a code that will then be written on the letter or parcel. This code will provide proof of payment. The system is expected to begin this summer.

Nearby Denmark is also expecting to begin a similar program shortly.

Bank of England publishes 2010 Payment Systems Oversight Report

The Bank of England has published its “Payment Systems Oversight Report 2010”. The Oversight Report forms an important element of the Bank’s oversight work and offers public accountability for this statutory function of the Bank, as well as increasing transparency about the performance of the overseen systems and acting as a tool to encourage further risk reduction.

The Oversight Report sets out how the Bank has implemented the statutory regime for oversight under Part 5 of the Banking Act of 2009 and how the Bank carries out its oversight of recognized UK payment systems. In its oversight work the Bank oversees interbank payment systems that are ‘recognized’ by the Treasury. Such “recognition” orders exist for Bacs, CHAPS, CLS, Faster Payments Service, and the embedded payment arrangements within CREST, ICE Clear Europe Ltd and LCH.Clearnet.

To summarise the main UK payment systems have continued to demonstrate high levels of operational availability and developments since the previous Oversight Report have contributed to further reductions in risk. The Oversight Report notes some areas where, in the Bank’s view, further measures to reduce potential systemic risks should be undertaken. These include:

• Tiering - the accession of two new members of CHAPS in 2010 and one new settlement member of CREST in 2009 has helped reduce tiering in these payment systems, but tiering remains a risk in UK payment arrangements and should be reduced.
• Payment arrangements for central counterparties (CCPs) - the two recognized CCPs should consider ways to reduce commercial bank risk in their payment arrangements.
• Default arrangements - Bacs should develop proposals to ensure that settlement can complete in all circumstances in the event of a member default.
• Contingency arrangements - payment systems should ensure they conduct a challenging program of business continuity tests to prove their contingency arrangements.
• Governance - payment systems should ensure that their governance arrangements reflect corporate governance good practice, and provide appropriate strategic guidance and challenge to management.

Fraud - a fake credit card production line

Fraudsters rack up millions of dollars in merchandise using fake credit cards with legitimate numbers hacked off the Internet. Detective Bob Watts of Newport Beach Police Department shows how it's done.

Mobile Banking – A view from the US

A short news item on mobile banking in the US from Consumer Reports Money Adviser. Like having an ATM in your pocket.
And there is a concern too about security.

Quiet a different perspective from that of the developing world.

TRAINING COURSE “REMITTANCES – CREATING VALUE”

Johannesburg – 22 & 23 June 2011

The transfer of migrant’s remittances represents a huge business opportunity for banks and other financial institutions which is still largely overlooked. The financial services industry, which plays such an important role in the Payments Industry, is missing an important opportunity if they ignore a very large component – Remittances.

The flow of funds from migrant workers back to their families in their home country is an important source of income in many developing economies. The total value of these remittances has been increasing steadily over the past decade and it is estimated that in 2009 the total value worldwide was over US$ 316 billion equivalent, involving some 190 million migrants.

This course is the definitive A to Z on Remittances – from informal systems to the revolutionary appearance of the Mobile Phone as a remittance tool.

This intensive 2-day course provides an insight of the payment system aspects of remittances, and is designed to assist financial institutions that want to improve their understanding of this important market as well as extend and develop the many business opportunities that present themselves. Processing these money transfers is a business opportunity with vast potential especially with the recent rise of the Mobile Phone is now set revolutionize the Remittance world.

For a fully descriptive brochure please send a blank e-mail to sharon@citadeladvantage.com with REMIT-JHB in the Subject line.


Who Should Attend

The course has been specifically designed for Senior Bankers involved with;

• Payment Systems and Money Transfers
• Payment Strategy 
• Micro Finance 
• International & Correspondent Banking 
• Retail Banking Services 
• Banking Product Development

Central Bankers involved with;

• Payment Systems 
• Payment Strategy & Policy 
• International & Correspondent Banking 
• Payment System Regulation & Oversight

Senior Staff of;

• Corporations who employ migrant workers 
• Money Transfer Operators 
• Government agencies involved in migrant workers

Development Agencies

Course Venue:

REGUS Sandton,
Nelson Mandela Square
West Tower, 2nd Floor, Nelson Mandela Square
Maude St.
Sandown
Johannesburg 2146
Tel: +27 (0) 11 881 5600

TRAINING COURSE “REMITTANCES – CREATING VALUE”

London – 16 & 17 May 2011

The transfer of migrant’s remittances represents a huge business opportunity for banks and other financial institutions which is still largely overlooked. The financial services industry, which plays such an important role in the Payments Industry, is missing an important opportunity if they ignore a very large component – Remittances.

This course is the definitive A to Z on Remittances – from informal systems to the revolutionary appearance of the Mobile Phone as a remittance tool.

This intensive 2-day course provides an insight of the payment system aspects of remittances, and is designed to assist financial institutions that want to improve their understanding of this important market as well as extend and develop the many business opportunities that present themselves. Processing these money transfers is a business opportunity with vast potential especially with the recent rise of the Mobile Phone is now set revolutionize the Remittance world.

For a fully descriptive brochure please send a blank e-mail to sharon@citadeladvantage.com with REMIT-LONDON in the Subject line.


Who Should Attend
The course has been specifically designed for Senior Bankers involved with;

• Payment Systems and Money Transfers 
• Payment Strategy 
• Micro Finance
• International & Correspondent Banking 
• Retail Banking Services 
• Banking Product Development

Central Bankers involved with;

• Payment Systems 
• Payment Strategy & Policy 
• International & Correspondent Banking 
• Payment System Regulation & Oversight

Senior Staff of;

• Corporations who employ migrant workers
• Money Transfer Operators 
• Government agencies involved in migrant workers

Development Agencies

Course Venue:

REGUS Trafalgar,
1 Northumberland Avenue,
Trafalgar Square,
London WC2N 5BW