Payment System Policy and Oversight Course Federal Reserve Bank of New York 33 Liberty Street, 12th Floor Auditorium (Final Day: Course moves to 13th Floor – Multi Purpose Room) May 11-14, 2015
- 84 Participants -
Mr. Nacer-eddine Haddad Mrs. Sheree Smiling Craig Director Director Payment Systems Project Management Office Bank of Algeria Central Bank of Belize Algeria Belize [email protected] [email protected]
Mr. Ivady Oliveira Miss. Sonia Noriega Oversight Analyst of Payment Systems Oversight Payment Systems Payment System Oversight Department Banco Nacional de Angola Banco Central de Bolivia Angola Bolivia [email protected] [email protected]
Mr. Jorge Carlos Gagliano Mrs. Maurice Ane Casagrande Brandao Analista Sr Head of Division Gerencia Principal de Control y Liquidacion de Banking Operations and Payments Systems Operaciones Banco Central do Brasil Banco Central de la Republica Argentina Brazil Argentina [email protected] [email protected]
Ms. Jamie Armour Mr. Luke Van Uffelen Senior Analyst Senior Analyst Financial Stability Department Payments Policy Bank of Canada Reserve Bank of Australia Canada Australia [email protected] [email protected]
Mrs. Silvija Vojinovic Mr. Roland Hellmann Senior Advisor Settlement Manager Payment Operations Regulation and Payment Systems Division Development Department Oesterreichische Nationalbank Croatian National Bank Austria Croatia [email protected] [email protected]
Mr. Muhammad Mijanur Rahman Joddar Mr. Jan Susicky Executive Director Head of Payment Service Providers and Chittagong Office Financial Intermediaries Supervision Unit Bangladesh Bank Financial Market Supervision Unit Bangladesh Czech National Bank [email protected] Czech Republic [email protected]
Mrs. Isabelle Reynders
Analyst Mr. Michal Volny Prudential Supervision & Oversight Financial Market Supervisor National Bank of Belgium Financial Market Supervision Department Belgium Czech National Bank [email protected] Czech Republic
Mr. Patrick Gregoire Mrs. Anna Pliquett Principal Supervisor Analyst DGMS3-ISO, Single Supervisory Mechanism Payment and Securities Settlement Systems European Central Bank Deutsche Bundesbank ECB Germany [email protected] [email protected]
Mr. Gabor Szendrey Ms. Helen Leung Senior Auditor Manager Directorate Internal Audit Financial Infrastructure Department European Central Bank Hong Kong Monetary Authority ECB Hong Kong [email protected] [email protected]
Mr. Lorenzo Dal Bianco Mrs. Cecilia Pinter Market Infrastructure Expert Senior Analyst, Overseer Directorate General Market Infrastructure and Directorate Financial infrastructures Payments Magyar Nemzeti Bank (The Central Bank of European Central Bank Hungary) ECB Hungary [email protected]
Mr. Ayman Hussein Mr. Sushil Kumar Dwivedi Head of Payment Systems and Business Assistant General Manager Technology Sector Department Of Payment and Settlement Payment Systems and Business Technology Systems Sector Reserve Bank of India Central Bank of Egypt India Egypt [email protected] [email protected] Ms. Sally Marintan Hutapea
Ms. Maria de los Angeles Delgado de Alvarado Deputy Director Industrial Engineer Department of Payment System Oversight & Payment and Securities Policies Banco Central de Reserva de El Salvador Bank Indonesia El Salvador Indonesia [email protected] [email protected]
Mr. Timo Iivarinen Mr. Daragh Cronin Economist Head of Payments and Securities Settlements Financial Markets and Statistics Payments and Securities Settlements Bank of Finland Central Bank of Ireland Finland Ireland [email protected] [email protected]
Ms. Maria Huhtaniska-Montiel Dr. Edoardo Rainone Project Manager Coadiutore Banking Operations Payment System Bank of Finland Banca d'Italia Finland Italy [email protected] [email protected]
Ms. Andrea Friedrich Ms. Yuriko Watanabe Deputy Head of Oversight Section Analyst Payments and Settlement Systems Payment and Settlement Systems Department Deutsche Bundesbank Bank of Japan Germany Japan [email protected] [email protected]
Mr. Ghassan Abu Shihab Ms. Petra Steenbakker Asst. Executive Manager- Payment Systems Senior Policy Advisor Oversight Market Infrastructure Policy Department Payments Systems & Domestic Banking De Nederlandsche Bank Operations Department Netherlands Central Bank of Jordan [email protected]
Jordan [email protected] Mr. Nathan Lewer
Manager, Payment and Settlement Services Mrs. Sophie Kabon Langat Financial Services Group Manager Reserve Bank of New Zealand Banking Services, NPS & Risk Management New Zealand Central Bank of Kenya [email protected] Kenya [email protected] Mr. Musa Itopa Jimoh
Head, Payments System Policy and Oversight Mr. Min woo Choi Banking and Payments System Junior Economist Central Bank of Nigeria Payment Systems Policy Team Nigeria Bank of Korea [email protected] Korea [email protected] Ms. Elisabeth Lervik
Assistant Director Mr. Jasem Ali Interbank Settlement Chief Accountant Norges Bank Foreign Operation Dept. Norway Central Bank of Kuwait [email protected] Kuwait [email protected] Mr. Muhammad Faisal Mazhar Deputy Director Mr. Egons Gailitis Payment Systems Head of Payment System Department State Bank of Pakistan Payment Systems Pakistan Bank of Latvia [email protected]
Latvia [email protected] Mr. Asim Iqbal
Director Dr. Zainal Hasfi Hashim Payment Systems Department Deputy Director State Bank of Pakistan Payment Systems Policy Pakistan Bank Negara Malaysia [email protected]
Malaysia [email protected] Mr. Maximo Raul Moquillaza
Payment Systems Specialist Miss. Jennifer Nicole Vella Payment Systems Oversight Department Financial Analyst Banco Central De Reserva del Peru Regulation and Oversight Peru Central Bank of Malta [email protected]
Malta [email protected] Mr. Pawel Lysakowski
Head of Division Mr. Eduardo Tejeda Payment Systems Department Special Studies and Projects Narodowy Bank Polski Directorate of Payment Systems Poland Banco de Mexico [email protected]
Mexico [email protected] Mrs. Otilia Gradinescu
Expert Mr. Gopal Kaphle Payments Department Deputy Governor National Bank of Romania Nepal Rastra Bank Romania Nepal [email protected] [email protected]
Ms. Liudmila Gruzdeva Division Head Mr. Ratnayaka Mudiyanselage Jayawardana Department of the National Payment System Additional Director of Payments and Central Bank of the Russian Federation Settlements Russia Payments and Settlements Department [email protected] Central Bank of Sri Lanka
Sri Lanka Mr. Hamad Alsuhaibany [email protected] Information Systems Examiner
Banking Supervision Mr. Lucien Nijman Saudi Arabian Monetary Agency Department Chief Saudi Arabia Domestic Payments Department [email protected] Centrale Bank van Suriname
Suriname Mr. Reshaid Alreshaid [email protected] Information Systems Examiner
Banking Supervision Department Ms. Sara Edholm Saudi Arabian Monetary Agency Economist Saudi Arabia Financial Stability Department [email protected] Sveriges Riksbank
Sweden Miss. Beggita Vital [email protected] Payment Systems Officer
Payment Systems Division Ms. Flurina Strasser Central Bank of Seychelles Business Analyst Seychelles Banking Operations Analysis [email protected] Swiss National Bank
Switzerland Miss. Fatima Mansaray [email protected] Assistant Director Information Technology
Bank of Sierra Leone Ms. Wei-Chuan Chang Sierra Leone Deputy Section Chief [email protected] Department of the Treasury
Central Bank of China, Taipei Mr. Ben Ong Taiwan Assistant Director [email protected] Information Technology Department Monetary Authority of Singapore Mrs. Saowalak Tripojanee Singapore Team Executive, Payment Systems Stability [email protected] Team Payment Systems Policy Department Mrs. Simona Veghova Bank of Thailand Senior Internal Auditor Thailand Internal Audit Department [email protected] National Bank of Slovakia Slovakia Ms. Leslie-Ann Des Vignes [email protected] Specialist Payments System Department Mrs. Maria Teresa Jimenez Alijo Central Bank of Trinidad and Tobago Expert in the Settlement Systems Oversight Trinidad and Tobago Unit [email protected] Payment Systems
Bank of Spain Mr. Nuh Agah Tahmiscioglu Spain Assistant Specialist [email protected] Regulation and Oversight Division, Payment Systems Department Mrs. Maria Jose Garcia-Ravassa Central Bank of the Republic of Turkey TARGET2 - Banco de Espana Unit Manager Turkey Payment Systems [email protected] Bank of Spain Spain [email protected]
Mr. Jamal Al Shamsi Mrs. Anna Tvishor Assistant Manager Senior Specialty Risk Examiner Banking Operation & Payment System Information Security Team Central Bank of the United Arab Emirates Federal Reserve Bank of Chicago United Arab Emirates US - Chicago Fed [email protected] [email protected]
Dr. Andrew Jales Mr. Andrew Ching Manager Financial Analyst Resolution Directorate Reserve Bank Operations & Payment Systems Bank of England Federal Reserve Board of Governors United Kingdom US - FRS Board of Governors [email protected] [email protected]
Miss. Rebecca Hall Ms. Wendy Matheny Policy Team Manager Policy Analyst Customer Banking Division Cash Product Office Bank of England Federal Reserve Bank of San Francisco United Kingdom US - San Francisco Fed [email protected] [email protected]
Mr. Malcolm Long Mr. Max Ellithorpe Manager Financial Services Analyst Payments Systems Supervision and Policy, Financial Market Infrastructure Oversight Financial Markets Infrastructure Federal Reserve Board of Governors Bank of England US - FRS Board of Governors United Kingdom [email protected] [email protected]
Mr. Scott Sloan Mr. Mark Louis Financial Services Analyst Senior Manager, Custody, Settlement and Reserve Bank Operations & Payment Systems Liquidity Federal Reserve Board of Governors Market Services division US - FRS Board of Governors Bank of England [email protected]
United Kingdom [email protected] Ms. Mirjana Milutinovic
Financial Services Analyst Ms. Jennifer Getz Reserve Bank Operations & Payment Systems Sr. Supervision Analyst Federal Reserve Board of Governors Supervision and Regulation US - FRS Board of Governors Federal Reserve Bank of Chicago [email protected]
US - Chicago Fed [email protected] Mr. Jacob Rodriguez
Financial Services Analyst Ms. Claire Brunner Reserve Bank Operations & Payment Systems Financial Services Analyst Federal Reserve Board of Governors Reserve Bank Operations & Payment Systems US - FRS Board of Governors Federal Reserve Board of Governors [email protected]
US - FRS Board of Governors [email protected] Mr. Troy Causey
Financial Services Analyst Mr. Constantine Varvouletos Reserve Bank Operations & Payment Systems Specialty Risk Examiner Federal Reserve Board of Governors Supervision & Regulation US - FRS Board of Governors Federal Reserve Bank of Chicago [email protected]
US - Chicago Fed [email protected] Mrs. Charity Nonde L Chikumbi Analyst-Payment Systems Oversight Ms. Yesel Lee Banking, Currency & Payment Systems Financial Services Analyst Bank of Zambia Reserve Bank Operations & Payment Systems Zambia Federal Reserve Board of Governors [email protected] US - FRS Board of Governors [email protected] Mr. Edward Kapili Assistant Manager-Banking, Back Office Banking, Currency and Payment Systems Bank of Zambia Zambia [email protected] Payment System Policy and Oversight Course Federal Reserve Bank of New York 33 Liberty Street, 12th Floor Auditorium (Final Day: Course moves to 13th Floor – Multi Purpose Room) May 11-14, 2015
GLOSSARY AND ACRONYMS
Agreement Corporation chartered by a state to engage in international banking: so Corporation named because the corporation enters into an "agreement" with the Fed's Board of Governors that it will limit its activities to those permitted by an Edge Act Corporation. Automated Clearing A type of payment system designed to allow corporations and House (ACH) consumers to reduce or eliminate the use of paper checks when making routine high-volume, low value payments. ACH systems process large volumes of individual payments electronically. Typical ACH payments include salaries, consumer and corporate bill payments, interest and dividend, and Social Security. Examples of private sector ACH providers in the U.S. include VISA, the New York Clearing House, and the American Clearing House.
Bank for An international organization which fosters international monetary and International financial cooperation and serves as a bank for central banks. The BIS Settlements (BIS) fulfils this mandate by acting as (1) a forum to promote discussion and policy analysis among central banks and within the international financial community; (2) a centre for economic and monetary research; (3) a prime counterparty for central banks in their financial transactions; and (4) agent or trustee in connection with international financial operations. The BIS was established in 1930 with head office located in Basel, Switzerland.
Bank Services The Act requires FDIC insured financial institutions to notify their Company Act appropriate federal banking agency in writing of contracts or relationships with third parties that provide certain services to the institution. Batch Processing The transmission or processing of a group of related payment instructions.
Beneficiary Person to be paid by the beneficiary’s bank.
Beneficiary’s Bank Bank identified in a payment order in which an account of the beneficiary is to be credited pursuant to the order.
Central Counterparty An entity that is the buyer to every seller and seller to every buyer of a (CCP) specified set of contracts, e.g. those executed on a particular exchange or exchanges.
Central Securities A facility (or an institution) for holding securities, which enables Depository (CSD) securities transactions to be processed by book entry. Physical securities may be immobilized by the depository or securities may be dematerialized (i.e. so that they exist only as electronic records). In addition to safekeeping, a central securities depository may incorporate comparison, clearing and settlement functions.
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Check A retail payment instrument consisting of a written order from one party (the drawer) to another party (the drawee, normally a bank) requiring the drawee to pay a specified sum on demand to the drawer or to a third party specified by a drawer.
Check Clearing for A US law designed to foster innovation in the payments system and to the 21st Century Act enhance its efficiency by reducing some of the legal impediments to (aka Check 21) check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks.
Check Conversion Changes in private sector rules (or NACHA) allow the initiation of an electronic automated clearinghouse payment from information on a check.
Clearance The process of transmitting, reconciling, and in some cases, confirming payments orders or financial instrument transfer instructions prior to settlement.
Clearing Corporation A central processing mechanism through which financial institutions (aka Clearinghouse) agree to exchange payment instructions or other financial obligations (e.g. securities). The institutions settle for items exchanged at a designated time based on the rules and procedures of the clearing corporation. In some cases, the clearing corporation may assume significant counterparty, financial, or risk management responsibilities for the clearing system.
Clearing Account Deposit account held by banks and thrift institutions at the Federal Reserve. Unlike reserve accounts, which institutions are required to maintain, clearing accounts are held if their required reserve balances are not large enough to cover the dollar volume of their check clearing and other transfers of funds through the Federal Reserve.
Clearing House An electronic payments system that transfers funds and settles Interbank Payments transactions in U.S. dollars. CHIPS enables banks to transfer and settle System (CHIPS) international payments more quickly by replacing official bank checks with electronic bookkeeping entries.
Committee on A committee of the BIS that serves as a forum for central banks to Payments and monitor and analyze developments in domestic payment, clearing and Market settlement systems as well as in cross-border and multicurrency Infrastructures settlement schemes. (CPMI) Continuous Linked A process enabling simultaneous foreign exchange settlement across Settlement (CLS) the globe, eliminating the settlement risk caused by delays arising from time-zone differences. CLS settles matched trades on a payment vs. payment basis and multilaterally nets funding obligations.
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Continuous Linked CLS Bank is a multi-currency bank, holding an account for each Settlement (CLS) settlement member and an account at each eligible currency’s central Bank bank, through which funds are received and paid. Technical and operational support is provided by CLS Services, an affiliate of CLS Bank. CLS Bank is based in New York and is an Edge Corporation bank supervised by the Federal Reserve.
Counterparty Risk The risk to each party of a contract that the counterparty will not live up to its contractual obligations. Correspondent Bank A bank that holds deposits for other banks and performs services, such as check clearing. The deposit balance is a form of payment for services.
Credit Risk The risk that a counterparty will not settle an obligation for full value, either when due or at any time thereafter. In exchange-for value systems, the risk is generally defined to include replacement cost risk and principal risk.
Credit Union Financial cooperative organization of individuals who have a common bond, such as place of employment or residence or membership in a labor union. Credit unions accept deposits from members, pay interest (in the form of dividends) on the deposits out of earnings and use their funds to provide consumer installment loans to members. Custodian An entity, often a bank, that safekeeps securities for its customers and may provide various other services, including clearance and settlement, cash management, foreign exchange, and securities lending.
Custody Risk The risk of loss of securities held in custody occasioned by the insolvency, negligence or fraudulent action of the custodian or of a subcustodian.
Daily Settlement The completion of settlement on the day of value of all payments accepted for settlement.
Daylight Credit Credit extended for a period of less than one business day; in a credit transfer system with end-of-day final settlement, daylight credit is tacitly extended by a receiving institution if it accepts and acts on a payment order even though it will not receive final funds until the end of the business day. Also called daylight overdraft, daylight exposure and intraday credit.
Daylight Overdraft A negative position in an institution’s Federal Reserve account.
Dealer A firm that enters into transactions as a counterparty on both sides of the market in one or more products. OTC derivatives dealers are primarily large international financial institutions – mostly commercial banks but also some securities firms and insurance companies – as well as a few affiliates of what are primarily non-financial firms.
Deferred Net See Net Settlement System. Settlement (DNS)System
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Delivery-vs- A system that ensures that the final transfer of one asset will Payments System simultaneously occur if, and only if, the final transfer of another asset (DVP) (or other assets) occurs.
Depository Facility for holding securities in either a certified or an uncertified (dematerialized) form. Allows securities transfers through book-entry. Depositories may also offer funds accounts and permit funds transfers as a means of payment. Depositories may be privately or publicly operated. The Depository Trust Company (DTC) is the largest American securities depository and holds the majority of the equity, corporate bond, and money market instruments issued in the United States.
Depository An institution that holds funds or marketable securities, usually under a Institution specific agreement.
Depository Trust & A holding company for a group of operating companies providing Clearing Corporation securities clearance, settlement, custody and information services. (DTCC) Subsidiaries include Depository Trust Company (DTC), National Securities Clearing Corporation (NSCC), Fixed Income Clearing Corporation (FICC), DTCC Solutions, DTCC Deriv/SERV, and Omega.
Depository Trust Established in 1973, it was created to reduce costs and provide clearing Company (DTC) and settlement efficiencies by immobilizing securities and making “book-entry” changes to ownership of the securities. It provides settlement services for all NSCC trades and for institutional trades, which typically involve money and securities transfers between custodian banks and broker/dealers. DTC is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission.
Dodd-Frank Act A federal statute formally known as The Dodd-Frank Wall Street and Consumer Protection Act, signed into law on June 21, 2010 by President Obama. The Act, by definition, was established to promote US financial stability by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. Edge Act Corporation chartered by the Federal Reserve to engage in Corporation international banking. The Board of Governors acts on applications to establish Edge Act corporations and also examines the corporations and their subsidiaries. Named after Senator Walter Edge of New Jersey, who sponsored the original legislation to permit formation of such organizations. See also agreement corporation. Electronic Funds A generic term describing any transfer of funds between parties or Transfer (EFT) depository institutions via electronic data systems. Automated Clearing House (ACH) is an example of EFT.
End-of-Day Gross Funds transfer system in which payment orders are received one by Settlement System one by the settlement agent during the business day, but in which final settlement takes place at the end of the day on a one by one or aggregate gross basis. This definition also applies to gross settlement systems in which payments are settled in real time but remain revocable until the end of the day.
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Federal Reserve Act The 1913 U.S. legislation that created the Federal Reserve System. The amendments to the Federal Reserve Act suggest two roles for the system: to promote monetary stability and high employment. Federal Agency Interest-bearing obligations issued by federal agencies and Securities government-sponsored entities, such as the Federal Home Loan Banks, the Federal Farm Credit Banks, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Tennessee Valley Authority. Some federal agency securities are backed by the U.S. government while others are not. Fedwire An electronic transfer system developed and maintained by the Federal Reserve System, enabling financial institutions to transfer funds and book-entry securities nationwide.
Fedwire Funds Owned and operated by the Federal Reserve, the Fedwire Funds Service Service provides a real-time gross settlement system in which more than 9,500 participants initiate funds transfers that are immediate, final, and irrevocable when processed. Participants that maintain a reserve or clearing account with a Federal Reserve Bank may use Fedwire to send payments to, or receive payments from, other account holders directly. Participants use Fedwire to handle large-value, time-critical payments, such as payments for the settlement of interbank purchases and sales of federal funds; the purchase, sale, and financing of securities transactions; the disbursement or repayment of loans; and the settlement of real estate transactions.
Fedwire Security Owned and operated by the Federal Reserve, the Fedwire Securities Service Service provides a real-time, delivery-versus-payment (DVP), gross settlement system that allows for the immediate, simultaneous transfer of securities against payment. It also provides participants with the ability to maintain multiple securities accounts segregated for their own use or their trust operations.
Finality An irrevocable and unconditional transfer of payment which occurs during settlement.
Financial Market The infrastructures that facilitate the clearing and settlement of Infrastructure (FMI) monetary and other financial transactions, such as payments, securities, and derivative contracts, including derivatives contracts for commodities. Also known as Financial Market Utility (FMU). Financial Stability The FSB was established to coordinate at the international level the Board (FSB) work of national financial authorities and international standard setting bodies (SSBs) in order to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. Fixed Income A subsidiary of Depository Trust and Clearing Company (DTCC), FICC Clearing Corporation is an industry service organization, designed to operate on a not-for- (FICC) profit basis, whose primary purpose is to ensure orderly settlement in the fixed income securities marketplace. FICC operates through two divisions: one serves the U.S. government securities market, while the other handles the mortgage-backed securities (MBS) market.
Foreign Exchange The potential loss of principal associated with settling transactions Settlement Risk (also sequentially instead of simultaneously. known as Herstatt Risk)
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Funds Transfer A series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order.
Funds Transfer A formal arrangement based on private contract or statute law, with System multiple memberships, common rules and standardized arrangements, for the transmission and settlement of money obligations arising between the members.
Group of Twenty The premier forum for international cooperation on the most important (G20) aspects of the international economic and financial agenda. It brings together the world’s major advanced and emerging economies. The G20 includes 19 country members and the European Union, which together represent around 90% of global GDP, 80% of global trade and two thirds of the world’s population.
Haircut The difference between the market value of a security and its collateral value. Haircuts are taken by a lender of funds in order to protect the lender, should the need arise to liquidate the collateral, from losses owing to declines in the market value of the security.
International Central A central securities depository that settles trades in international Securities securities and in various domestic securities, usually through direct or Depository (ICSD) indirect (through local agents) links to local CSDs.
International An international organization comprised of securities market regulators. Organization of Securities Commissions (IOSCO) Intraday Credit See Daylight Credit.
Intraday Liquidity Funds which can be accessed during the business day, usually to enable financial institutions to make payments in real time.
Lamfalussy The six minimum standards for the design and operation of cross- Standards border and multicurrency netting schemes or systems.
Large-Value Payments, generally of very large amounts, which are mainly Payments (LVP) exchanged between banks or between participants in the financial markets and usually require urgent and timely settlement.
Large-Value Transfer A type of wholesale payment system used primarily by financial System institutions in which large values of funds are transferred between parties. Fedwire and CHIPS are the two large-value transfer systems in the U.S.
Liquidity Risk The risk that a counterparty (or participant in a settlement system) will not settle an obligation for full value when due. Liquidity risk does not imply that a counterparty or participant is insolvent since it may be able to settle the required debit obligations at some unspecified time thereafter. Money Market Figurative expression for the informal network of dealers and investors over which short-term debt securities are purchased and sold. Money market securities generally are highly liquid securities that mature in less than one year, often less than ninety days.
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Multilateral Netting An arrangement among three or more parties to net their obligations. In settlement systems of this type transfers are irrevocable, but are only final after the completion of end-of-day-settlement.
NACHA A not-for-profit association that develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment, e-checks, financial electronic data interchange, international payments, and electronic benefits services.
National Securities A wholly owned subsidiary of the Depository Trust & Clearing Clearing Corporation Corporation (DTCC). It is a central counterparty that provides (NSCC) centralized clearance, settlement and information services for broker-to- broker equity, corporate bond and municipal bond, exchange-traded funds and unit investment trust (UIT) trades in the U.S.
National Settlement A multilateral settlement service owned and operated by the Federal Service (NSS) Reserve Banks. The service is offered to depository institutions that settle for participants in clearinghouses, financial exchanges and other clearing and settlement groups. Settlement agents acting on behalf of those depository institutions electronically submit settlement files to the Reserve Bank. Files are processed on receipt, and entries are automatically posted to the depository institutions’ Reserve Bank accounts. Entries are final and irrevocable when posted.
Net Debit Cap The maximum dollar amount of daylight overdrafts an institution is permitted to incur in its Federal Reserve account. The exact dollar amount is a multiple—determined by the Federal Reserve—of an institution’s capital. Under current policy, institutions are subject to two caps: a daily cap and a 2-week average cap. Net debit caps help reduce the credit risk to the Federal Reserve and taxpayers by limiting losses should an institution fail. In April 1994, as a supplement to the existing net debit cap policy, Federal Reserve Banks began charging fees to depository institutions for average daylight overdrafts in deposit accounts with the Federal Reserve.
Net Settlement A category of payments system. A system in which banks continually System send payment instructions over a period of time, with final transfer occurring at the end of the processing cycle. During the period, a record is kept of net debits and credits.
Nostro (or Nostro Nostro agents often act for several settlement members in an FMU. Agent) Nostro agents have no formal relationship with FMU’s or with the user members or third-party clients of the settlement member. Operational Risk The risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. Originator Sender of the first payment order in a funds transfer.
Originator’s Bank Receiving bank to which the originator’s payment order is issued.
Over-The-Counter Figurative term for the means of trading securities that are not listed on (OTC) an organized stock exchange such as the New York Stock Exchange. Over-the-counter trading is done by broker-dealers who communicate by telephone and computer networks.
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Payment A transfer of value.
Payment Order An instruction to a bank to pay or to cause another bank to pay a fixed or determinable amount of money to a beneficiary.
Payment System The mechanism—the rules, institutions, people, markets, and agreements—that make the exchange of payments possible.
Payment-vs-Payment A mechanism in a foreign exchange settlement system which ensures (PVP) that a final transfer of one currency occurs if and only if a final transfer of the other currency or currencies takes place.
Pre-Settlement risk The risk that a counterparty to an outstanding transaction for completion at a future date will fail to perform on the contract or agreement during the life of the transaction. The resulting exposure is the cost of replacing the original transaction at current market prices and is also known as replacement cost risk.
PSR Policy The Federal Reserve’s Payments System Risk policy.
Queuing A risk management arrangement whereby transfer orders are held pending by the originator/deliverer or by the system until sufficient cover is available in the originator’s/deliverer’s clearing account or under the limits set against the payer; in some cases, cover may include unused credit lines or available collateral.
Real-Time Gross A category of payments system. A system is said to operate in real-time Settlement (RTGS) if each payment is processed as it is initiated—which provides System immediate finality—rather than in batch. This serves to reduce Herstatt Risk. Gross settlement refers to the settlement of each transfer individually rather than netting. Fedwire uses a real-time gross settlement system.
Receiver Finality When the obligation of the originator bank to pay the beneficiary is discharged.
Repurchase A contract to sell and subsequently repurchase securities at a specified Agreement (aka date and price. Repo) Retail Payments Small-dollar payments made in the goods and services market.
Securities Settlement The full set of institutional arrangements for confirmation, clearance, System (SSS) and settlement of securities trades and safekeeping of securities.
Settlement The transfer of ownership involving the physical exchange of securities or payment. In a banking transaction, settlement in the process of recording the debit and credit positions of the parties involved in a transfer of funds; in a financial instrument transaction, settlement includes both the transfer of securities by the seller and the payment by the buyer. Settlements can be “gross” or “net.” Gross settlement means each transaction is settled individually. Net settlement means that parties exchanging payments will offset mutual obligations to deliver identical items, at a specified time, after which only one net amount of each item is exchanged.
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Settlement Date The date on which the parties to a transaction agree that settlement is to take place.
Settlement Finality When the sender’s obligation to pay its receiving bank is discharged.
Society for A cooperative organization created and owned by banks that operates a Worldwide Interbank network which facilitates the exchange of payment and other financial Financial messages between financial institutions (including broker-dealers and Telecommunication securities companies) throughout the world. A SWIFT payment (SWIFT) message is an instruction to transfer funds; the exchange of funds (settlement) subsequently takes place over a payment system or through correspondent banking relationships.
Strength of Support SOSA rankings reflect an assessment of a Foreign Bank Organization’s Assessment (SOSA) ability to provide financial, liquidity and management support to its U.S. ranking operations.
Substitute Check A substitute check is the legal equivalent of the original check and includes all the information contained on the original check.
Systemically Firms whose disorderly failure, because of their size, complexity and Important Financial systemic interconnectedness, would cause significant disruption to the Institutions (SIFI) wider financial system and economic activity. Systemically A payment system is systemically important where, if the system were Important insufficiently protected against risk, disruption within it could trigger or Payment System transmit further disruptions amongst participants or systemic disruptions in the financial area more widely.
Systemic Risk The risk that the failure of one participant in a transfer system, or in financial markets generally, to meet its required obligations will cause other participants or financial institutions to be unable to meet their obligations (including settlement obligations in a transfer system) when due. Such a failure may cause significant liquidity or credit problems and, as a result, might threaten the stability of financial markets.
Throughput Guidelines that require banks to submit certain percentages of the Requirements payments the banks make for the whole day by specified times during the day. Such throughput requirements can regulate the rate of turnover of account balances.
Trade Repository Authoritative registries of key information regarding open over-the-counter (OTC) derivatives trades to mitigate the opacity of OTC derivatives markets. TARGET2 TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem.
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Tri-party Repo A repurchase transaction in which a third party (tri-party agent) facilitates the transaction by providing operations services, such as custody of securities, settlement of cash and securities, valuation of collateral, and optimization tools. Wholesale Payments Large-value payments used primarily in the financial markets.
Warehouse Trust The Warehouse Trust Company LLC is a subsidiary of DTCC Deriv/SERV LLC. The Warehouse Trust is regulated as a member of the U.S. Federal Reserve System, and as a limited purpose trust company by the New York State Banking Department. It operates DTCC’s Trade Information Warehouse, which provides the market's first and only comprehensive trade database and centralized electronic infrastructure for post-trade processing of OTC credit derivatives contracts over their lifecycles, from confirmation through to final settlement.
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ACH Automated Clearing House BIS Bank for International Settlements CCP Central Counterparty CFTC Commodities Futures Trading Commission Check 21 Check Clearing for the 21st Century Act CHIPS Clearing House Interbank Payments System CLS Continuous Linked Settlement CMO Collateralized Mortgage Obligation CPMI (formerly Committee on Payments and Market Infrastructures CPSS) CSD Central Securities Depository DDRL DTCC Derivatives Repository Limited DFA Dodd-Frank Act DFMU Designated Financial Market Utility DLOD Day-Light Over-Draft DNS Deferred Net Settlement DTC Depository Trust Company DTCC Depository Trust & Clearing Corporation DVP Delivery-vs-Payments system ECCHO Electronic Check Clearing House Organization EFT Electronic Funds Transfer EPN Electronic Payment Network GSD Government Securities Division GSE Government Sponsored Entity FSA Financial Services Authority FBO Foreign Banking Organization FI Financial Institutions FICC Fixed Income Clearing Corporation FMI Financial Market Infrastructure FMU Financial Market Utility FR Federal Reserve FRBNY Federal Reserve Bank of New York FSB Financial Stability Board FSOC Financial Stability Oversight Council FX Foreign Exchange ICSD International Central Securities Depository IOSCO International Organization of Securities Commissions KRI Key Risk Indicators LVP Large-Value Payments MMIs Money Market Instruments MBS Mortgage-Backed Securities MBSD Mortgage-Backed Securities Division NACHA Electronic Payments Association NDF Non-Deliverable Forward NSCC National Securities Clearing Corporation NSS National Settlement Service NYSE New York Stock Exchange OC Oversight Committee OTCD Over-the-counter derivatives ODRF OTC Derivatives Regulators’ Forum ODSG OTC Derivatives Supervisors Group ORM Operational Risk management PCS Payment, Clearing and Settlement 11
PFMIs 2012 CPSS-IOSCO Principles for Financial Market Infrastructures PS Payment System PSPAC Payment System Policy Advisory Committee PSR Payments System Risk PVP Payment-vs-Payment P2P Person-to-Person RTGS Real-Time Gross Settlement SEC Securities and Exchange Commission SOSA Strength of Support Assessment SIFI Systemically Important Financial Institutions SSS Securities Settlement System SWIFT Society for Worldwide Interbank Financial Telecommunication TARGET Trans-European Automated Real-time Gross settlement Express Transfer TIW Trade Information Warehouse TPR Tri-Party Repo TR Trade Repository UCC Uniform Commercial Code UST US Treasury WT Warehouse Trust
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Payment System Policy and Oversight Course Federal Reserve Bank of New York 33 Liberty Street, 12th Floor Conference Center (Final Day: Course moves to 13th Floor – Multi Purpose Room) May 11-14, 2015
Reference Guide
Federal Reserve regulations and policies:
1. Policy on Payment System Risk, October 2014 http://www.gpo.gov/fdsys/pkg/FR-2014-11-13/pdf/2014-26791.pdf 2. Regulation HH, October 2014 http://www.gpo.gov/fdsys/pkg/FR-2014-11-05/pdf/2014-26090.pdf
BIS publications:
1. Principles for financial market infrastructures (PFMIs), April 2012 http://www.bis.org/cpmi/publ/d101.htm 2. PFMIs, disclosure framework and assessment methodology, December 2012 http://www.bis.org/cpmi/publ/d106.pdf 3. Implementation monitoring of PFMIs - Level 2 assessment reports for central counterparties and trade repositories - US, Japan, EU, February 2015 http://www.bis.org/cpmi/publ/d126.htm http://www.bis.org/cpmi/publ/d127.htm http://www.bis.org/cpmi/publ/d128.htm 4. Implementation monitoring of PFMIs - Level 1 assessment report, August 2013 http://www.bis.org/cpmi/publ/d111.pdf
5. Public quantitative disclosure standards for central counterparties, February 2015 http://www.bis.org/cpmi/publ/d125.htm 6. Assessment methodology for the oversight expectations applicable to critical service providers, December 2014 http://www.bis.org/cpmi/publ/d123.htm 7. Statistics on payment, clearing and settlement systems in the CPSS countries, figures for 2013, December 2014 http://www.bis.org/cpmi/publ/d124.htm 8. Cyber resilience in financial market infrastructures, November 2014 http://www.bis.org/cpmi/publ/d122.htm 9. Recovery of financial market infrastructures, October 2014 http://www.bis.org/cpmi/publ/d121.htm 10. Developments in collateral management services, September 2014 http://www.bis.org/cpmi/publ/d119.htm 11. Non-banks in retail payments, September 2014 http://www.bis.org/cpmi/publ/d118.htm 12. Authorities' access to trade repository data, August 2013 http://www.bis.org/cpmi/publ/d110.pdf 13. Supervisory guidance for managing risks associated with the settlement of foreign exchange transactions, February 2013 http://www.bis.org/publ/bcbs241.pdf 14. Final report on OTC derivatives data reporting and aggregation requirements, January 2012 http://www.bis.org/cpmi/publ/d100.htm
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15. Report on Trading of OTC derivatives, February 2011 http://www.iosco.org/library/pubdocs/pdf/IOSCOPD345.pdf 16. Strengthening repo clearing and settlement arrangements, September 2010 http://www.bis.org/cpmi/publ/d91.htm 17. The Interdependencies of Payment and Settlement Systems, June 2008 http://www.bis.org/cpmi/publ/d84.htm 18. Progress in reducing foreign exchange settlement risk, May 2008 http://www.bis.org/cpmi/publ/d83.htm 19. Developments in Clearing and Settlement Arrangements for OTC Derivatives, March 2007 http://www.bis.org/cpmi/publ/d77.htm 20. General Guidance for National Payment System Development, Jan 2006 http://www.bis.org/cpmi/publ/d70.htm 21. Developments in Large Value Payment Systems, May 2005 http://www.bis.org/cpmi/publ/d67.htm 22. Central Bank Oversight of Payment and Settlement Systems, May 2005 http://www.bis.org/cpmi/publ/d68.htm 23. The role of central bank money in payment systems, August 2003 http://www.bis.org/cpmi/publ/d55.htm
Central bank payment system information from the CPMI (formerly CPSS):
1. Reference to all central bank payment system information http://www.bis.org/cpmi/paysysinfo.htm 2. Reference to U.S. payments systems in the CPSS’ red book http://www.bis.org/cpmi/paysys/unitedstatescomp.pdf
Other references:
1. Payments Risk Committee http://www.newyorkfed.org/prc/ 2. Financial Sector Assessment Program (FSAP) country reports http://www.imf.org/external/NP/fsap/fsap.asp#C 3. Tri-party Repo Infrastructure Reform http://www.newyorkfed.org/banking/tpr_infr_reform.html
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