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Test

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Elmond Tan

on 27 July 2016

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Transcript of Test

Deals Processing And Settlement Flows
Singapore And MEPS
CA 2 Project Presentation
$
$
$
$
Content
Cross Border
Interbank Payment Systems
Explain
WHAT
Cross Border
Interbank Payment Systems
means ?
Real Time Gross Settlement (RTGS)
And
Netting
Describe the
DIFFERENCE
ADVANTAGE
DISADVANTAGE
and
between RTGS and Netting.
List one
of RTGS and Netting.
What do we have???
Singapore Payment System

MEPS
Introduction
of MEPS
Regulator
of MEPS
Summarise
of how MEPS works
Analyse
the STRENGTHS/WEAKNESSES/RISK
on MEPS
of MEPS
Case study


£
£


£
£
¥
¥
¥
¥
Fr
Fr
Fr
Fr
Participants
Different countries
payment services providers
Cross Border
Interbank Payment System
Allows the clearing and settlement of payments.

Brings substantial contribution to the integration of markets.
S
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CROSS BORDER INTERBANK PAYMENT SYSTEM
WHAT
DOES?
Real Time Gross Settlement
and
Netting
Difference between
RTGS
Enables the transacting parties
to do each transaction one at a time
Netting
Allows the transacting parties to combine the value which reduce the number of transactions.
Advantage
Reducing number of transactions, also reduces the risk of running errors.


Settlement dates may not match the transaction dates
Disadvantage
And
Netting
BUT
Immediate transmission (on the transaction date) which would not lead to unmatched transaction dates


Incurred the risk of gridlock from insufficient intraday liquidity.
RTGS
BUT
MAS Electronic Payment System (MEPS)
MEPS - IFT
Are you sure there's
nothing else in SGS?!
MEPS - SGS
Raffles???
MAS???

Replace SHIFT (System for Handling Interbank Funds Transfer)

Handle the use of for high value interbank fund transfers;

Settle the scripless Singapore Government Securities (SGS).

Transfer are instantaneous and irrevocable
MEPS (13 August 1998)- RTGS system
WHY
SHIFT
had to be
REPLACE?
Payment instructions are accumulated throughout the day
Net obligation for each bank is computed and settled ONLY AT THE END OF THE DAY
Result in systemic risk
SHIFT
MEPS
Reduces settlement risk as transfers are settled on a
GROSS BASIS CONTINUALLY DURING THE DAY
Minimise intra-day interbank exposure
MEPS sustain
REAL-TIME SYSTEM
Singapore Exchange (SGX),

Debt Securities Clearing and Settlement System (DCSS)

For the settlement of listed
Singapore Dollar (SGD) corporate debt
securities on a Delivery Versus
Payment (DVP) basis
link
Making direct payments.

Hiring participating bank (on their behalf)
to transfer small amounts of SGD

Does not have any limits to such negotiation.
USING MEPS
SGD
SGD
MEPS
Interbank
Funds
Transfer
(MEPS-IFT)
Singapore
Government
Securities
(MEPS-SGS)
IFT was made using MEPS messages
(derived from SWIFT standards).

Same day value transactions

Forward dated transaction
_______________________
_______________________
* Flat fee is charged for
every MEPS message by initiating bank
Stores government bonds and controls the transfer of SGS.
Choose the basis of MEPS-SGS
Delivery-Versus-Payment
(DVP)
Free-Of-Payment
(FOP)
SGS transactions takes
place on an electronic
basis over MEPS


MAS-SGS book-entry
clearing system.
AND
Encompasses a
transfer of SGS
without an equivalent
funds transfer
instruction.
SGS-Minimum Liquid Assets account (SGS-MLA)
Designed to uphold SGS agreement to meet the minimum
liquid assets requirements
Two Sub-Accounts for SGS :
Any extras from the requirements or the excess holdings will be preserved in SGS-Free account and it can be used for settlement.
SGS-Free account
Level type of transactions:
1) Transactions with MAS
2) Cheque/Interbank GIRO (IBG) transactions
3) Banks’ urgent transactions
4) SGS transactions
5) Banks’ normal transactions
9) Banks’ transactions on hold
Operation of the transfer system and the transaction processing environment
Submitted payment instructions
with lack of funds will be in QUEUE till there is sufficient funding
WHERE
Queues are settled according to their assigned priority levels on a first-in-first-out (FIFO) basis.
*Registered banks are only able to reprioritise payments at importance levels 3, 5 or 9
Credit and liquidity risks
and their management

To minimise settlement risk,
Allows banks to use the full amount
of their reserves on an intraday basis
MAS
Extends intra-day credit based on potential systemic impact on the systematic function of the money market and RTGS system.
End-of-day facility, banks can borrow funds after working hours from MAS for overnight repurchase transactions of
SGS.
To ensure the confidentiality, integrity and authenticity (CIA) of the payment messages, operational risk must be mitigated.
Rigorous front-end application user security mechanisms
Encryption technologies
Digital signatures
Business continuity
Disaster recovery plans
Speech By DPM Lee Hsien Loong, Chairman Of MAS
At The Official Launch Of The MAS Electronic Payment System
13 August 1998
Banks managed their payments
and liquidate their positions
more efficiently and effectively.
Reduce settlement risks.
MEPS links Singapore with other financial centers
GLOBALLY
future ventures to make international Payment-Versus-Payment system for FX transactions.
With MEPS
Guaranteed good funds
Payment queues are prioritized
Banks monitor account positions and payments instantaneously
Avoiding systemic risk
MEPS enhanced Singapore's financial system
Case 1
Payment consistency cannot be
impaired when switching
from automated MEPS to manual back-up.
MEPS responsible for
Overseeing high-value interbank funds transfers
Settles payments related to interbank GIRO transfers and cheque processing
Central Depository of the Singapore Exchange which settles Singapore’s dollar-denominated debt securities
MAS introduced a new set
of risk measures
Computer system failure
System failure recovery and
manual back-up
Emergency plans for recovery of business processes
New Risk Measures
For MAS’ Payment System
Case Study 2:
MAS upgrades the current EPS to MEPS+
To supervise their liquidity more smoothly
Manage large transfers of funds with GIRO transfers and cheque processing
Automated liquidity and flexible queue management functions
Control their liquidity more competently
Lehman Brothers caused a financial crisis globally
MAS took a variety of steps to cope with the financial crisis
Inserting extra funds into Singapore’s banking system
Addition of US$30 billion swap line with US Federal Reserve
Measures are effective in dealing and anticipating tight liquidity conditions
Level of liquidity increased in the banking system to more than 3.5 percent of total liabilities
_____________________________________________
MAS Eased Liquidity Stresses
MAS To Upgrade Electronic Payments System
______________________________________________
Case 2
Case 3 & 4
Conclusion
MEPS has played as a more effective and efficient payment system and it increased growth to the financial world.
Case Study
2 &
3
4
to MEPS
Improvement
demand on the provision of this system.
Full transcript