Central bank, Treasury launch fully automated intraday settlement facility

The Bangko Sentral ng Pilipinas (BSP) and Bureau of the Treasury (BTr) have launched a fully automated intraday settlement facility (ISF) to address timing issues and make transactions for banks more efficient.

In a statement on Monday, the central bank said it officially rolled out the automated ISF on June 27.

“The facility is available to all eligible financial institutions that encounter timing mismatches when settling their transactions through the Peso Real-Time Gross Settlement (RTGS) Payment System operated by the BSP.”

The automated ISF was developed by linking the BSP’s RTGS system or the Philippine Payment and Settlement System (PhilPaSS) Plus with the BTr’s National Registry of Scripless Securities (NRoSS).

The BSP said the facility’s full automation promotes a “safe, efficient, and reliable mode of fund transfer in support of financial stability.”

“Aside from preventing gridlocks in the PhilPaSS Plus from timing mismatches in the settlement of payments between participants, the ISF is designed to support a quick and efficient paperless process,” the central bank said.

“This allows PhilPaSS Plus participants to obtain funds within a few minutes after initiating a repurchase agreement or repo transaction with the BSP. These funds can cover the participants’ queued or expected outgoing payment instructions in the PhilPaSS Plus,” it added.

A repurchase agreement (repo) is a transaction in which the borrower temporarily lends a security to the lender for cash with an agreement to buy it back in the future at a pre-determined price, the BSP said, citing the International Monetary Fund.

PhilPaSS Plus is a real-time gross settlement system that processes and settles high-value transactions between financial institutions.

The growing number of settlements by financial institutions prompted the BSP to upgrade the PhilPaSS system to PhilPaSS Plus in July 2020.

“This system also settles the clearing results of retail payments made by individuals, businesses, and the government using checks, ATMs, InstaPay, and PESONet,” the central bank added.

Meanwhile, the NRoSS is one of the electronic registry systems the Treasury uses for the issuance of government securities.

In January, the BSP amended the regulations on the return of banks’ bounced checks, as well as reintroduced the intraday liquidity facility to also prevent timing mismatches in the settlement of payments. — Luisa Maria Jacinta C. Jocson