BESP Russian RTGS implementation uptodate state and development

BESP (Russian RTGS) implementation: up-to-date state and development perspectives Bolshakov Mikhail London, 9 th IRSF April 12, 2011

Content 1. Bank of Russia payment system development concept 2. Financial market infrastructures (FMI) and Bank of Russia payment system interaction instruments 3. Access to the BESP system through SWIFT transport 4. Negotiations with CLS Bank International for rouble inclusion 2

1. Bank of Russia payment system development. Steps done. • Bank of Russia payment system development concept till 2015 Approved by the Board of Directors of the Central Bank of the Russian Federation (Protocol No. 16 of July 16, 2010) • Nearly all CI became BESP members All credit institutions, which were not in liquidation process, automatically joined BESP system on August 27, 2010. 3

1. Bank of Russia payment system development prospect (centralization) interlinking RC-1 RC-2 RC-… RC-77 RC-78 2011 year federal component offsetting of non-urgent payments 2013 year From regionally localized to fully centralized structure From general-purpose functionality to specialized services for urgent and non-urgent payment 4

1. Main goals on the first development stage • Introduction of uniform working time • Choice of the manner of liquidity distribution between BESP and Federal component system • Choice of the settlement rules in Federal component system • Choice of participants inclusion rules into BESP and Federal component system 5

1. BESP system evolution 4 th quarter 2008 4 th quarter 2009 4 th quarter 2010 Payments volume 6

1. BESP system evolution 7

1. Bank of Russia payment system tariffs Type of service RUB EUR (1: 40) Intraregional electronic payments 7 -201 0. 175 -0. 5 Interregional electronic payments 8 -241 0. 2 -0. 6 Payments carried out through the BESP system express payments of direct participants 30 0. 75 regular payments of direct participants 25 0. 625 regular payments of associated participants 20 0. 5 9 -13 0. 225 -0. 325 Information services in the BESP system Discount rates in the BESP system Number of payments Discount rate, % from 301 to 500 4 from 501 to 1000 5 over 1000 6 1 - depending on the transmission time period 8

2. Peculiarities in FMI and Bank of Russia payment system interaction FMI are simple clients in BESP system – Now FMI are represented by NSD and MICEX indirectly Peculiarities in interaction with BESP system – Liquidity distribution – Limited set of payment instruments (even without direct debit) – Absence of special instruments for Dv. P, Pv. P schemes implementation 9

2. FMI and Bank of Russia payment system interaction instruments • Direct debit instrument in BESP system – For Bank of Russia own operations – To simplify interaction of FMI and participants • REPO implementation for BESP and NSD clients 10

2. Preliminary REPO implementation scheme Bank of Russia DSP CI NSD MICEX 11

3. New transport facilities V – shape scheme BESP FIN – main interaction File. Act, MT 999 – users directory new payment instrument Conversion 2011 MT 103 – payments SWIFT formats MT 992, MT 995 – queries 2011 MT 996, MT 998 – answers MT 900, MT 910 – debit/credit approval MT 202 – with new payment instruction SWIFT transport Bank of Russia VPN DSP, ASP Participant DSP CLS bank (2013? ) 12

3. New payment instruments • Payment Instruction STP compatible with SWIFT formats – Fields length compatible – STP rules of field to field content conformity • New rules of payment instruction processing increasing STP level – Fund transfer decision on digital requisites – Execution of payment instructions with fields in English for payments that are not own bank payments 13

The model of new SWIFT compatible instrument utilization in payment instructions flow Payment system Bo. R Instruments Organizations 3. SWIFT participants STP Including non-residents DSP translation to Credit Institutions 0401070 Payment instruction 0401070 MT 103 MT 202 SWIFT transport BESP system 14

The model of new SWIFT compatible instrument utilization in payment instructions flow Payment system Bo. R Instruments Organizations 3. SWIFT participants translation. Including non-residents to DSP Credit Institutions STP MT 103, MT 202 Payment instruction 0401070 MT 103 MT 202 SWIFT transport BESP system 15

4. Negotiations with CLS Bank International for rouble inclusion Estimate rouble inclusion in CLS – 2 years 16

Thank you for attention!