It had responsibility for the CHAPS system, providing high-value, same-day settlement with a minimum value of £ (equivalent to around £ in today’s prices).5 Today there is no minimum value, but CHAPS settles around £ billion every working day, representing 93% of non-cash payments in the UK. Around 40% of CHAPS payments originate from organisations based overseas, reflecting the UK’s strong links to the global economy. Bringing CHAPS into the Bank When RTGS was established in 1996, it became the settlement infrastructure for CHAPS, increasing financial stability by ensuring the highest value payments were settled real time in central bank money. The CHAPS Co Clearing Company Ltd (CHAPS Co) continued to operate the CHAPS scheme from a member perspective until last year. Bringing CHAPS in-house marked an important milestone in our ongoing work to make CHAPS and RTGS safer, more secure, more accessible, and in line with international best practice. Until last year, the UK was unusual in that a private sector company (CHAPS Co) was responsible for the governance and rulebook6 of the high-value payment system, while the Bank provided the underlying settlement infrastructure. In 2017 the Bank’s analysis concluded that there were structural constraints in this model. Given the status of RTGS as critical national infrastructure, CHAPS Co could not be given the full range of information on RTGS that it would need to identify and manage risks across the whole payment system.
We engaged with them to discuss these risks and how “de-tiering” could alleviate them. Each of these banks now accesses CHAPS directly. Over the last year, they accounted for 17% of total CHAPS values, demonstrating a clear and measurable reduction in risk, which in turn, benefits the wider payments ecosystem and all of its participants and end users. In April 2012, after consultation with all CHAPS participants, formal tiering criteria were introduced to CHAPS based on a presumption that Indirect Participants that breach the criteria should transition to direct access. The Bank will continue to analyse the financial stability risks presented by indirect access and further refine if we consider there is an unacceptable level of risk. Expanding eligibility to non-banks. Where it can be done safely without compromising our mission to maintain monetary and financial stability, we also seek to promote efficiency, innovation and competition through our operation of RTGS and CHAPS. We have therefore recently widened the access criteria for RTGS and CHAPS to enable non-bank PSPs to join. Key to this was working closely with the FCA, HM Treasury and the PSR to develop a supervisory regime that would allow non-bank PSPs to access settlement in RTGS and participation in the CHAPS payment system without increased risks. In April 2018 Transferwise was the first non-bank PSP to join RTGS and was followed by iPagoo who in August 2018 was 8 i.e.