PAYMENT AND SETTLEMENT SYSTEMS - Bank Negara …

1 PAYMENT AND SETTLEMENT SYSTEMS . PAYMENT AND SETTLEMENT SYSTEMS . FINANCIAL STABILITY AND PAYMENT SYSTEMS REPORT 2010. 85 Developments in PAYMENT and SETTLEMENT SYSTEMS 89 Oversight of the PAYMENT and SETTLEMENT SYSTEMS 93 Sectoral Migration to Electronic payments 94 Regional PAYMENT System Integration 83. PAYMENT AND SETTLEMENT SYSTEMS FINANCIAL STABILITY AND PAYMENT SYSTEMS REPORT 2010 84. PAYMENT AND SETTLEMENT SYSTEMS . The oversight of the PAYMENT and SETTLEMENT transactions settled in 2010, mainly involving SYSTEMS by the Bank continued to focus on foreign exchange settlements, re ecting the systemic risk reduction, promoting an ef cient pick up in business and nancial transactions as PAYMENT and SETTLEMENT infrastructure to con dence in the global economy improved.

2 The cater for both domestic as well as cross-border value of foreign exchange transactions settled payments and improving ef ciency in the through the PAYMENT versus PAYMENT (PvP) link provision of PAYMENT services. With a view to between RENTAS and the USD Clearing House accelerate the adoption of electronic payments Automated Transfer System (USD CHATS) in (e- payments ), the Bank has intensi ed its efforts Hong Kong SAR registered a signi cant increase to achieve greater utilisation of electronic means of The total value of transactions settled of payments in targeted sectors including through RENTAS represents times Malaysia's initiatives to provide wider and more convenient gross domestic product (GDP) while the daily access to PAYMENT SYSTEMS and PAYMENT services.

3 Average turnover of RENTAS recorded an average The major PAYMENT SYSTEMS in Malaysia remained annual growth of in the past ve years. resilient and operated without any material disruption throughout 2010, thus ensuring the Modernising RENTAS. timely SETTLEMENT of both systemically important Apart from facilitating the effective execution of high-value transactions and retail transactions. monetary policy, RENTAS plays a pivotal role in enhancing the ef ciency of the nancial system and the economy as a whole. The convenience The major PAYMENT SYSTEMS in and speed of executing and receiving PAYMENT transactions through RENTAS has a direct bearing Malaysia remained resilient and on the operational ef ciency of the nancial institutions, corporates and businesses.

4 In the operated without any material light of the signi cant PAYMENT ows passing disruption throughout 2010, thus through the system and as Malaysia's nancial sector expands and integrates with regional ensuring the timely SETTLEMENT and global markets, the ef cient functioning of FINANCIAL STABILITY AND PAYMENT SYSTEMS REPORT 2010. RENTAS and its ability to cater for cross-border of both systemically important payments were given greater focus by the Bank high-value transactions and retail during the year. transactions Chart RENTAS : Daily Average by Value and Volume DEVELOPMENTS IN PAYMENT AND RM billion ('000). SETTLEMENT SYSTEMS 180 14.

5 160. 12. RENTAS 140. 10. 120. The Real-time Electronic Transfer of Funds and 8. 100. Securities System (RENTAS) which provides 80 6. real-time gross SETTLEMENT (RTGS) of transfers 60. 4. between members for high-value payments 40. as well as Delivery versus PAYMENT (DvP) 20. 2. securities SETTLEMENT is now operated by the 0 0. 2002 2003 2004 2005 2006 2007 2008 2009 2010. Bank's wholly-owned PAYMENT subsidiary, Volume (RHS) Value Malaysian Electronic Clearing Corporation Sdn. Bhd. (MyClear). RENTAS continued to Source: Bank Negara Malaysia register increases in the daily average value of 85. In April 2010, the Bank announced its participation of the SWIFT messaging standard will allow in the pilot implementation of a common platform Malaysian banks and corporates to streamline their PAYMENT AND SETTLEMENT SYSTEMS .

6 For the Asian post-trade processing infrastructure. domestic and international treasury operations to This is a collaborative initiative among several improve operational ef ciency and lower PAYMENT central banks and central securities depositories infrastructure cost. in the region together with Euroclear, an International Central Securities Depository (ICSD), under the Pan-Asian Central Securities Depository Alliance (the Alliance). The Alliance is a regional In the light of the signi cant task force formed to facilitate the development of PAYMENT ows passing through the the Asian bond market by promoting ef cient and cost-effective post-trade SETTLEMENT and processes system and as Malaysia's nancial for the Asian capital market.

7 The initiative will link RENTAS with Euroclear thus allowing sector expands and integrates with MyClear to provide custodian services for securities regional and global markets, the denominated in any currency. In addition, the link would provide seamless accessibility to securities ef cient functioning of RENTAS and and sukuk issued and deposited in Malaysia by international investors. The pilot which is planned its ability to cater for cross-border for implementation in the second half of 2011 will payments were given greater focus further strengthen Malaysia's position as the world's largest securities depository for sukuk instruments.

8 By the Bank during the year To complement this, RENTAS would be enhanced to allow multi-currency settlements. Given the complexity of the initiative, the Developments are also underway to enhance RENTAS implementation of the SWIFT messaging standard to adopt the international messaging standard will be carried out on a staggered basis to the Society for Worldwide Interbank Financial minimise operational risks and is targeted for Telecommunication (SWIFT) standard. The adoption completion in 2014. Table Major Retail PAYMENT SYSTEMS in Malaysia System Description Operator FINANCIAL STABILITY AND PAYMENT SYSTEMS REPORT 2010. National Electronic Cheque An image-based cheque clearing system where the cheque image MyClear Information Clearing System and magnetic ink character recognition (MICR) code line data are (eSPICK) captured and transmitted electronically to facilitate clearing.

9 Interbank GIRO (IBG) An interbank funds transfer system that facilitates payments of Malaysian Electronic PAYMENT up to RM500,000 per transaction. System Sdn. Bhd. (MEPS). Shared ATM Network (SAN) A network switch which enables bank customers to access their MEPS and HOUSe funds from any of the participating banks' automated teller machines (ATMs). There are currently two networks MEPS SAN. and HOUSe. MEPS is owned by all domestic commercial banks, two Islamic banks and one development nancial institution, while HOUSe is owned by four locally incorporated foreign banks. e-Debit A switching network which enables participating banks' ATM MEPS.

10 Cards to be used to pay for purchases at point-of-sale (POS). terminals at all participating retail outlets. Financial Process Exchange (FPX) An Internet-based multi-bank PAYMENT platform that leverages on MEPS. the Internet banking services of banking institutions to offer online PAYMENT for electronic commerce (e-commerce) transactions. MEPS Direct Debit An interbank collection service for regular and recurring payments MEPS. enabling automated collection directly from a customer's bank account at multiple banks with a single authorisation. Source: Bank Negara Malaysia 86. Retail PAYMENT SYSTEMS at the ATM was higher, increasing from RM470.