Bolshakov Mikhail

London, 9th IRSF

April 12, 2011

BESP (Russian RTGS) implementation: up-to-date state and

development perspectives

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

3

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 membersAll credit institutions, which were not in liquidation process, automatically joined BESP system on August 27, 2010.

1.1.

4

Bank of Russia payment system development prospect (centralization)

2011 year 2013 year

From regionally localized to fully centralized structureFrom general-purpose functionality to specialized services for urgent and non-urgent payment

federalcomponent

offsetting of non-urgent paymentsRC-78RC-77RC-…RC-2RC-1

interlinking

1.1.

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

1.1.

5

6

BESP system evolution

4th quarter 20104th quarter 2010

4th quarter 20084th quarter 2008 4th quarter 20094th quarter 2009

1%

99%

1.1.

Payments volumePayments volume

BESP system evolution1.1.

0

5000

10000

15000

20000

25000

30000

35000

40000

45000of roublesBillions

1 quarter 2008 1 quarter 2009 1 quarter 2010 1 quarter 2011

DSP ASP SSP

7

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

Information services in the BESP system 9-13 0.225-0.325

1.1.

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 1- depending on the transmission time period

8

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 DvP, PvP

schemes implementation

2.2. Peculiarities in FMI and Bank of Russia payment system interaction

9

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

2.2.

10

Preliminary REPO implementation scheme

DSP DSP

Bank of RussiaBank of Russia

CICI

2.2.

NSDNSD MICEXMICEX11

12

ParticipantParticipant

BESP

Bank of Russia VPN

Bank of Russia VPN

SWIFT transport

SWIFT transport

SWIFTformats

new payment instrument

V – shape scheme

ParticipantParticipant

New transport facilities

ParticipantParticipant

2011

CLS bank (2013?)

CLS bank (2013?)

FIN – main interaction

FileAct, MT999 – users directory

MT103 – payments

DSP, ASPMT202 – with new payment instruction

MT992, MT995 – queries

DSP

MT996, MT998 – answers

MT900, MT910 – debit/credit approval

3.3.

Conversion

2011

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

3.3.

13

SWIFT transport

SWIFT transport

BESP systemBESP system

The model of new SWIFT compatible instrument utilization in payment instructions flow

SWIFT participants Including non-residents

SWIFT participants Including non-residents

Pay

men

t sy

stem

B

oR

Pay

men

t sy

stem

B

oR

DSPDSPCredit InstitutionsCredit Institutions

Inst

rum

ents

Inst

rum

ents

Org

aniz

atio

nsO

rgan

izat

ions

Payment instruction 0401070

Payment instruction 0401070

STP translation to

0401070

STP translation to

0401070

04010700401070

MT103MT202

MT103MT202

3.3.

14

Payment instruction 0401070

Payment instruction 0401070 SWIFT

transport

SWIFT transport

BESP systemBESP system

The model of new SWIFT compatible instrument utilization in payment instructions flow

SWIFT participants Including non-residents

SWIFT participants Including non-residents

DSPDSPCredit InstitutionsCredit Institutions

STP translation to MT103,MT202

STP translation to MT103,MT202

04010700401070

MT103MT202

MT103MT202

3.3.P

aym

ent

syst

em

BoR

Pay

men

t sy

stem

B

oR

Inst

rum

ents

Inst

rum

ents

Org

aniz

atio

nsO

rgan

izat

ions

15

Negotiations with CLS Bank International for rouble inclusion

4.4.

Estimate rouble inclusion in CLS – 2 yearsEstimate rouble inclusion in CLS – 2 years

16

Thank you for attention!