‘Fully-automated ISF to solve transaction timing issues’
THE transaction timing issues encountered by financial institutions will now be hastened through the fully-automated Intraday Settlement Facility (ISF) launched by the Bangko Sentral ng Pilipinas (BSP).
The BSP said it rolled out the new automated system together with the Bureau of the Treasury (BTR) on June 27, 2024, to fasten the turnaround time of settlements, support paperless transactions and manage funds efficiently.
The BSP noted the system is aligned with the central bank’s mandate of “promoting a safe, efficient, and reliable mode of funds transfer in support of financial stability.”
The BSP said the ISF is available to all eligible financial institutions experiencing timing mismatches when they engage in transactions involving government securities through the Peso Real-time Gross Settlement (RTGS) Payment System managed by the central bank.
The ISF automates the settlement process by linking the BSP’S RTGS system, or PhilPassplus, to the Btr’s Enhanced National Registry of Scripless Securities.
This system will enable Philpassplus participants to obtain funds within a few minutes after initiating repurchase agreement or “repo” transaction with the BSP.
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.
These funds can cover the participants’ queued or expected outgoing payment instructions in the Philpassplus, the BSP added.
The ISF is also designed to support a paperless process aside from preventing gridlocks in the Philpassplus due to its automation reducing physical documents.
This system also settles the clearing results of retail payments made by individuals, businesses, and the government using checks, ATMS, Instapay and PESONET, the BSP said.
Philpassplus, owned and managed by the BSP through the Payments and Settlements Department, enables an “efficient and low-risk” settlement of large-value funds transfers between financial institutions, according to the BSP.
Meanwhile, the Peso RTGS Payment System designated as a systematically important payment system (Sips), poses or has potential to pose systemic risk that could threaten the stability of the national payment system, under the BSP’S Payment System Oversight Framework.
Its participants are required to comply with the rules, standards, and requirements promulgated by the BSP, and contribute toward ensuring the safety, efficiency, and reliability of the payment system, the BSP said.