The Timing and Funding of CHAPS Sterling Payments

Becher, Christopher; Galbiati, Marco; Tudela, Merxe

doi:10.2139/ssrn.1141340

Cited by 27 publications

(28 citation statements)

References 7 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The free-riding behaviour is considered intentional when a payments delay arises as a strategic decision; however, it may also be non-intentional when it emerges from the type of business conducted by a financial institution (Denbee et al 2012). In any case, and as noted by Bech, Galbiati and Tudela (2008), delaying payments could imply additional costs for the financial institution following this payments pattern, given by:…”

Section: Free-riders In Large-value Payment Systemsmentioning

confidence: 99%

Free-riding on liquidity in the colombian LVPS

Martínez-Ventura¹,

Cepeda-López²,

Martínez³

2016

View full text Add to dashboard Cite

The functioning of large-value payment systems (LVPSs) can be affected when some of its participants voluntarily decide to delay their payments until they can totally fund them with the payments received from other participants. This behaviour, known as the free-rider problem, can cause an under-provision of liquidity in LVPSs that operate under a RTGS (real-time gross settlement) mode. With the aim of determining whether there are free-riders in the Colombian LVPS (CUD), we empirically tested this payment strategy: firstly, using regression techniques (quantile regression models) and secondly, computing the empirical quantiles. Our results indicate that there is evidence of this problem in the Colombian case; however, their negative effects on CUD are negligible.

show abstract

Section: Free-riders In Large-value Payment Systemsmentioning

confidence: 99%

Free-riding on liquidity in the colombian LVPS

Martínez-Ventura¹,

Cepeda-López²,

Martínez³

2016

View full text Add to dashboard Cite

show abstract

“…Becher et al [5] investigate the factors influencing the timing and funding of payments in the CHAPS Sterling system (the British LVPS), drawing where appropriate on comparisons with payment activity in Fedwire. Their results show that the settlement of time-critical payments in CHAPS supplies liquidity early in the day.…”

Section: Literature Reviewmentioning

confidence: 99%

Direct Participants’ Behavior Through the Lens of Transactional Analysis: The Case of SPEI®

Alexandrova-Kabadjova

Serguieva

Heijmans

et al. 2015

Proceedings of the International Conference on Social Modeling and Simulation, Plus Econophysics Colloquium 2014

View full text Add to dashboard Cite

This paper presents a methodology to study the flow of funds in large value payment systems (LVPSs). The presented algorithm separates the flow of payments in two categories: (1) external funds, i.e. funds transferred from other financial market infrastructures (FMIs) or provided by the central bank and (2) the reuse of incoming payments. Our method further studies the flow of intraday liquidity under the framework of its provision within the Mexican FMIs. The aim is to evaluate the impact of the intraday liquidity provision, and understand how liquidity is transmitted to participants in the Mexican LVPS SPEI R . IntroductionThe worldwide economic crisis has revealed that liquidity problems of (large) banks can occur suddenly, and with serious consequences for the (global) financial stability. The Lehman Brothers' collapse in 2008 is the most recent and widely referred to example. The interest, by both academics and financial authorities (such as central banks), in intraday liquidity management has gained momentum since then. Studying intraday liquidity flows, gives valuable insight into: (1) the provision of liquidity and the level of efficient use, (2) potential liquidity risks in settling payment obligations, and (3) the degree of interdependencies between financial B. Alexandrova-Kabadjova ( ) • L. Garcia-Ochoa Banco de México,

show abstract

“…We have used We observe in subfigure 1(a) that under normal operational conditions there are certain patterns in the way participants sent payment orders with value lower than 100. In particular, given the average and standard deviation calculated per day of the week presented in the first two rows in table 3, we can say that there is a weekly periodicity in such a way that Fridays the transaction volume is higher than the rest of the week, whereas Tuesday is the day with lower volume 7 . In comparison with the daily average and standard deviation presented in table 3, the weekday average calculated for Monday, Tuesday and Wednesday is lower than the overall daily average presented in table 3, whereas the standard deviation observed for each of the days of the week presented in table 2 is smaller than the standard deviation reported in table 3.…”

Section: How Volume and Value Is Related To The Delay Of Paymentsmentioning

confidence: 99%

“…To achieve this, due to the volume of transactions settlement engines need to ensure highly efficient liquidity usage with the guarantee that retail payments do not delay time sensitive payments that settle important financial market obligations. In this line of research, mainly the efficient use of liquidity, several studies have been developed in the last decades among which are [3,7,10]. To that end, payment systems need to establish timely and liquidity-efficient operational rules, which will allow the settlement of a high volume of retail payments with minimum pressure on intraday liquidity usage.…”

Section: Introductionmentioning

confidence: 99%

The Mexican Experience in How the Settlement of Large Payments is Performed in the Presence of a High Volume of Small Payments

Alexandrova-Kabadjova

Solís-Robleda

2012

SSRN Journal

View full text Add to dashboard Cite

The Mexican experience in how the settlement of large payments is performed in the presence of a high volume of small payments Working Papers, Banco de México, No. 2012-17 Provided in Cooperation with: Bank of Mexico, Mexico City Suggested Citation: Alexandrova-Kabadjova, Biliana; Solís-Robleda, Francisco (2012) : The Mexican experience in how the settlement of large payments is performed in the presence of a high volume of small payments, Working Papers, Banco de México, No. 2012-17 Abstract: Payment systems play a key role in the financial infrastructure of all modern economies. Participants of payment systems need access to intraday liquidity to fulfill their payment obligations. They do that either using their own funds, which are costly, or recycling incoming payment. In order to rely on incoming payments, banks could delay the settlement of their own payment obligations. From the regulators' point of view it is important to know to what degree participants rely on the payments they receive from others. In Mexico, this is among the first studies that analyze from this perspective the intraday liquidity management of the Real Time Settlement Payment System, SPEI. We examine a data set of transactions from April 7 to May 7, 2010 in order to get insights of the participants' behavior regarding the delay of sending payment orders. Keywords: Payment systems, intraday liquidity management, simulation. JEL Classification: C63, G20, G28.Resumen: Los sistemas de pago juegan un papel clave en la infraestructura financiera de todas las economías modernas. Los participantes de los sistemas de pago necesitan tener acceso a la liquidez intradía para cumplir con sus obligaciones de pago. Ellos realizan esto, ya sea con fondos propios, que son costosos, o reciclando pagos entrantes. Con el fin de reutilizar los pagos entrantes, los bancos podrían retrasar el envío de sus propias obligaciones de pago. Desde el punto de vista de los reguladores es importante saber hasta qué grado los participantes reutilizan pagos recibido de los demás. En México, este es uno de los primeros estudios que analizan desde esta perspectiva la gestión de la liquidez intradía realizada en el Sistema de Pagos de Liquidación en Tiempo Real, SPEI. Examinamos un conjunto de transacciones de 7 abril al 7 mayo 2010 con el fin de obtener una perspectiva del comportamiento de los participantes en términos de la demora del envío deórdenes de pago. Palabras Clave: Sistemas de pago, gestión de liquidez intradía, simulación.

show abstract

The Timing and Funding of CHAPS Sterling Payments

Cited by 27 publications

References 7 publications

Free-riding on liquidity in the colombian LVPS

Free-riding on liquidity in the colombian LVPS

Direct Participants’ Behavior Through the Lens of Transactional Analysis: The Case of SPEI®

The Mexican Experience in How the Settlement of Large Payments is Performed in the Presence of a High Volume of Small Payments

Contact Info

Product

Resources

About