Extended CHAPS and CREST settlement day

On 20 June 2016, the CHAPS and CREST settlement day was extended by an hour and 40 minutes to a new later end-of-day of 6pm. The CHAPS deadline for customer payments changed to 5.40pm, although customer cut-off times set by providers may be earlier. We enabled these changes by extending the operating hours of the RTGS service.

Identified benefits included enhanced risk management for financial market infrastructures, increased flexibility in market participants’ balance sheet management, and greater flexibility for end users. The Bank and the operators of CHAPS and CREST completed a review in late-2017 covering whether the identified benefits have been enabled by providers and adopted by users. The review included engagement with relevant stakeholders and considered whether further actions are required to encourage the realisation of benefits.

Greater flexibility for end-users

CHAPS and CREST service providers have passed on later cut-off times to customers. In summer 2017, an average of 6.1% of CHAPS daily values and 5.3% of volumes settled in the additional 100 minutes. We found that the change in hours enabled more customer CHAPS payments instructed late in the business day to settle on the same day.

Improved risk management

Some CHAPS and CREST service providers thought the extension has enabled improvements to operational stability through reduced time-pressure, providing additional time to manage incidents and calmer end-of-day processing.

Improved balance sheet management

As expected, there have been no significant changes to the timings of sterling money market or foreign exchange flows (and few trades that would need to settle later the same day). Separately, FMI members now have greater flexibility over how they meet their financial commitments to the FMI.

Next steps

The Bank has no current plans for changes to the operating hours of RTGS. In building the next generation of our RTGS service, the Bank will build the technical capability to operate at close to 24 hours during business days for real-time gross settlement and potentially to carry out periodic net settlement of retail systems over the weekend. This will ensure that there is flexibility to change the operating hours in the future in light of user demand.