Source: Chaps
CHAPS Clearing Company Limited, the UK payments system that processes and settles both systemically important and time-dependent payments, today (Friday 20th December), announced that it has received Letters of Intent from five major international banks to become Direct Participants.
A Direct Participant of CHAPS is able to send and receive irrevocable, guaranteed sterling payments with same day settlement finality. A Letter of Intent expresses a commitment to join the CHAPS Scheme within an agreed time frame.
As set out in the Bank of England Quarterly Bulletin[1], the five Banks who have decided to become settlement banks are: BNY Mellon, ING Bank N.V, Northern Trust, BNP Paribas and Société Générale. These banks are currently Indirect Participants of CHAPS. A total of twenty-five banks will be CHAPS Direct Participants by the end of 2015, an increase of eleven since the 2007-2008 financial crisis.
The banks who have expressed their intention to join CHAPS were identified as a result of changes brought about to reduce systemic risk within the CHAPS system. This has been achieved by highlighting those Indirect Participants who process payments above a certain value threshold[2]. These changes are embodied within the CHAPS Tiering Criteria which were put in place in April 2012.
Last month, Swedish bank, Handelsbanken (Svenska Handelsbanken AB (Publ)) joined CHAPS as a full Direct Participant independently of the Bank of England's detiering initiative.