2014 Assessment of the Reserve Bank Information and Transfer System List of tables

Chapters

Table 1: Summary of Progress against 2013 Committed Actions
Committed Action Principle Progress
Conducting a comprehensive review of the RITS Regulations with the aim of identifying any areas in which the clarity of the RITS Regulations could usefully be improved. 1. Legal basis Partly addressed. Will be progressed further during 2015.

Over the past year, the Bank has engaged a law firm to conduct the review. Following an extensive information-gathering exercise, this law firm has developed an initial proposal that the Bank is currently reviewing.
Upgrading RITS's core infrastructure as part of the Bank's commitment to continuously improve the resilience of RITS. 17. Operational risk Fully addressed.

The Bank completed the upgrade to the core infrastructure of RITS in June 2014. This upgrade involved a renewal of the back-end technological infrastructure, including the replacement and re-engineering of the critical software and hardware components that underpin the operation of RITS. The renewal has enhanced the performance and resilience of RITS and reduced the complexity of system maintenance.
Implementing further enhancements to network and system monitoring. 17. Operational risk Fully addressed.

The Bank has implemented the remaining recommendations from the 2013 reviews of RITS's operational risk procedures and controls. In particular, further measures to enhance the monitoring of RITS's network and systems were implemented in December 2013, which will improve the Bank's ability to identify and respond to system problems.
Continuing to monitor RITS participants' compliance with the new RITS participant Business Continuity Standards. 17. Operational risk Partly addressed. Participants are required to be fully compliant with these standards by the end of September 2015.

The Bank received participants' second annual self-certifications against the new standards as at the end of 2013, at which point 63 per cent of RITS participants were fully compliant with the standards. Of the participants that are yet to be fully compliant, many have indicated that they expect to be compliant by the end of 2014, or during the first half of 2015.
Reviewing RITS's public disclosures once CPSS (now CPMI) and IOSCO finalise supplementary quantitative disclosure requirements for payment systems. 23. Disclosure of rules, key policies and procedures, and market data Not addressed. No quantitative disclosure requirements for payment systems have been developed and none are planned in the near term.
Table 2: RITS Ratings and Recommendations
Principle Rating Actions
1. Legal basis Observed The Bank should continue its review of the RITS Regulations, with the aim of identifying any areas where the clarity of the RITS Regulations could be improved.
2. Governance Observed  
3. Framework for the comprehensive management of risks Observed  
4. Credit risk Observed  
5. Collateral Observed  
6. Margin Not applicable  
7. Liquidity risk Observed  
8. Settlement finality Observed  
9. Money settlements Observed  
10. Physical deliveries Not applicable  
11. Central securities depositories Not applicable  
12. Exchange-of-value settlements Not applicable  
13. Participant default rules and procedures Observed  
14. Segregation and portability Not applicable  
15. General business risk Observed  
16. Custody and investment risks Observed  
17. Operational risk Observed The Bank should keep under continued review its approach to cyber security, and in particular its mechanisms for prevention and detection, and its plans to recover from a cyber-related incident.

The Bank should examine the benefits, challenges and costs of implementing a range of measures that could further enhance the resilience of RITS and facilitate timely recovery from an operational incident.

The Bank should continue to monitor RITS participants' compliance with the new Business Continuity Standards.
18. Access and participation requirements Observed  
19. Tiered participation arrangements Observed  
20. FMI links Not applicable  
21. Efficiency and effectiveness Observed  
22. Communication procedures and standards Observed  
23. Disclosure of rules, key policies and procedures, and market data Observed  
24. Disclosure of market data by trade repositories Not applicable  
Table 3: Payments in Australia
2013/14, daily average(a)
Number(b) '000s
 		 Value(b) $ billion
 		 Interbank settlement
value in RITS
$ billion
RITS 42 162.7 162.7
SWIFT payments (HVCS) 38.7 100.5 100.5
Debt securities (Austraclear)(c) 3.1 50.3 50.3
RITS cash transfers 0.2 11.9 11.9
     
CLS 56.8 246.2 2.2
     
Retail payments 34,816.3 62.9 2.9
Direct entry(d) 11,912.4 56.1  
Cheques 715.3 4.9  
Credit/charge cards 7,943.9 1.1  
Debit cards 14,244.6 0.9  
     
Equity settlements (CHESS) 718.8 4.0e 0.5

(a) Business days
(b) Includes payments between customers of the same financial institution
(c) Excludes intraday repurchase agreements
(d) Includes BPay
(e) Gross value of equity trades

Sources: ASX; CLS; RBA
Table 4: RITS Participation(a)
Number of ESAs
As at end October
2014		 Number(b)
Per cent, year to end October
2014		 Value(b)
Per cent, year to end October
2014
Major domestic banks 4 63.0 56.4
Foreign banks 35 31.3 35.1
Other domestic institutions 15 2.6 3.0
CS facilities and the Bank 4(c) 3.1 5.5
Dormant accounts(d) 28 – –
Total 86 100.0 100.0

(a) Excludes non-transactional RITS participants as they do not hold an ESA
(b) Outgoing payments
(c) Excludes LCH.Clearnet Ltd, which joined RITS in November 2014
(d) Indirect RITS participants that maintain an ESA for contingency purposes

Source: RBA
Table 5: RITS Availability
Per cent
Bank-operated systems External Feeder systems
2014(a) 99.980 99.974
2013 99.989 99.914
2012 99.948 99.818
2011 99.997 99.981
2010 99.993 99.844

(a) 1 January to 30 September 2014

Source: RBA
Table A.1: List of Systems Linked to RITS
Linked system Settlement in RITS Transaction types Governance and ownership
SWIFT PDS RTGS Primarily customer and bank-to-bank payments, including the funding of the Australian dollar leg of foreign exchange transactions that settle in CLS. The SWIFT PDS is a closed user group governed by APCA, an industry body that sets rules and procedures for clearing and settling payments in Australia, under APCA's High Value Clearing System.

SWIFT is a member-owned cooperative company registered in Belgium that provides a communications platform for, among other things, payment messages. SWIFT is primarily overseen by the SWIFT Oversight Group, comprising the G10 central banks and chaired by the National Bank of Belgium. A broader group of central banks, including the Reserve Bank of Australia, are represented on the SWIFT Oversight Forum.
Austraclear RTGS Primarily debt security transactions, although payment instructions that are not associated with the settlement of securities transactions may also be sent via the Austraclear system. Austraclear is owned by the ASX Group, which is listed on the ASX. Austraclear is licensed as a clearing and settlement (CS) facility and subject to the Bank's SSF Standards.
CHESS Batch Multilateral net batch Primarily equity security transactions. The CHESS batch is operated by ASX Settlement, which owned by ASX Group. ASX Settlement is licensed as a CS facility and subject to the Bank's SSF Standards.
Low Value Settlement Service Multilateral net batch Cheque, DE (including the BPAY system) and card (ATM, eftpos and credit card). Each retail payment system has its own rules and procedures. These rules and procedures are determined by the system operator (e.g. APCA), in consultation with its members.
MasterCard Batch Multilateral net batch MasterCard brand credit and debit card payments. MasterCard is a privately owned company incorporated in the US and listed on the New York Stock Exchange
PEXA Batches Multilateral net batch Property transactions. PEXA is owned by the Victorian, New South Wales, Queensland and Western Australian Governments, as well as a number of Australia's largest financial institutions.