4.1 Impact of intraday clearing on the liquidity of systems
Following the introduction of intraday clearing, adjustment to the new system was complete by mid-2013. Adjustment can be measured through changes in the behaviour of system participants and their clients. This measurement covers the choice between VIBER and ICS in the case of payment transactions, the re-channelling rate between the systems and developments in the intraday timing of VIBER transactions. In addition, the reasoning behind participants’ choice of a liquidity parameter also bears relevant information. The reasons behind the roll-over of transactions between clearing cycles illustrate the successful change in liquidity management behaviour.
aside liquidity during the day and do not initiate transactions immediately before the collection of collateral linked to intraday clearing cycles. After the launch of intraday clearing, the adjustment in liquidity management, and thus in the timing of transactions, was concluded for the most part by 2012. In the first half of 2013, turnover shifted to slightly later in the day, but had returned to its original level by the end of the year. On an annual level, 75-80 per cent of VIBER transactions are settled by 2:00 pm. Only five per cent of VIBER turnover was left for the last hour, as only bank-to-bank transactions can be executed at that time, mainly allowing participants to close their daily positions (Chart 19).
Since the introduction of multi-cycle ICS intraday clearing, as opposed to their previous practice, customers execute numerous payment orders through ICS rather than through VIBER.40 The rise in the number and proportion of transactions of over HUF 100 million within ICS continued in the first half of 2013. This was driven by the migration of a portion of VIBER customer transactions to intraday clearing, resulting in a nearly HUF 600–800 billion increase in ICS turnover. This migration may have been driven by the fact that VIBER is no longer needed to complete all time-critical customer transactions due to intraday clearing, which now can be used as an equivalent option in certain cases. The different pricing of VIBER and ICS transactions by banks presumably largely impacts the choice between the two systems, as banks generally apply far lower transaction fees for ICS as compared to VIBER.
Chart 19 Timing of turnover in VIBER
Another effect of the adjustment process to the new clearing system was the timing of transactions by VIBER participants, which had shifted significantly to later hours during the day in the second half of 2012 before this practice became permanent in 2013. The timing of transactions has been one of the liquidity management tools used by banks, allowing them to define within certain limits the initiation time of their transactions within the ten-hour operating hours of VIBER. Stricter control on sending is linked to the management of time-critical transactions, such as the provision of collateral for intraday clearing. This means that some banks deliberately set 40
40
(2011–2013) Launch of ICS intraday clearing Per cent
100 90 80 70 60 50 40 30 20 10 0
Jan. 2011 Mar. May July Sept. Nov. Jan. 2012 Mar. May July Sept. Nov. Jan. 2013 Mar. May July Sept. Nov. Jan. 2014
100 90 80 70 60 50 40 30 20 10 0
Operating hours: Op.hrs.: 8:00 am – 5:00 pm 8:00 am – 6:00 pm Per cent
Turnover executed by 10:00 am Turnover executed by 12:00 noon Turnover executed by 2:00 pm Turnover executed by 4:00 pm Turnover executed by 5:00 pm
The intraday forecasting of exogenous transactions flowing out from the ICS on tax payment days shows great uncertainty, which can be managed by VIBER and ICS participants by changing the timing of transactions and with tighter liquidity management. On tax payment days, substantial payment transfers, and thus liquidity transfers, are made by participants via ICS intraday clearing towards the
Miklós Luspay–Annamária Madarász (2014): The effects of the introduction of intraday clearing on turnover in Hungarian payment systems MNB Bulletin, March.
Payment Systems report • June 2014
