4.6 Impact of changes in the payment system membership
Changes in the membership level can impact the turnover, liquidity and risks of payment systems, the degree of the impact depending on the volume of payments executed by the financial institutions changing their membership level. Banks can choose from two membership levels in payment systems, opting to either join the systems directly or indirectly. Direct system participants execute payment through their own accounts, while indirect participants execute payments through the accounts of direct participants. Direct participants can increase the clearing and settlement risk of payment systems by enabling the accession of indirect participants executing excessively high turnover in the payment systems. This could entail a situation where the direct participant encounters a temporary liquidity shortfall for meeting the needs of higher turnover. The operators of payment systems must therefore collect basic information from direct and indirect participants to duly identify, monitor and manage the risks arising from this tiered membership system. They must identify the interdependencies between direct and indirect participants, as well as the indirect participants accounting for large portions of system turnover or of the turnover of individual direct system members. Participants decisions on their membership level are primarily shaped by business policy considerations, as there are currently no statutory requirements (except for cooperative society financial institutions) imposing the choice or change of membership level depending on specific indicators.45 Due to the transformation and reorganisation of the saving cooperatives sector in 2013, the group of direct and indirect participants of the payment systems has changed, but this did not have any significant impact on the operation of the systems. As of 1 November 2013, pursuant to the government
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decree46 15 saving cooperatives and credit unions which were formerly direct participants in the Hungarian payment systems – i.e. ICS and VIBER – became indirect participants through the Magyar Takarékszövetkezeti Bank (Takarékbank). Their turnover in the payment systems were significantly lower than that of Takarékbank: between November 2012 and March 2013 their aggregate VIBER turnover amounted to 5.82 per cent, while their ICS intraday clearing turnover amounted to 8.26 per cent of that of Takarékbank, and thus no significant liquidity dependency materialised between the new indirect participants and Takarékbank. This change in membership level could entail a channelling of a portion of interbank payments into quasi-systems, such as the internal accounting system of Takarékbank, reducing payment systems turnover. The transactions and payments executed between indirect participants, and naturally between their clients and transactions with Takarékbank would be channelled into these quasi-systems. Between November 2013 and March 2014 compared to the corresponding periods of the previous years, the aggregate VIBER turnover of these new indirect participants and Takarékbank – taking into account bank to bank and customer transactions – fell by 7.2 per cent in terms of value and 16.9 per cent in terms of transaction number, while their aggregate ICS intraday clearing turnover increased by 13.14 per cent. The latter was also driven by improving real economic performance and the resulting rising turnover trend of intraday clearing. As a direct participant in both systems, Takarékbank was able to execute both its own turnover and that of the indirect participants joining through it. In light of these figures, the indirect participants did not entail a rise in the clearing and settlement risk of either Takarékbank or the payment systems.
Such as size of the capital or market share, for instance. Decree on the transformation and reorganisation of the saving cooperatives sector and the provision of necessary funding.
Payment Systems report • June 2014
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