BSP Released Peso Real Time Gross Settlement (RTGS) Rules

In its Resolution No. 1680 dated 17 November 2022, the Monetary Board (“MB”) approved the following rules covering the operation of the Peso Real Time Cross Settlement Payment System (“RTGS PS” or the “PhilPaSS^plus”), which is a designated payment system under MB Resolution No. 992 dated 29 July 2021. 

Below are some of the following sections will be created in the Manual of Regulations for Payment Systems (“MORPS”):

Participants. 

The participants in the RTGS PS are, as follows: 

1. Participants with Settlement Accounts (“SAs”). These include banks, non-bank financial institutions with quasi-banking functions, non-bank electronic money issuers, ano government agencies, as well as Bangko Sentral departments that conduct monetary operations and those responsible for disbursing and receiving funds on behalf of the Bangko Sentral. The participating financial institutions may sponsor other entities into settlement. Except for the Bangko Sentral departments, a Participation Agreement mutually executed with the Bangko Sentral shall document and govern the participation of these entities in the RTGS PS.
   
   
2. Sponsored Participants. These are financial institutions sponsored into settlement through the RTGS system.

   Any sponsorship into settlement shall comply with the following guidelines:

   1. The transactions of a sponsored participant shall be considered as the sponsoring participant’s own transactions. As such, the sponsoring participant shall be held responsible for any loss, liability, or damage caused by the sponsored participant insofar as settlement is concerned. 
   2. The sponsorship shall be covered by a formal contract between the sponsoring and sponsored participants. The contract shall include a provision addressing settlement default situations caused by either or both the sponsoring and the sponsored participants. 
   3. The sponsorship terms and conditions should promote access to the RTGS PS without compromising the safety and efficiency of the system. 
   4. The sponsoring participant shall adopt risk-mitigating measures to ensure that the risks it assumes as sponsor are kept at manageable level. These measures include the performance of due diligence to ensure that the participant it sponsors complies with the RTGS PS rules. 
   5. The sponsorship contract shall require the sponsored participant to submit pertinent information, if any, to the sponsor for risk management purposes. 
   6. The sponsoring and sponsored participants shall comply with the Bangko Sentral’s reporting requirements pertaining to the sponsorship. 

3. FMls. These are infrastructures that are interlinked with the RTGS system to enable settlement of security, foreign exchange (“FX”), and other financial market transactions in accordance with the DvP and PvP mechanisms, which minimize the principal risk associated with such transactions. 
   
   The business between the Bangko Sentral and the operator of an FMI that interfaces with the RTGS PS shall be conducted in accordance with a contract in an appropriate form (e.9., Terms of Reference, Memorandum of Agreement, Memorandum of Understanding, etc.), the provisions of which shall be compliant with these rules. 

4. CSOs. These are clearing organizations that are permitted to interconnect with the RTGS system for purposes of settling retail payments in accordance with the National Retail Payment System regulatory framework. 
   
   The interlinkage of the CSOs with the RTGS PS shall be in accordance with operating guidelines or a formal agreement between the Bangko Sentral and the CSO. The provisions of the guidelines or agreement shall be consistent with these rules. 

5. CSPs. These are technology companies that provide solutions which are vital to the operation of the RTGS PS. 
   
   Prior to providing services to the RTGS PS, a CSP shall enter into a service contract with the Bangko Sentral, the provisions of which shall be aligned with these rules.

Cessation of Participation. 

Participation in the RTGS PS may be terminated through any of the following modes, as applicable to the case of the concerned participant: 

1. Voluntary Withdrawal – refers to a mode where the participant voluntarily ends its participation or surrenders its secondary license (e.g., banking license), subject to the approval of the Bangko Sentral; 
2. Closure of Operation – results from a decision of the MB or any lawful authority to order the dissolution, revocation of license, or prohibit a participant from doing business in the Philippines; 
3. Merger or consolidation – terminates the participation of the merged or acquired entity after the approval of the merger or consolidation by the MB or any lawful authority; or 
4. Placement under insolvency, bankruptcy or rehabilitation by o competent court or quasi-judicial agency – results in the deactivation of a participant’s account upon receipt by the Bangko Sentral of a notification from the participant, which is required to inform the Bangko Sentral on the day of the participant’s receipt of the order or resolution issued by the court or quasi-judicial agency. 

The Bangko Sentral shall issue an Advisory on the cessation of participation of any of the participants. 

Types of Transactions. 

The RTGS system shall settle Peso-denominated funds transfers. These transfers represent time-critical and high-value payments, which include: 

1. Movements of funds between the individual participants’ proprietary accounts; 
2. Interbank/ inter-institution transfers for proprietary transactions; 
3. Interbank/inter-institution transfers for further credit to customer accounts; 
4. Government collections; 
5. Withdrawals from and deposits into the accounts maintained with the Bangko Sentral; 
6. Transactions with the Bangko Sentral Financial Markets, including placements in deposit facilities and maturities of deposits, availments and maturities of the Overnight Lending Facility, and purchase or sale of FX and securities; 
7. Settlements related to the Bangko Sentral’s Intraday Liquidity Facility (“ILF”); 
8. The money settlement leg of security trades; 
9. The Peso leg of FX trades; 
10. Clearing results for checks, automated teller machine (“ATM”) transactions, digital payments, and 
11. Other types of retail payments; and Other large value transactions or those that are not considered as retail payments under Bangko Sentral regulations.

Reporting Requirements. 

A participant shall submit reports that the Bangko Sentral may require on a periodic or on call basis. These reports, which include an annual Attestation Report certifying that the participants continue to comply with the terms and conditions on participation, should be accurate, complete, and timely.

Business Continuity. 

The participants shall operate with a resilient, documented, and tested business continuity plan (“BCP”), which shall be compliant with the requirements of Section 129 of the MORB and Section 148-Q of the MORNBFI on Business Continuity Management, as applicable, and shall provide for the following contingency measures: 

1. Primary fallback facility(ies). Back-up facilities which are located at the main site; 
2. Remote recovery site(s). Places which are sufiiciently distant from the main site and can be readily accessed for resumption of operation; 
3. Connectivity bock up(s). Secondary lines and network connections; and 
4. Alternative operating procedure(s). Measures enabling settlement processing, should a disruption prevent the performance of business-as-usual procedures.

Documentary Requirements.

The applicant shall submit the original copy of the following documents in support of its application for participation:

1. Application Letter; 
2. Signed and notarized Participation Agreement that defines the roles and responsibilities of the Bangko Sentral and of the Participant; 
3. Virtual Private Network (“VPN”) Connectivity Registration Form; 
4. Secretary’s Certificate attesting to the resolution of the applicant’s Board, authorizing the institution to apply for participation in the RTGS PS, providing the list of authorized officers/signatories, and certifying the specimen signatures of these authorized officers/signatories;

Electronic submission of the scanned copies of the above documents is allowed, provided that: 

1. such copies are accompanied by a duly accomplished Summary Statement Form (“SSF”) and each page of said documents, including the SSF, is certified by the applicant’s authorized officer; 
2. emailed with a subject in this format: <Application>underscore< RTGSPS> underscore<Applicant’s Acronym>underscore<type of submission>; and
3. sent by a registered email sender to the Director, PSD at RTGS@bsp.gov.ph.

The Bangko Sentral may require supporting documents other than those enumerated above.