IGTA Journal - Winter 2020/2021

Delivered by Ingenta IP: 193.129.26.79 On: Tue, 28 Jan 2020 14:32:43 Copyright: Henry Stewart Publications Page 330 - - - - - - - - - ● HVPS+: This group is formed of high- value payment system operators (including the Bank of England, Federal Reserve and ECB) along with global banks and SWIFT. The group has developed guidelines for the international implementation of ISO 20022 for HVPS which allow LEIs to be included on an optional basis in payment messages. These guidelines will be adopted by many major global high-value payment systems, such as the CHAPS (sterling), Fedwire (US dollar) andTarget 2 (euro). 31 ● CBPR+: SWIFT has created this group, formed of international payments firms, to define usage guidelines for the consist ent use of ISO 20022 in cross-border pay ments across the SWIFT network. These market guidelines align with the HVPS+ guidelines on all similar fields, ensuring interoperability with domestic high-value payment processing. These guidelines also allow LEIs to be included on an optional basis in payment messages. 32 By 2025, as part of the migration to ISO 20022, LEIs will be included on an optional basis in payment messages for cross-border payments and by high-value payment systems for the US dollar, euro and sterling at a minimum. UK plans to incorporate LEI into the ISO 20022 Common Credit Message The Bank of England (the Bank) provides sterling settlement services for payment sys tems in the UK through the RTGS service. An average of over £650bn is settled through the system each working day and the Bank is currently undertaking a multi-year pro gramme to renewRTGS to enhance resilience and promote innovation. The Bank is also the operator of the CHAPS system, which is one of the largest high-value payment systems in the world, providing efficient, settlement risk-free and irrevocable payments. As CHAPS operator, the Bank will imple ment ISO 20022 through the introduction of the Common Credit Message (CCM), which is central to message harmonisation across the UK’s main interbank payment systems and compatible with the emerging international consensus. Other payment sys tems (BACS and Faster Payments) are also committed to using this CCM. As part of its 2018 public consultation on ISO 20022 implementation, the Bank asked for views on including LEIs in payments messages in designated f ields in the CCM. The major ity of respondents supported making LEIs mandatory for transactions between f inan cial institutions in CHAPS due to the widespread benef its this can provide. In the November 2018 consultation paper response, the Bank became the f irst central bank to announce its intention to start to mandate LEIs into payment messages for transactions between f inancial institutions, as part of the migration to the CCM. 33 While many respondents supported extending mandatory LEI usage to a wider range of payments, the feedback suggested that the full benef its of including LEI in all sterling payment messages would only be realised with major increases in the uptake of LEIs by UK businesses. 34 The Bank sees LEI usage as an important tool in a future data-driven economy as outlined in the Bank’s response to the Huw van Stee nis Review on the Future of Finance and is minded to extend the mandatory use of LEIs to a wider range of transactions in the future. The Bank recognises that more work needs to be done to provide the infra structure to support such wider adoption and use of LEIs in payments. The Bank is therefore working with key stakeholders in the UK and internationally to address the challenges and seeks to support initiatives to improve the accessibility of LEIs, to ensure the benef its can be achieved. The Bank has committed to ‘champion the Legal Entity Identif ier (LEI) as a globally recognised and unique identif ier for all businesses in the UK, including integrating the LEI in the - The value of the LEI for the payments industry IGTA eJournal | Winter 2020/21 | 46