Real Time Gross Settlement (RTGS)

Efficiently and reliably provides irrevocable clearing and settlement of financial transactions between Central Banks and Participants.

The need for a new domestic payment infrastructure

The global economy depends on highly sophisticated banking systems to make payments and settle transactions. The Bank for International Settlements (BIS) established Real‐Time‐Gross‐Settlement (RTGS) as the standard for large‐value interbank funds transfers to improve efficiency and reduce risk. However, the gulf between the implementation of an improved international standard and the ability of all countries to meet that standard can be a formidable one.

A modern, efficient and reliable payments infrastructure is now an essential requirement for any country looking to promote growing financial markets and improve execution of monetary policy. A country must be capable of clearing and settling a wide range of transactions according to international standards if it is to be successful in attracting foreign investments.

In the past, the requirements and investments associated with implementing a comprehensive RTGS system have made it difficult for many countries to justify cost. The Montran solutions address those concerns with cost effective systems that are functionally rich, reliable and secure.

The Montran RTGS Solution

The Montran RTGS is specifically designed to meet and exceed the standards required by today’s Central Banks for Real‐Time‐Gross‐Settlement processing. The RTGS solution handles very high volumes of large-value domestic payments and combines efficiency and reliability of service with sound position maintenance and intraday liquidity management facilities.

The RTGS is based on modern web technology, using Java Enterprise architecture and components, combined with RDBMS and PKI based security. The open architecture and the open standards simplify integration with other financial systems. Since the system is Java‐based, it can run on a wide choice of hardware, operating systems and databases; and can be implemented, maintained and enhanced efficiently. The software architecture allows for maximum hardware platform independence, providing the overall RTGS solution with benefits of cost and reliability.

Increased Efficiency

The modern architecture and flexible tools of the Montran RTGS solution make it easier to optimize cash flows, to enable flexible STP and to enhance the liquidity management facilities necessary for the oversight and execution of monetary policy. The solution’s electronic delivery mechanism ensures secure delivery of payment orders to the central system and manages the queuing and delivery of payments and confirmations to the participants.

Risk Management

The Montran RTGS system is designed to maximize the use of liquidity in settling interbank transactions, while reducing the risk between the origination of a payment instruction and its final execution. The settlement process is always final and irrevocable, and the involved Participants have immediate access to the settled funds. For more elaborate settlement arrangements, the RTGS fully supports Delivery-versus-Payment (DvP) and Payment-versus-Payment (PvP) strategies involving other external financial systems.

New liquidity saving features include multilateral and bilateral offsetting for streams of payments of lower priority by settling such groups at predetermined intervals, thus reducing the liquidity required for the Participants involved. This feature is finely controlled by the banks by setting multilateral and bilateral limits online. Urgent payments continue to be settled immediately within the liquidity margins.

The Montran RTGS system offers a complete Anti Money Laundering (AML) system for the identification and blocking of transactions involving parties found on OFAC (Office of Foreign Asset Control), Global Watch Lists, LAC (Local Asset Control), European and other country AML Lists.

  • Features
  • Modules
  • Security
  • Cloud Computing

Features of the Montran RTGS

  • A modular component structure to meet individual country requirements allowing for flexibility in growth and expansion as needs arise
  • 24x7 payments processing capabilities
  • Final and irrevocable settlement of funds transfers continuously in real-time
  • Absolute control over access and processing flows of individual payments
  • Centrally located queuing of payments held awaiting availability of funds
  • Automatic gridlock resolution
  • Real-time monitoring, including- but not limited to ‐ messages, count and volumes of RTGS payments, actual and projected positions, account balances for both the RTGS operator and participating institutions
  • Credit and intra-day liquidity management facilities by using collateral funds provided by other financial systems through real-time interfaces
  • Flexible reserve liquidity capabilities driven by transaction types
  • Payment entry and processing using standard SWIFT and ISO20022 message formats
  • A multi-currency and multi-lingual system
  • Full support for SWIFTNet FIN, Browse, InterAct and FileAct services
  • Proven capabilities of interfacing with leading Core Banking System solutions
  • Numerous Government Ministries and Agencies integration projects
  • Cross Border Payments
  • User-specified visual, email and audio real-time alerts
  • Operational reliability with backup and contingency arrangements
  • Complete audit trail, recovery and reporting facility

RTGS Core Modules

  • Central RTGS Engine – the highly optimized and efficient core settlement EJB3 application running on clustered servers for maximum performance and reliability.
  • Central Payment Originator System – the centrally running server application with a thin-client architecture provides users with the ability to manually enter all payment message types, SWIFT or non-SWIFT. It features on screen data validation, SSL encryption, digital signatures and compatibility with all popular Internet browsers available.
  • The RTGS WebStation – provides access to the web interface of the Montran RTGS solution via a standard Internet browser, a VPN connection to the central system and a cryptography kit. The webstation requires no locally installed Montran software, therefore there are no system software maintenance requirements for the Participants.
  • The RTGS Gateway – the most cost-effective solution for achieving maximum STP with external systems feeding payments to RTGS. Featuring standard JMS or file based interfaces, the software is downloaded onto the Participant RTGS webstations to securely channel batches or individual payments to the central RTGS or Payment Originator system.
  • Billing Module – Cost recovery, interfaces with the Database and Reporting module to calculate charges and produce customer billing statements. Statement production is customized to Bank requirements. Automatically produced statements are printed or transmitted via available networks.

Security

The Montran RTGS provides the highest level of protection and confidentiality of transaction information in the industry. The security standards are designed to meet or exceed those of the SWIFT network, even when not directly interfacing with SWIFT. Data access security is provided through both digital signature and encryption technology based on Public Key Technology. For any sensitive operation, a four or even six‐eye approval policy is applied. Screens are designed to be user friendly and intuitive, with customizable menus by way of user profile functions. The system supports integration with an LDAP server as a Centralized User Repository, Single Sign On and two‐factor authentication.
The Montran RTGS solution has met the criteria for the IBM Ready for PureSystems validation.
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Platform Description

Montran RTGS leverages on PureSystems' flexibility and provides a system pattern to deploy the application across production, test and disaster recovery environments. The process of creating the environment, provisioning the resources, configuring the application server and database system, and deploying the Montran RTGS enterprise application is fully automatic. A Central Bank with PureSystems can deploy a fully working RTGS solution in less than 30 minutes.

Technical Requirements

  • Websphere Application Server ND version 7.0.0.19
  • DB2 Enterprise Edition version 9.7.0

Hardware Requirements

  • PureSystems 1.0
  • One virtual instance with 16GB RAM and one Intel Xeon CPU quad-core, 2.6Ghz, for database
  • One virtual instance with 16GB RAM and one Intel Xeon CPU quad-core, 2.6Ghz for application server

Architecture
  • Based on open system architecture
  • A standard browser based "thin client" user interface
  • Server application components written in Java and running in an enterprise environment, Java EE 5.0 application server
  • Interoperability through the use of standardized Java API (JDBC, JMS, JTA, JCA), Interface adapters, and SOA integration