Continuous Linked Settlement:
RITS Session Times and Operational Arrangements – July 2015 2. Evening Participation Arrangements

2.1. Eligibility for AGREED Participation in Evening Operations

All banks have the option to operate in the evening. Australian CLS settlement members need to participate; other banks should analyse their business requirements before determining whether or not to participate. In order to operate fully in the evening, a bank will need to be ‘EVENING AGREED’ with the Reserve Bank.

Evening Agreed Banks are required to have sufficient front and back office staff available until the end of the Evening Settlement Session every day to allow the bank to conduct and settle any interbank money market deals that may be necessary in the evening. To give Evening Agreed banks greater flexibility over required staffing levels in the Evening Settlement Session, the Reserve Bank has no objection to staff at an Agreed Bank going home early once its settlements are complete, provided that arrangements are in place for staff to monitor that bank's ESA and be able to execute and settle transactions as necessary to cope with unexpected cash flows for the entire duration of the session. Also, banks must provide the Reserve Bank with alternate contact details if regular contact numbers will be unattended during the evening.

The Evening Agreement function in RITS allows banks to electronically record their election to participate in the Evening Settlement Session. This agreement will not be operative until after the Reserve Bank matches the bank's entry. Banks will be able to reverse their agreement, but this must also be matched by the Reserve Bank before becoming operative.

The Reserve Bank's System Administrator mnemonic ‘ACHO’ should be entered as the ‘Other Member’ in the Evening Agreement function by the bank. The screen will show the bank's agreement as unmatched ‘No Counterparty Entry’ until it is matched by the Reserve Bank (ACHO).

Note that this entry will not be effective until matched by the Reserve Bank. Subject to operational review, the RBA will match changes to Evening Agreed status on the last Friday of each month. Exact dates will be advised in the RITS Information Facility under Session Arrangements. The Reserve Bank will match these entries after the end of the Evening Settlement Session. This periodical matching aims to prevent banks from agreeing to operate one night and not the next; agreement means a bank will operate every night during the relevant period. This will ensure that all banks know which banks may make or receive SWIFT payments in the evening, minimising confusion.

Once matched by the Reserve Bank, i.e. on the status change date, the list of all Evening Agreed banks is shown in the RITS function Evening Members.

2.2. Transaction flags

To ensure that liquidity does not build up during the evening in the ESAs of non-Evening Agreed banks, it is necessary to ensure that transactions involving non-Evening Agreed banks are not on the RTGS queue awaiting settlement at the commencement of the Evening Settlement Session. This is done using flags on the transactions of Evening Agreed banks.

The counterparties of each transaction are checked prior to entry onto the queue. If both counterparties are Evening Agreed banks and the transaction is from an eligible feeder system, or the transaction is a direct entry related Low Value Settlement Service (LVSS) settlement, the transaction is flagged as eligible for settlement in the Evening Settlement Session. During the Interim Session (see section 3.3), all transactions without the flag are deleted from the queue as unsettled. Therefore only transactions eligible for settlement in the evening will be on the queue at the commencement of the Evening Settlement Session. Note that property batch settlements may occur during the Evening Settlement Session, but these transactions are not on the queue between the time of reservation and the time of settlement (see section 3.1).

Transactions of Austraclear clients or a feeder system that has not been approved for evening operations are not eligible for settlement in the evening, regardless of the agreed status of the participating banks. These payments will not be flagged.

New bank-to-bank RITS and Austraclear transactions are able to be entered during the Interim and Evening Settlement Sessions, as such entry requires the agreement of both counterparties.

Transactions with an evening flag may settle in earlier sessions, subject to the normal rules governing each session.

2.3 Feeder System Operation

Both the SWIFT PDS and Austraclear Feeder Systems operate in the evening (the latter only for transactions between banks, there is no Austraclear client activity). More information on timing of SWIFT PDS and Austraclear transactions is provided below.