CMB and Limit Management TIPS UDFS v.1.0.0

Transcription

1 and Management TIPS UDFS v.1..

2 and Management in TIPS - Introduction A Credit Memorandum Balance () represents a limit, defined by a TIPS Participant for a Reachable Party, in the usage of the liquidity of a given TIPS Account. When defining a, the account owner specifies the limit the user cannot exceed using the payment capacity of the TIPS Account linked to the. This presentation provides detailed information about and includes several examples of possible settlement scenarios that involve a in TIPS. Furthermore, the presentation gives details about limit management related to a and provides examples useful to understand how it may affect the settlement of Instant Payment transactions and Recalls when settling on a in TIPS. 2

3 and Management in TIPS - Table of Contents 1 in TIPS - headroom and utilisation 2 Settlement scenarios - Debiting the 3 Settlement scenarios - Crediting the 4 in TIPS - Management 5 Annex 3

4 TIPS Accounts and in TIPS - headroom and utilisation Each is linked to one TIPS Account, but each TIPS Account may have any number of s, each representing a credit line for a Reachable Party in TIPS. 45 Balance s offer the possibility to define limit management flexibly on a TIPS Account, without dedicating liquidity exclusively for each single customer. Specifically, the sum of all limits on a TIPS Account may be higher than the balance of the same Account at any time. s can be set to zero. In this case, the related user cannot make use of the payment capacity of the TIPS Account linked to the until either (i) the limit is set by the TIPS Participant to a value greater than zero or (ii) the starts receiving Instant Payments in credit. A can also be unlimited. In this case, the related user can make use of the full payment capacity of the TIPS Account linked to the TIPS Account 4 headroom 3 utilisation

5 headroom and utilisation in TIPS - headroom and utilisation A Headroom is created in TIPS for each. The current limit utilisation is always equal to the limit minus the headroom headroom utilisation When the is unlimited, the headroom is considered infinite and the utilisation always zero Lu = L - Lh 1 = 3-2 When an Instant Payment transaction involving one or two s with a limit is settled, in addition to updating the cash balances for the involved accounts, the headroom and the limit utilisation of the related s are also modified. 5

6 Settlement scenarios - Debiting the Settlement scenarios Debiting the Whenever an Instant Payment transaction is settled against a given Originator, TIPS debits the linked TIPS Account and decreases the relevant Headroom accordingly at the same time. If the amount of an Instant Payment transaction would exceed the current Headroom to be debited (or the available balance of the TIPS Account linked to the debiting ), then it is rejected. Case 1 Successful scenario - The requested amount is lower than the limit headroom and lower than the account available balance. TIPS UDFS Successful scenario with confirmed order Creditor account and debtor TIPS Account Available headroom Balance utilisation Event Balance Settlement of an IP (26) against the Originator 35 TIPS Account Available headroom Balance utilisation Balance headroom utilisation 6

7 Settlement scenarios - Debiting the Case 2 Unsuccessful scenario - The payment fails since the requested amount exceeds the headroom. TIPS UDFS Error scenarios TIPS Account Available headroom Balance utilisation Balance headroom utilisation Event Settlement of an IP (35 EUR) against the Originator Business rule: Available amount not exceeded Error Code: AM23 35 TIPS Account Available headroom Balance utilisation Balance headroom utilisation The transaction is set to Failed status 7

8 Settlement scenarios - Debiting the Case 3 Unsuccessful scenario The payment fails since the requested amount exceeds the account available balance. TIPS Accounts cannot have a negative balance under any circumstances. TIPS Account Available headroom Balance utilisation Balance headroom utilisation Event Settlement of an IP (25) against the Originator Business rule: Available amount not exceeded Error Code: AM23 TIPS Account Available headroom Balance utilisation < The transaction is set to Failed status Balance headroom utilisation 8

9 Settlement scenarios - Crediting the Settlement scenarios Crediting the Whenever an Instant Payment transaction is settled against a given Beneficiary, TIPS credits the linked TIPS Account and increases the relevant Headroom accordingly at the same time. Case 1 Successful scenario - The available account balance is increased as well as the limit headroom. The utilisation becomes negative when the headroom exceeds the limit as a result of crediting payments. TIPS UDFS Successful scenario with confirmed order Creditor and debtor Account TIPS Account Available headroom Balance utilisation Balance headroom utilisation Event Settlement of an IP (99) against the Beneficiary TIPS Account Available headroom Balance utilisation utilisation headroom 9

10 Management in TIPS Management A Headroom is modified each time an Instant Payment transaction impacting the is processed or the limit is adjusted. The update of a limit (and adjustment of the related headroom) together with the actions of blocking/unblocking of a participant/account or, falls under the category: Immediate reference data changes. This class of operations refers to high-priority settlement-relevant reference data changes that need to be processed and applied in TIPS as soon as they are instructed. The limit of a can never be set to a negative value, although the headroom and utilisation can go negative. When a limit is modified, the headroom is updated (increased or decreased) on the basis of the difference between the new limit value of the and the old limit value: if this difference is positive, the headroom is increased; if the difference is negative, the headroom is decreased. 1

11 management - scenarios in TIPS Management Case 1 Successful scenario - The new limit value is set and the headroom amended. It is decreased by the difference between the new limit value and the old limit value. TIPS UDFS Successful scenario Decrease of a utilisation headroom Event Decrease the limit - NEW LIMIT 8 utilisation headroom Case 2 Successful scenario The limit utilisation is positive and the new limit value is set to. The headroom is amended accordingly. It is decreased by the difference between the new limit value and the old limit value. In this case the will only accept Instant Payments transactions in credit until the headroom once again goes over zero. utilisation headroom Event Decrease the limit - NEW LIMIT utilisation headroom headroom utilisation headroom utilisation The will only accept Instant Payments transactions in credit until the headroom once again goes over zero 11

12 in TIPS Management Case 3 Successful scenario - The limit headroom is negative and the new limit value is set greater than zero. The headroom is increased by the difference between the new limit value and the old limit value. utilisation headroom Event Increase the limit - NEW LIMIT 5 utilisation headroom headroom utilisation 12

13 Annex 1 - Debit-only Management Periodic Update Periodic Utilisation/Headroom Update Mixed Approach 13

14 Annex Debit-only Management Debit-only Management A may be related to a Reachable Party that only executes payments (debiting the ) and never receive payments (crediting the ). In order to make sure that sufficient limit headroom is always available for the processing of each single payment, the Account Holder may follow three different approaches: 1. A periodic limit update that may be performed in two different ways: The limit is increased at regular intervals* (e.g. daily) by a fixed amount, no matter the limit utilisation during each interval; The limit is increased at regular intervals* (e.g. daily) to the same extent as the increase in the limit utilisation, so to offer the same payment capacity for each interval. 2. A periodic limit utilisation and limit headroom update (based on the settlement of an Instant Payment wherein the Originator is the Account Holder and the Beneficiary is the user) that may be performed in the two ways: The limit headroom is increased (i.e. utilisation decreased) at regular intervals (e.g. daily) by a fixed amount no matter the limit utilisation; The limit headroom is increased (i.e. utilisation decreased) at regular intervals to the same extent as the increase in the limit utilisation. After the settlement, the available balance of the TIPS Account remains unchanged, while the limit headroom is increased by the same amount of the transferred amount. The limit utilization is decreased accordingly. *The maximum value of the limit is (18 digits) in TIPS and in the CRDM (14 digits). 14

15 Annex Debit-only Management 3. A mixed approach: The limit is increased at regular intervals* (e.g. daily) by a fixed amount, no matter the limit utilisation; And, when the Account Holder deems it appropriate: The limit is restored at its starting value; The limit headroom is increased (and the utilisation decreased) to the same extent as the limit utilisation (an Instant Payment is sent to settlement by the Account Holder with an appropriate transferred amount). The maximum value accepted by TIPS and CRDM allow adopting both option 1 and 3 virtually without any technical restriction, as even when increasing the limit e.g. by 1 7 euros on a daily basis, the maximum value would be reached after many thousands of years. *The maximum value of the limit is (18 digits) in TIPS and in the CRDM (14 digits). 15

16 Annex Periodic Update Periodic Update (Example 1) The Account Holder increases the limit by 1. EUR at the beginning of each interval no matter the limit utilisation. T utilisation headroom , headroom T+1 Event Increase the limit - NEW LIMIT 2. T+1 utilisation headroom , 2, 15, , 18,5 utilisation T+2 Event Increase the limit - NEW LIMIT 3. 1, 5, 5, T+2 Event Settlement of an IP (6.5) against the Originator - T+2 utilisation headroom T T+1 T+2

17 Annex Periodic Update Periodic Update (Example 2) The Account Holder increases the limit to the same extent as the increase in the limit utilisation (8.2 EUR). T utilisation headroom T+1 Event Settlement of an IP (8.2) against the Originator T+1 utilisation headroom ,8 1, headroom utilisation 8 T+2 Event Increase the limit - NEW LIMIT 8.2 T+2 utilisation headroom , T T+1 T+2 17

18 Annex Periodic Utilisation/ Headroom Update Periodic Utilisation/Headroom Update (Example 1) The Account Holder sends an IP (Transferred Amount 1. EUR) in order to increase the limit headroom (i.e. decrease the limit utilisation) at the beginning of each interval by 1. EUR no matter the limit utilisation. T utilisation headroom T+1 Event Settlement of an IP (1.) against the Beneficiary T+1 utilisation headroom , 8, 6, 4, , 11. headroom utilisation 13.5 T+1 TIPS Account Available Balance 2. 2, - T+2 Event T+2 Event Settlement of an IP (1.) against the Beneficiary Settlement of an IP (7.5) against the Originator T+2 utilisation headroom T+2 TIPS Account Available Balance , -4, Balance T T+1 2, T+2 12,5 18

19 Annex Debit-only Management Periodic Utilisation/Headroom Update (Example 2) The Account Holder sends an IP (Transferred Amount 4.2 EUR) in order to increase the limit headroom (i.e. decrease the limit utilisation) to the same extent as the increase in the limit utilisation (4.2 EUR). T utilisation headroom T+1 Event Settlement of an IP (4.2) against the Originator T+1 utilisation headroom T+1 TIPS Account Available Balance T+2 Event 2. Settlement of an IP (4.2) against the Beneficiary T+2 utilisation headroom , Balance 5,8 1, T T+1 T+2 headroom utilisation 2, 19

20 Annex Debit-only Management Mixed Approach (Example 1) The limit is increased by 1. EUR at regular intervals no matter the limit utilisation; At T+3, the Account Holder restores the limit at its starting value (1. EUR) and sends an IP (Transferred Amount 12. EUR) in order to increase the limit headroom (i.e. decrease the limit utilisation) to the same extent as the increase in the limit utilisation (12. EUR). T utilisation headroom T+1 Event T+1 Event Increase the limit - NEW LIMIT 2. T+1 utilisation headroom T+2 Event Settlement of an IP (7.) against the Originator Increase the limit - NEW LIMIT 3. 3, 25, 2, 15, , 18, 1. utilisation headroom 1. T+2 utilisation headroom , 5, 5, 1, 1, T+3 Event Decrease the limit - NEW LIMIT 1. - T+3 Event Settlement of an IP (12.) against the Beneficiary T+3 utilisation headroom T T+1 T+2 T+3 2

21 UDFS References in TIPS - headroom and utilisation Credit Memorandum Balance; Reference data for accounts and s in TIPS; Headroom; Reference data management. Settlement scenarios - Debiting the Instant Payment transaction settlement process; Successful scenario with confirmed order Creditor account and debtor ; Error scenarios. Settlement scenarios - Crediting the Instant Payment transaction settlement process; Successful scenario with confirmed order Creditor and debtor Account. in TIPS - Management management. 21