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Whole Sale Payment System

Whole Sale Payment System

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Published by: ✬ SHANZA MALIK ✬ on Jul 11, 2011
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10/29/2012

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Federal Financial Institutions Examination Council
FFIEC
IT E
XAMINATION
H
ANDBOOK
WPS
Wholesale PaymentSystems
JULY 2004
 
 
TABLE OF CONTENTS
INTRODUCTION................................................................................1
 
INTERBANK PAYMENT AND MESSAGING SYSTEMS..................3
 
Fedwire and Clearing House Interbank Payments System (CHIPS).....................3
 
Fedwire Funds Service..............................................................................4
 
CHIPS........................................................................................................5
 
Other Clearinghouse, Settlement, and Messaging Systems.................................7
 
National Settlement Service (NSS)............................................................7
 
Society for Worldwide Interbank Financial Telecommunication (SWIFT)...8
 
Telex-based Messaging Systems..............................................................8
 
Continuous Linked Settlement (CLS) Bank................................................9
 
SECURITIES SETTLEMENT SYSTEMS.........................................11
 
U.S. Government Securities...............................................................................11
 
Fixed Income Clearing Corporation (FICC)..............................................12
 
Fedwire Securities Service.......................................................................13
 
Corporate and Municipal Securities....................................................................14
 
National Securities Clearing Corporation (NSCC)....................................14
 
Depository Trust Company (DTC)............................................................15
 
INTRABANK PAYMENT AND MESSAGING SYSTEMS................16
 
Internally Developed and Off-The-Shelf Funds Transfer Systems......................16
 
Payment Messaging Systems..................................................................17
 
In-house Terminals..................................................................................18
 
Non-automated Payment Order Origination.............................................18
 
Funds Transfer Operations (Wire Room)............................................................18
 
Computer and Network Operations Supporting Funds Transfer..............20
 
WHOLESALE PAYMENT SYSTEMS RISK MANAGEMENT.........21
 
Payments System Risk (PSR) Policy.......................................................22
 
Reputation Risk...................................................................................................23
 
Strategic Risk......................................................................................................23
 
Credit Risk..........................................................................................................24
 
Customer Daylight Overdrafts..................................................................24
 
 
 
Settlement Risk........................................................................................25
 
Liquidity Risk.......................................................................................................26
 
Legal (Compliance) Risk.....................................................................................27
 
Operational (Transaction) Risk...........................................................................30
 
Internal and Operational Controls............................................................31
 
Audit.........................................................................................................32
 
Information Security.................................................................................33
 
Business Continuity Planning (BCP)........................................................33
 
Vendor and Third-Party Management......................................................33
 
APPENDIX A:
 
EXAMINATION PROCEDURES...........................A-1
 
APPENDIX B:
 
GLOSSARY..........................................................B-1
 
APPENDIX C:
 
LAWS, REGULATIONS AND GUIDANCE...........C-1
 
Regulations............................................................................................C-1
 
APPENDIX D:
 
LEGAL FRAMEWORK FOR INTERBANKPAYMENT SYSTEMS.....................................................................D-1
 
APPENDIX E:
 
FEDERAL RESERVE BOARD PAYMENT SYSTEMRISK POLICY: DAYLIGHT OVERDRAFTS..................................E-1
 
APPENDIX F:
 
PAYMENT SYSTEM RESILIENCY.......................F-1
 

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