The Gateway to Algorithmic and Automated Trading

US payment markets support SWIFT gpi cross-border payments tracking

First Published 13th March 2017

The Federal Reserve Banks and The Clearing House develop local market practices to facilitate end-to-end payments tracking for their participants.

Stephen Grainger, SWIFT

Stephen Grainger, SWIFT

Brussels - SWIFT has announced that the Fedwire Funds Service of the Federal Reserve Banks in the United States and The Clearing House (CHIPS) have established local market practices for their participants that use the SWIFT global payments innovation (gpi) service.

SWIFT gpi includes the following key features: same day use of funds (within the time zone of the receiving gpi member), end-to-end payments tracking, and delivery of unaltered remittance information.

Payment market infrastructures have a critical role to play in facilitating the end-to-end tracking of cross-border payments. As soon as an international payment reaches a domestic or regional market, payment market infrastructures typically come into the picture for local clearing and settlement. SWIFT gpi banks can already exchange gpi payments over the 56 SWIFT-connected market infrastructures, including EURO1 and TARGET2.

Since SWIFT gpi payments carry additional information in the messages to flag them as gpi, member banks need a standardised, local market practice in order for these payments to be exchanged through local clearing systems not using SWIFT. Having these market practices available for the major USD clearing systems should increase the efficiency of tracking the status of cross-border payments.

SWIFT will continue to actively engage with other market infrastructure communities, including the Bank of Japan Financial Network System (BOJ-NET) and SIX's Swiss Interbank Clearing, for future gpi compatibility.

In addition, the High Value Payments Systems Task Force (HVPS+) - facilitated by SWIFT and sponsored by the Payments Market Practice Group (PMPG) - is currently establishing a set of global guidelines to ensure common identification of gpi transactions exchanged across market infrastructure communities planning to implement ISO 20022. This forms part of the Task Force's mission to develop global ISO 20022 market practice guidelines for HVPS with future ISO 20022 adoption plans.

"Support from the market infrastructure community is a key factor for success," adds Stephen Grainger, Head of North America at SWIFT. "Taking a standardised approach to identifying transactions for SWIFT gpi in these local clearing systems will reduce fragmentation and costs for banks."