An RTGS system is a Real Time Gross Settlement System that is used mainly for large value and important funds settlement instructions to be processed within a payment system in one country. An RTGS system typically represents the major payment system in one country and that allows it to be defined or classified as the country’s major “Systemically Important Payment System”.
An RTGS system defined as a Systemically Important Payment System constitutes the major system that processes the most important types of funds settlement instructions across a country’s payment system and that of course applies to Egypt. And since such payment system abides that sort of importance, it still -as well- encounters a degree of risk that could affect the whole payment system in the same way that the elimination of such associated risks could positively affect the efficiency of liquidity circulation within the payment system.
The Egyptian RTGS system in a snapshot
- The Central Bank of Egypt has launched its RTGS system successfully on the 15th, of March 2009.
- RTGS in Egypt is based on latest business concepts in Large Value Payment Systems and state of the art technology.
- RTGS system is owned and operated by the Central Bank of Egypt.
- Settlement in RTGS is final and irrevocable.
- The RTGS system is considered a hybrid system, which settles both single payment requests and netting results of clearing houses.
- The RTGS settles Cash leg of government securities primary and secondary markets.
- The Central Bank of Egypt offers a free of charge and collateralized intraday loan facility to banks based on a haircut. Accepted collaterals within the system are the Treasury Bills (through intra-day repos with the Central Bank) and Commercial Banks deposits –other than one night deposits- at the Central Bank (By blocking deposits).
- RTGS supports many liquidity optimization mechanisms in order to facilitate timely settlement of funds instructions throughout each and every day. Three queues are available in the system supporting FAFO (First Available First Out) -or FIFO (First In First Out) bypass - with priority techniques.
- The system supports Bilateral and Multilateral offsetting techniques.
- RTGS is even following an authenticated and trustworthy medium of transferring funds that has already been used in Egypt which is –SWIFT-. All messages sent through the RTGS system fully complies with SWIFT messaging format, and applies the standard "Y" topology of SWIFT.
- RTGS –in its first phase- processes only Egyptian pounds payments.
- Three clearing houses settle their netting results in the RTGS, CBE Cheques Clearing House, National Switch and ACH of EBC, and Stock exchange transactions of MCSD.
- RTGS has proved to be vital to the Egyptian economy as it evidenced that more than 57 billion Egyptian Pounds (above 9 Billion US Dollars) are settled and circulated within the system on a daily basis, with a daily average of 5,400 settlement requests.
- During its operation, over 13.6 Trillion Egyptian Pounds are settled annually in the system (over 2.25 trillion US Dollars). This means that the GDP circulates in the system in roughly 20 working days.
- All banks registered in the Central Bank of Egypt are direct participants in the RTGS, and participation is mandatory for all banks.
- The system operating hours are from 8:30 AM till 4:30 PM every working day.
- Payment requests can be stored in the system for processing in a later time during the day or in a future day.
- All transactions affecting banks' accounts at the Central Bank must pass through the system.
- RTGS system operates in a high secure environment, with a highly available disaster recovery site.
- RTGS system fully complies with Core Principles of BIS Systemically Important Payment Systems, a proper oversight is performed to ensure such compliance.
RTGS system is analyzed to detect individual banks and market trends and behaviors in Payment Systems, including indications for shortage in liquidity, early versus late payment behavior, and effects of high demand/supply of foreign currency.