Tuesday, September 26, 2023

pacs.008 FI to FI Customer Credit Transfer – Settlement Information

The pacs.008 Settlement Method element within the Group Header Settlement Information, includes one of the embedded codes to indicate how the payment message will be settled.

D

27

The Settlement Method element in the pacs.008 allows a choice of an embedded code.

COVE indicate this Customer Credit Transfer will be settlement using a covering pacs.009 (COV). The Agents being used in the covering payment to reimburse the Instructed Agent can be provided in the dedicated Reimbursement Agent elements. This allows the Instructed Agent to identify the debit account on their books from the Reimbursement Agent account or look up the account related to the reimbursement agent.

INDA indicate this Customer Credit Transfer will be settlement by the Instructed Agent (as the Account Servicing Institution) The account held at the Instructed Agent may captured in the dedicated Settlement Account element.

INGA indicate this Customer Credit Transfer has already been settlement by the Instructing Agent, who has credited the Account they service for the Instructed Agent (as an Account Owner). The account held by the Instructed Agent with the Instructing Agent may captured in the dedicated Settlement Account element.

Settlement Method code CLRG is not part of CBPR+ specifications but instead used in Market Infrastructure specification (HVPS+)

 

 

pacs Settlement Method - explained

The pacs messages introduce the Settlement Method element within the Group Header Settlement Information. Settlement refers to the Agent whose role is to act as an Account Servicing Institution i.e. owns the account and providesD service to the customer

27

(Account Owner).

The Account Owner can be an Agent or another Party.

Traditionally an interbank account relationship may have been referred to as a Nostro/Vostro relationship or an Agent's account held on another Agent's books/ another Agent's account held on my books.

Typically the commonality of this can be simplified to the Agent who provides the official Account statement is servicing the account and therefore is the Agent responsible for performing the settlement.

Why is it so important to understand which Agent Services the account ?

In ISO 20022, much like the legacy FIN process, each leg of a payment has a settlement component. Commonly one of these settlement legs occurs over a Market Infrastructure, who typically owns or instructs the settlement between the two Market Infrastructure participant Agents at a national Central Bank. In this case the Central Bank services both the Instructing Agent and InstructedAgent accounts which is represented by CLRG in the Settlement Method of a pacs message.

In a number of business Use Cases there are examples of additional legs, which may occur prior to or after a potential Market Infrastructure, where an Agent is responsible for the role to service an account and perform settlement of that leg.

This role is important as it determines the subsequence message behaviour.

pacs Settlement Method – INDA versus INGA

INGA

pacs Settlement Method – relationship to message process flow

The relationship between the settlement of a payment leg and the message process flow is an important one. The state of settlement influences further messages in the process flow.

                                  The pacs message sent by the Instructing Agent to the Instructed Agent has already been settled.                                                                                                            D

                                             Instructing Agent may (for example) send                                                                         27

         a pacs.002 to the Previous Agent with status ACSC Accepted Settlement Complete.

         a camt.053 Customer Statement to the Instructed Agent (as Account Owner)

Instructed Agent can not Reject the pacs message received as it has already settled. The inability to process the pacs message further by the Instructed Agent must result in a pacs.004 Payment Return (which in turn triggers a Reverse Indicator on the Account Owners statement).

Creditor Agent having performed the settlement on the Creditor's account, camt reporting message may be used to report or notify on this credit entry.

INDA

The pacs message sent by the Instructing Agent to the Instructed Agent has not been settled.

Instructing Agent may (for example) send

         a pacs.002 to the Previous Agent with status ACSP Accepted Settlement in Progress

Instructed Agent may

         Reject the pacs message received, using a pacs.002, as it has not been settled.

         a camt.053 Customer Statement to the Instructing Agent (as Account Owner) Although an rejected entry will not appear in the camt.053

Creditor Agent of a pacs.009 (particularly in the cover scenario) may forward the pacs.009 to the Creditor, as the Creditor will perform the settlement (they are the Account Servicing Institution)

CLRG

The pacs message sent by the Instructing Agent to the Instructed Agent has not been settled. Settlement is performed by the Market Infrastructure.

Instructing Agent may (for example) send

         a pacs.002 to the Previous Agent with status ACSP Accepted Settlement in Progress

Instructed Agent may

         can not Reject the pacs message received as it has already settled. The inability to process the pacs message further by the Instructed Agent must result in a pacs.004 Payment Return.

Market Infrastructure may

         Reject the pacs message received, using a pacs.002, as it has not been settled.

         a camt.053 Customer Statement to the Instructing Agent and Instructed Agent (as Account Owners)


INGA


High Level INGA message example

Note: return of a payment would involve a booked entry. In this example Agent B would capture the original booked entry and a separate reversed entry in the statement for Agent A and Agent C. Detail on statement entry can be found in the camt.053 section.

INDA


High Level INDA message example

 

 

 

 




This e-mail and any attachments are confidential and intended solely for the addressee and may also be privileged or exempt from disclosure under applicable law. If you are not the addressee, or have received this e-mail in error, please notify the sender immediately, delete it from your system and do not copy, disclose or otherwise act upon any part of this e-mail or its attachments. Any opinion or other information in this e-mail or its attachments that does not relate to the business of HBL is personal to the sender and is not given or endorsed by HBL. Internet communications are not guaranteed to be secure or virus-free. HBL does not accept responsibility for any loss arising from unauthorised access to, or interference with, any Internet communications by any third party, or from the transmission of any viruses. Replies to this e-mail may be monitored by HBL for operational or business reasons.

No comments:

Post a Comment

Saudi Arabia's air defense intercepted rockets aimed at Israel.

  Saudi Arabia's decision to intercept missiles aimed at Israel has drawn mixed reactions. While some view it as a positive step toward...