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Net payment or clearing system

Gross payment system (SGMT)



SGMT (The Tunisian System for Transfer of Gross Amounts) is the RTGS (Real Time Gross Settlement) managed by the Central Bank of Tunisia.

 

This system, put into operation in November 2006, represents a payment infrastructure that helps to carry out fast and secure payment between participating financial institutions. It helps in particular to:

  • Carry out real time individual payment , in full safety, thanks to irrevocable bank money settlement, through a highly secured  SWIFT network;
  •  Ensure , through prior constitution of provisions, financial stability and reducing the risk of settlements that are likely to have systemic dimensions;
  •  To facilitate Bank money circulation, helping thus to boost efficiency, in conducting the monetary policy;
  • And finally to optimize management of participating institutions’ treasury, thanks to the establishment of a unique Central account for settlement by participant, with a standing watching over of flows and liquidity by the BCT;
  • It processes every day some 722 payments on average, with a total value of some 3.255 billion dinars.

 

Targets sought through the establishment of SGMT

 

  • Provide the national banking system with an efficient device to prevent systemic risk of credit and settlement (notably thanks to an immediate and definitive settlement in central bank money);
  • Ensure rapidity of settlement : carrying out real time transfer;
  • Align with international norms and standards  in the area of payment systems with systemic importance; notably those enacted by the Bank of International Settlements (BIS);
  • Set up conditions for a greater financial security for capital markets operations. To reach this target, a legal framework is required and a maximum level of operations should be integrated in SGMT.
  • Boost efficiency of monetary policy management: improving settlement infrastructure for capital markets would improve their liquidity in general, the SGMT being the operating channel for the monetary policy.
  • Reinforce attractiveness of financial markets for international investors with respect to international norms in the area of efficiency and security of settlement/delivery of transactions of Tunis Stock Exchange Market (BVMT).

 

 

Participants in SGMT

 

The BCT: as an owner, supervisor and manager of the system but also an ordinary participant that issues and receives orders.

The lending institutions acting as banks: a participant can have one of the two following status:

Direct: manages by itself issue orders in the system and follows up its position via a “participant platform”. It is endowed with a subscription to SWIFT network.

Indirect: Holds a settlement account in SGMT, but for lack of technical means, carries out its orders through a direct participant.

A participant can be eligible for an intra-day advance if it holds Treasury bonds in coverage of non-remunerated advance and the one to be reimbursed within the same day.

Conditions for participation in SGMT

 

1. Signing a participation convention with the BCT.

2. Paying fees for participation in the system.

3. Technical approval of the BCT with respect to infrastructures of connection of participants to the system.

 

Transactions settled in the SGMT

 

•         Interbank Treasury transactions: borrowing loan, transfers on behalf of ordering participant or on behalf of its customer=>100 thousand dinars, exchange operations…

•         BCT operations tied to the monetary system (Open Market, loan facility, deposit, granting advance, etc.)

•         Payment orders initiated by the BCT in the form of debit or credit (exchange operation, remission of Treasury mandate …)

Operating principles

Operating of SGMT is based upon 5 principles :

1. provision control.

2. irrevocability of orders.

3. respecting FIFO rules.

4. managing the queue.

5. granting intra-day advances.

 

Role of the BCT

The Central Bank of Tunisia has several roles with relation to SGMT.

1.   Monitoring:

  • Supervise sound operating throughout the day by means of SGMT chronological operation;
  • Monitor financial flows : close follow up of local position, charging orders, blocking the queue, trigger optimization process;
  • Answer the different requests emanating from participating banks (HELP DESK SERVICES).

 2. Administration of the system: it is the pillar of the operating system:

·         Set the principles and modalities of the system’s operation;

·         Inform participants about possible changes introduced in the system (change of the exchange day profile, momentary interruption of SGMT services, new operations, admission of new participants, …).

  • Take all preventive and remedial measures it considers necessary and enforcing sanctions in case of a participant breach of his obligation.

3. Prudential supervision: This supervision aims at operational and financial stability of the system:

  • Maintain the system in compliance with the evolution of international norms and attuned with the economic environment;
  • Analyze and manage risk: a dynamic process which consists in carrying out periodic audit of the system with regard to the supervision policy and defined operating;
  • Work out plans for risk management, continuity of trade flows and possible breakout of contingency procedures facing emergency or unusual situations.

3 – Supervision of systems and means of payments

In application of article 33 (new) and 33 A of BCT organic law n°55-90 of 19 September1958 providing for creation and organization of the Bank, the latter watches over and guarantee stability, soundness and efficiency of the systems of payment.

To this end, the BCT organizational chart provides for a structure devoted to supervision and development of systems and means of payments.

The supervision function is intended to comply with international standards and aims mainly at:

  • Preserving security, stability, soundness, efficiency and effectiveness of the payment systems.
  • Preserving the quality of means of payments made available to users.

The function of development of the payment system targets:

  • Availability of payment services  and reduction of their costs
  • Creation of new payment niches that are more accessible for users 
  • Boosting the national effort to reinforce financial inclusion of socio-professional categories up to now excluded from classical banking services.
  • Integration of inter-regional payment systems.