Payment traffic in general
The Business Identifier Code (BIC) is a SWIFT 8- or 11-digit code (ISO 9362) used to identify unequivocally both participating financial and non-financial institutions.
The process of transmitting, reconciling and, in some cases, confirming payment orders or security transfer instructions prior to settlement, possibly including the netting of instructions and the establishment of final positions for settlement. Sometimes the term is used to include settlement.
Continuous Linked Settlement: The global CLS payment system, operated by some of the world’s largest commercial banks, processes currency transactions in the major currencies according to the payment against payment principle. Processing on both sides of the currency transaction operates with simultaneous credit and debit of the settlement members' accounts at the CLS Bank in New York. To facilitate this, each of the parties holds an account at the CLS Bank that gives them access to various national payment systems. Processing takes place via a direct link between SIC and the CLS Bank. This eliminates processing risks known as "Herstatt risks" (time-shifted processing that leads to considerable fulfilment risk). Direct system participants can use CLS services not only for their own purposes, but also offer them to their customers (third-party business).
Security in form of stocks and bonds or moneys which are handed to the "Cash Provider" by the "Cash Taker".
A settlement that takes place in a country other than the country in which one trade counterparty or both are located.
The Swiss banks used to offer their customers the electronic transmission of payments in a standardized DTA (German for "Datenträgeraustausch") format as a means of executing paperless payments. The DTA standard was withdrawn from the market on 30 June 2018.
As from 1 July 2018, the DTA standard is eliminated. The document "DTA – Standards and Formats" has been be discontinued and removed from SIX Interbank Clearing's website.
Delivery versus payment: A link between a securities transfer system and a funds transfer system that ensures that delivery occurs if, and only if, payment occurs.
Electronic Data Interchange For Administration, Commerce and Transport. A comprehensive standard that covers the encoding and transmission of a variety of business documents. EDIFACT, or UN/EDIFACT, is supported by the United Nations. The USA uses EDI. The standard covers a variety of different aspects, although the technical infrastructure and intervention in data processing are costly.
Swiss (RTGS) system for euro payments between banks within Switzerland & cross border, operated by SIX Interbank Clearing Ltd.
Settlements in payment systems (e.g. SIC), which are both unconditional and irrevocable, are designated as final (sending bank’s account debited, receiving bank’s account credited).
Gross settlement system
A transfer system in which the settlement of funds or securities transfer instructions occurs individually (on an instruction-by-instruction basis).
IBAN stands for International Bank Account Number and is the international standard for the presentation of account numbers. In order to rationalize cross-border payments, the ISO (International Organization for Standardization) and the ECBS (European Committee for Banking Standards) have created the IBAN. It simplifies the recording, transmission and processing of payment data.
Interbank Security: Security system for SIC & euroSIC and other interbank applications. It ensures that the messages are transmitted unadulterated, that their sender is evident, that sending and receiving of messages cannot be disputed, and that confidentiality is guaranteed during message transmission.
The institution identification (IID) serves in Switzerland & Liechtenstein for the identification of institutions participating in the SIC & euroSIC system.
Credits with a maturity of less than a business day. Such credits are granted in order to facilitate the smooth processing of payments in payment systems. Intraday credits are usually provided interest-free by central banks.
Stands for Lastschriftverfahren (direct debit procedure). LSV+ & BDD are Swiss direct debit schemes for the processing of domestic & cross-border collections in francs and euros.
Net settlement system
A system in which transfer orders are settled on a net basis. Some systems distinguish between types of transfer orders and settle some, such as payment orders, on a net basis and settle others, such as securities transfer orders, on an instruction-by-instruction basis.
An agreed setoff of mutual positions or liabilities between business partners or participants in a payment system. Netting reduces a large number of individual positions or liabilities to a smaller number of positions or liabilities. Netting can take different forms; these claims are legally enforceable to a varying extent in case of default by a participant.
Payments Committee Switzerland. The committee is responsible for consulting and supporting financial institutions and SIX Interbank Clearing regarding product and market design and for communication. It also deals with the coordination and interest representation in national and international committees.
Project and IT Process Steering Committee. A standing committee reporting to the Board of Directors of SIX Interbank Clearing and mandated to ensure that the further development of payment systems services meets the banks' requirements. The PAP supports the banks and SIX Interbank Clearing in implementing strategies for joint projects and with the specification, development and operation of payment systems applications. It also rules on questions and problems that arise at the interfaces between the parties involved – the banks, SIX Interbank Clearing and the Swiss National Bank.
Payment versus payment: Mechanism in a foreign exchange processing system that ensures that the final transfer of one currency will occur if, and only if, the final transfer of the other currency occurs simultaneously as well.
Short for repurchase agreement. Sale of securities connected with a simultaneous repurchase of those same securities at a future date which may or may not be set.
Real Time Gross Settlement. Irrevocable settlement of each individual payment without settlement of a counterclaim.
Stammdatenservice (German for master data service) of SIX Interbank Clearing. Administers the master data of the SIC & euroSIC systems.
SECB Swiss Euro Clearing Bank GmbH, Frankfurt. Multipurpose bank, specializing specifically in euro payment traffic and all related cash & collateral management services. It supervises and manages the Swiss RTGS system euroSIC.
Online system of the Swiss banks for securities transactions both nationally and abroad.
Stands for single euro payments area.
The actual fulfilment of the payment order, i.e. the transfer of the payment from the sender bank to the receiver bank is called settlement. This transfer is carried out via a central counterparty. It releases the debtor from its payment obligation.
Swiss (RTGS) system for the payment traffic in francs between banks, operated by SIX Interbank Clearing Ltd on behalf & under supervision of the Swiss National Bank.
SIX Interbank Clearing
Operator of the Swiss RTGS systems SIC & euroSIC, in addition to other payment transaction services on behalf of banks for the Swiss financial center.
Straight Through Processing: refers in the realm of payment traffic to the automatic processing of payment transactions from the ordering party right through to the beneficiary. The acronym is also used in connection with securities trading but the process involved is different.
Society for Worldwide Interbank Financial Telecommunications. Network operation facilitating the exchange of payments and other financial transactions world-wide.
Swiss Value Chain
Full electronic integration of securities' trading, handling and payment traffic through an association of the SIX Swiss Exchange, SIX Securities Services & SIX Interbank Clearing.
Trans-European Automated Real-time Gross settlement Express Transfer system. Clearing and settlement system of the European Central Bank, providing EMU member countries' central banks with same day payment settlement.