Requirements for banks operating or applying to operate the Protected Payments System (PPS)
The bank must have a minimum long term rating of A- by Fitch or Moody’s or Standard & Poor’s equivalents.
The PPS arrangement must be operated from a London or New York branch.
Banks must apply to S.W.I.F.T. to join the closed user group to accept MT204 messages from the Clearing House.
Any current account held by the Clearing House must be interest-bearing.
Banks must be able to operate the PPS service on international business days as advised, including UK Bank Holidays. On a UK Bank Holiday, the Clearing House will instruct you to give irrevocable commitment and good value to any currency where the currency centre is open. GBP PPS instructions will be sent and irrevocable commitment will be required from you on a UK Bank Holiday. These GBP PPS instructions will be for value next business day. PPS in New York does not currently operate on a U.S. Bank Holiday.
Daily statements to be sent by S.W.I.F.T. MT950 quoting transaction reference numbers from credit/debit messages.
No bank charges to be levied to LCH.Clearnet Limited.
The Clearing House will issue S.W.I.F.T. MT 202 messages at pre-agreed times throughout the business day, to instruct the PPS Banks to transfer any credit balances from the Clearing House’s account with that PPS Bank to the Clearing House’s account with another nominated bank. Funds should be received by the beneficiary (the Clearing House) at the nominated Bank within two hours of receipt of the MT 202.
In the event that the Clearing House’s account with a PPS Bank is overdrawn intra-day, the Clearing House will issue S.W.I.F.T. MT 210s to pre-advise that funds will be transferred to that account.
Any limitations or cut-off times during normal operation and during Bank Holidays, and any minimum balance/non-interest bearing levels etc. must be advised to the Clearing House in writing.
The Terms & Conditions of the PPS Agreement must be adhered to.
The Clearing House reserves the right to apply criteria higher than the minimum at its absolute discretion and when in its assessment, a PPS bank’s financial resources or operational capability are not commensurate with its level of business.
LCH.Clearnet Limited’s S.W.I.F.T. address is LCHLGB2L. The Clearing House will send PPS banks the following message types:
MT202/203 to instruct payment to LCH.Clearnet Ltd accounts at other banks
MT202/MT203 to instruct payment to members (PPS payments)
MT204 to instruct debit of members (PPS calls)
MT210 to advise of incoming funds from LCH.Clearnet Ltd accounts at other banks.
In the event that a PPS bank is downgraded below the minimum long term rating criterion or it fails to meet the operational capability criteria outlined above, the PPS bank will be required to leave the service. In the event that this process – which will take a maximum of three months – is invoked, details of the process will be provided by the Risk Management Department of the Clearing House. In the event that a Bank no longer wishes to participate in the PPS service, a minimum of three months notice must be given and arrangements made with LCH.Clearnet Ltd for an orderly wind-down
For further information, please contact Siobhan White on +44 (0)20 7426 7044 or siobhan.white@lchclearnet.com