BSP to designate important payment systems

Published October 10, 2021, 10:00 PM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) will designate the check image clearing system (CICS), automated teller machine (ATM) payment system, PESONet and InstaPay as prominently important payment systems (PIPS).


This is based on the BSP’s draft guidelines and proposed expectations for all participants of CICS, ATM, PESONet and InstaPay. The draft memo has already been released for industry comments and feedback. The feedback deadline is on Friday, Oct. 15.

This means that when the BSP’s Monetary Board approves the proposal to name the PIPS, all participants of the CICS, ATM, PESONet and InstaPay will have to comply with the regulatory expectations in BSP Circular No. 1089 or the Payment System Oversight Framework (PSOF) on designated payment systems (DPS). And, as DPS participants, they will also have to observe the Principles for Financial Market Infrastructures (PFMI) as PIPS.

At a minimum, the draft memo said participants of CICS, ATM, PESONet and InstaPay will have to comply with the BSP’s general expectations for PIPS such as to submit reports and/or information to facilitate evaluation of the payment system and/or the National Payment System (NPS). Participants must also ensure that the payment system rules and policies they agree to are aligned with the relevant principles to PIPS. They must also adhere to the operational rules, standards and requirements promulgated by the operators of DPS and fulfill their respective roles to ensure safety, efficiency and reliability of the payment system, including participation in exercises or activities. Lastly, participants must comply with BSP policy issuances primarily concerning payment system or specific to their role in the payment system.

Last August 13, the BSP has identified the Philippine Peso Real-Time Gross Settlement (PhP-RTGS) payment system which it owns and operates, as a systemically important payment system (SIPS). As a SIPS, it is a payment system “which poses or has the potential to pose systemic risk that could threaten the stability of the NPS”. The NPS ensures the circulation of money or movement of funds in the country. The BSP’s PSOF was approved last July 2020, and it ensures a safe and efficient NPS.

Identifying SIPS is one the provisions of the PSOF, and also in naming PIPS. A PIPS is different from a SIPS in that the latter is described as a payment system that may not trigger or “transmit systemic risk but could have a major economic impact or undermine the confidence of the public in the NPS or in the circulation of money.”

The PFMI is developed by the Bank for International Settlement and the International Organization of Securities Commissions. Basically, PFMI is made up of international standards for financial market infrastructures such as payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories.

All DPS, whether SIPS or PIPS, will use PFMI to design and conduct its operations.