Bank of England resumes settlement after 'technical issue’

Central bank extends opening hours to deal with backlog

Bank of England
Bank of England

Part of the Bank of England's (BoE) real-time gross settlement (RTGS) system was closed for several hours on October 20 due to a "technical issue".

"The Bank of England confirms it is now processing payments through RTGS as normal," the BoE said in a statement at the time. "We have extended opening hours until 20:00hrs (BST) to maximise the opportunity for settlement."

Details remain scarce on what the problem was that caused the BoE to "pause" settlement for most of the day. The central bank said only that it occured during "routine maintenance".

The RTGS underpins the Clearing House Automated Payment System (Chaps) – a vital part of the UK's financial market infrastructure that deals with high-value interbank payments. In 2013, it processed an average of £277 billion each day. 

The managing director of Chaps, Phil Kenworthy, said the scheme was "unable to process payments", in a statement issued around 13:00 local time.

Once the issue was resolved, Chaps processed the backlog of payments and Kenworthy was "confident that all payments submitted today will be processed today". Chaps also extended its operational hours, in this case to 19:40.

The Bank of England has a clear set of contingency plans in place for when the RTGS system experiences a problem. It operates the "principal RTGS infrastructure" from two sites near London. If the "live site" fails, the RTGS can be operate through the "standby site".

Earlier this year, the BoE introduced an "additional contingency infrastructure" named the Market Infrastructure Resiliency Service (Mirs), developed by Swift in conjunction with the central banking community.

"This ensures banks can continue to settle Chaps payments in the event of a disruption without resorting to a [deferred net settlement] model," according to an article published in the BoE's latest quarterly bulletin.

It is understood the Mirs was not used on October 20, though this remained an option if the problem continued over an extended period of time. When exactly this contingency plan would have been triggered is, however, unclear.

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