M5 CH12 - Clearing and Settlement Systems

It pertains to how the transactions are handled in a net settlement system.

• Processed immediately one by one

• Grouped and offset at the end of the day

• Delayed until the following business day

• Settled only if authorized manually

This system processes each transaction individually and in real time.

• Deferred Net Settlement

• Large-Value Transfer System (LVTS)

• Real-Time Gross Settlement (RTGS)

• Automated Clearing House

Allows the electronic fund transfers between government agencies and the Bureau of the Treasury in the Philippines.

• PhilPaSSplus

• BSP Electronic Fund Transfer Instruction System (EFTIS)

• Large-Value Transfer System (LVTS)

• InstaPay

It is what the PhilPaSSplus provides in the Philippine Payment and Settlement System.

• Deferred settlement of all transactions

• Real-time, gross settlement for peso transactions

• Exclusive access to retail merchants

• Manual verification of all payments

This happens if a check is dishonored (e.g., insufficient funds) during the clearing process.

• The drawee bank returns it to the presenting bank

• The check is destroyed by the clearinghouse

• The payer’s account is automatically closed

• The beneficiary must initiate a legal case

System that allows banks to process checks digitally instead of physically transporting them.

• Manual Clearing System

• Deferred Payment System

• Loan Processing System

• Check Imaging and Clearing System (CICS)

It pertains to how the use of a clearinghouse minimizes risk in check processing.

• By physically transferring funds between branches

• By ensuring funds are available before transactions

• By allowing multiple reversals of cleared checks

• By using manual systems to verify transactions

Its primary objective is to verify the transaction’s authenticity, ensure sufficient funds are available, and confirm the payment details.

• Clearing

• Settlement

• Net settlement

• Gross settlement

This is a benefit of clearing and settlement systems for companies wherein clearinghouses act as intermediaries between buyers and sellers, significantly reducing the risk of default.

• Increased transparency and compliance

• Improved cash flow management

• Risk mitigation

• Enhance efficiency

A type of settlement which is temporary and subject to change, as it depends on certain conditions being fulfilled.

• Final

• Provisional

• Gross

• Net