Fund settlement is a process and method used by international and domestic banks to finally clear the creditor’s rights and debts of both parties in the process of handling and payment through accounts and relevant transfer systems.
Foreign exchange clearing is an important link in the process.
The settlement of foreign exchange funds consists of three parts: the settlement of foreign exchange funds in overseas banks, the settlement of foreign exchange funds in domestic banks, and the settlement of foreign exchange funds in the system, including the business processes of domestic and foreign banks, the exchange of foreign exchange funds in the system, regular deposit, release and release, accounting verification and so on.
1. The difference between clearing and settlement is based on the Terms and Definitions of China UnionPay Bank Card Network Joint Technical Specifications V2.1 Part 0: Clearing: The process of classifying and summarizing transaction data according to institutions and transaction types, and calculating the settlement amount.
Liquidation: According to the liquidation results, the transaction data net marking, submission and completion of the fund transfer process.
Settlement: refers to the whole process of transferring funds between customer accounts.
Second, clearing form foreign trade, foreign exchange funds in bank clearing system has the following several forms: 1, Jones lang lasalle Jones lang lasalle exchanges, refers to the headquarters of bank system and domestic branch, branch office and the branches abroad, between the branches, in the headquarters of charge-offs, regular way of settlement rate, deal with mutual funds liquidation.
According to different regions, joint bank contacts are divided into Hong Kong, Macao and overseas joint bank contacts and national joint bank contacts.
2. Account exchange between the clearing center Account exchange refers to the fact that the head office, branches and sub-branches of the banking system establish clearing centers at all levels, open current accounts in the clearing centers, and handle the settlement of mutual fund transactions by the way of case-by-case settlement.
3. Foreign agent bank to foreign agent bank means that a bank selectively signs an agreement with a foreign bank to establish a capital current account, and through the account opened with the foreign bank and the account opened with the foreign bank in our bank, the bank shall settle the capital transactions with the overseas peer bank by the way of case-by-case settlement.
4. Foreign correspondent bank and clearing system combined transactions due to the size of the correspondent bank network participating in the settlement of foreign exchange funds will be different.
If the agent bank cannot complete the clearing through its own network, it shall use the local clearing system of the foreign agent bank to complete the clearing jointly.
The local clearing system of a country with an international common currency handles the clearing of its own currency for international banks on an international scale.
Such as FEDWIRE Clearing system, CHAPS Clearing System, CHATS Clearing System.
Settlement System of Foreign Exchange Funds In order to ensure timely, accurate and complete settlement of foreign exchange funds, domestic financial institutions have established the existing settlement system of foreign exchange funds according to different settlement regions, settlement objects and settlement channels.
1. According to different liquidation regions, it can be divided into domestic capital settlement and overseas capital settlement;
The settlement of domestic foreign exchange funds can be divided into the settlement of foreign exchange funds in the same city and the settlement of foreign exchange funds in different places.
2. According to the different objects of settlement, it can be divided into the settlement of foreign exchange funds of the central bank, the settlement of foreign exchange funds of overseas banks, the settlement of foreign exchange funds of domestic banks, and the settlement of foreign exchange funds within the system.
3. According to different channels of settlement, domestic foreign exchange fund settlement can be divided into inter-bank settlement in the system, account settlement in the clearing center, account settlement in the mutual establishment outside the system or local settlement center;
The settlement of overseas foreign exchange funds can be divided into the settlement of overseas branches, the settlement of foreign correspondent banks (account banks) and the settlement of foreign local clearing institutions.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT), founded in May 1973, is a non-profit cooperative organization among international banks.
It is headquartered in Brussels, Belgium, and has set up exchange centers in Amsterdam, the Netherlands and New York, the United States respectively, to provide fast, accurate and excellent services for international financial business.
The global society of banking and finance is Members. The prerequisites for membership are a BankingLicence, Members owning shares in the society and having the right to vote. All Members must pay an initial membership fee and an annual fee.
Its founding members were 239 big banks in 15 countries in Europe and North America, and by June 2007 SWIFT had grown to serve more than 11,000 financial institutions in 200 countries.
2. The Bank for International Settlements (BIS) was incorporated in Basel, Switzerland, in 1930 and is the oldest International financial institution in the world.
Twenty-nine institutions are represented at the BIS general meeting, among which 24 are European central banks and 5 are members of other countries. Up to now, more than 80 central banks have deposits with the BIS. China’s central bank established a business relationship with the BIS in 1984 and has foreign exchange and gold reserves with the BIS.
3. New York Clearinghouses Inter-Bank Payment System (CHIPS) In 1970, New York Clearinghouses Association (NYCHA) established CHIPS to provide clearing and settlement services for dollar payments between enterprises and banks instead of the original paper payment and settlement method.
In 2001, CHIPS adopted a new system and began the transition to a real-time netting system.
In 2007, it was one of the largest private payment and clearing systems in the world, mainly responsible for the clearing of transnational dollar transactions. It has a secure, reliable and efficient payment system, and handles about 95% of the world’s international dollar transactions, with an average daily transaction volume of more than 340,000 transactions worth about 1.9 trillion US dollars.
At present, more than 90% of the world’s foreign exchange transactions are completed through CHIPS. It can be said that CHIPS is a bridge for international trade fund settlement and a channel for Eurodollar suppliers to conduct transactions.
4. CHAPSCHAPS, an automated payment clearing system of London Clearing House, is the main large payment clearing system in London, providing two kinds of independent clearing services in sterling and in sterling, among which Euro clearing is connected to TARGET, a unified European payment platform.
CHAPS has four basic provisions :(1) there will be no central authority in the system, and cooperation between exchange banks will be carried out only when necessary (meaning a minimum level of cooperation).
(2) Once the payment telex has been sent and accepted by the channel, the sending bank must pay the exchange bank on the same day even if it is immediately proved that the payment order is wrong.
(3) Each exchange bank must keep the channel open during the prescribed business hours so that it can receive telex from other channels at any time.
(4) Each exchange bank must act in accordance with the agreement unanimously adopted.
5, Financial Network System (BOJ-NET) The Bank of Japan Financial Network system (BOJ-NET) began operation in October 1988, it is an online system for electronic fund transfer between financial institutions, including the Bank of Japan.
The system is administered by the Bank of Japan.
To be a direct user of the Bank of Japan’s online funds transfer service, a financial institution must open an account with a Japanese bank.
The participants in the system include banks, securities firms and brokers who make short-term loans, as well as foreign banks and securities firms in Japan.
The fund transfer handled by the Bank of Japan network is generally credit transfer, but if it is internal fund transfer, debit business can also be performed.
A sending bank may transmit a payment order with information about the sending bank or the customer of the commercial bank.
The minimum amount to be transferred for a third party is set at 300 million.
6. European TARGET (TARGET) was built in 1995 and officially launched on January 1, 1999. It mainly provides real-time full clearing services for European Union countries.
The interconnection system links countries’ RTGS systems to EPMs so that payment orders can be passed from one system to another.
The system operates 11 hours per day (7am – 6pm) on Frankfurt time.
Risk appetite improved, the dollar fell, gold retreated and oil prices jumped 4 percent.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
