Bank of England publishes new Omnibus Accounts Access Policy

The policy enables eligible payment system operators to open an omnibus account on behalf of their participants in the Bank’s Real-Time Gross Settlement (RTGS) system. This provides a new model for payment system operators to offer settlement services fully funded in central bank money.

This new offering is expected to support payment system innovation and is a welcome development for the fintech industry and more broadly, according to Link Laters. Full funding in central bank money means participants bear reduced credit risk when holding funds and making payments, and that the payment system can offer greater flexibility in terms of intraday settlement as well as operation outside RTGS operating hours, the online publication adds.

This new offering will sit alongside existing models for settlement in central bank money, such as the real-time settlement model used for CHAPS (the Clearing House Automated Payment System) and various deferred net settlement arrangements.

According to the policy, the eligibility requirements for opening an omnibus account are:

• the sterling balances in the relevant payment system must always be fully funded with monies in the omnibus account;

• the entities that can hold an overnight entitlement (i.e. have beneficial ownership rights to funds in the account outside RTGS operating hours) in the account are restricted to participants in the Sterling Monetary Framework that hold reserves at the Bank of England and which are not subject to a target level of reserves;

• the payment system operator holding the account needs to have robust legal arrangements that protect both the participants and the Bank of England from legal risks and liability exposures;

• the account holder must be an operator of a payment system that has been recognised under the Banking Act 2009;

• specific settlement services should not increase the risk to financial or monetary stability;

• the operator must also become a direct participant in CHAPS (in order to facilitate funding and de-funding of the account).