2/5  BIS central bankers' speeches  The industry environment is complex far beyond the security and resiliency domain. Financial market infrastructures face an unprecedented volume of technological change, market developments, and regulatory scrutiny. For the Fedwire Funds Service, at least two market developments promise to have major strategic implications over a 3-5 year horizon: the advent of real time retail payments, which the Federal Reserve is actively promoting as a desired outcome in its Strategies for Improving the Payments System; and the trend toward global adoption of ISO 20022 payment message standards. For the Fedwire Securities Service, the successful modernization in November 2015 of the application suite and hardware platform supporting this critical business presents an historic opportunity to articulate a future vision that responds to customer and stakeholder needs. Straddling both domains, the emergence of new technologies such as distributed ledgers presents both challenge and opportunity. A key desired outcome identified in the Federal Reserve’s Strategies for Improving the Payment System (SIPS) is to increase the speed of retail payments. An unmistakable global trend toward real time retail payments has emerged reflecting the advent of new technologies, the rapid pace of private sector innovation, the proliferation of mobile payment devices, and the recognition that a world of 24x7 commerce requires a payment system that can keep pace. As this trend inevitably accelerates, the question of interbank settlement to address credit exposures that may accumulate outside of conventional banking hours must be addressed.

Members of the SIFMA Government Operations Committee and the Wholesale Securities Customer Advisory Group have consistently expressed their desire for this enhancement, which reflects an important opportunity for customers to realize value from the modernized Fedwire Securities platform. Strategy 2 seeks to provide customers with greater and more flexible access to Fedwire Securities Service data to support reconciliation, perform analytics, enhance risk management reporting, and project liquidity needs. Strategy 3 seeks to improve credit and liquidity risk management tools available to depository institutions and the Reserve Banks to manage and control daylight overdrafts that derive from the delivery-versus-payment nature of the Fedwire Securities Service. Strategy 4 seeks to examine the costs and benefits of expanded operating hours for the Fedwire Securities Service, reflecting an increasingly global world in which financial institutions and their customers conduct transactions at all hours across multiple jurisdictions. Many stakeholders have suggested that expanded hours will enhance the ability of financial institutions to mobilize collateral in domestic and international markets and provide participants with better access to liquidity, especially during periods of stress, recognizing that we serve as central securities depository for the largest, deepest, and most liquid pool of collateral in the world. While these prospective benefits must be assessed against potential costs, and require more comprehensive study across a wide range of stakeholders before any commitment can be made, the time to assess an expansion in operating hours for the Fedwire Securities Service has come.