We engaged with them to discuss these risks and how “de-tiering” could alleviate them. Each of these banks now accesses CHAPS directly. Over the last year, they accounted for 17% of total CHAPS values, demonstrating a clear and measurable reduction in risk, which in turn, benefits the wider payments ecosystem and all of its participants and end users. In April 2012, after consultation with all CHAPS participants, formal tiering criteria were introduced to CHAPS based on a presumption that Indirect Participants that breach the criteria should transition to direct access. The Bank will continue to analyse the financial stability risks presented by indirect access and further refine if we consider there is an unacceptable level of risk. Expanding eligibility to non-banks. Where it can be done safely without compromising our mission to maintain monetary and financial stability, we also seek to promote efficiency, innovation and competition through our operation of RTGS and CHAPS. We have therefore recently widened the access criteria for RTGS and CHAPS to enable non-bank PSPs to join. Key to this was working closely with the FCA, HM Treasury and the PSR to develop a supervisory regime that would allow non-bank PSPs to access settlement in RTGS and participation in the CHAPS payment system without increased risks. In April 2018 Transferwise was the first non-bank PSP to join RTGS and was followed by iPagoo who in August 2018 was 8 i.e.

The Bank has recently commenced a multi-year Renewal Programme of the RTGS service, to enhance resilience and drive innovation.4  1  https://www.bankofengland.co.uk/research/fintech https://www.bankofengland.co.uk/research/future-finance 3 https://www.bankofengland.co.uk/news/2018/april/non-bank-psp-access-to-the-payments-system-announcement 4 See https://www.bankofengland.co.uk/payment-and-settlement/rtgs-renewal-programme and https://www.bankofengland.co.uk//media/boe/files/speech/2018/real-time-gross-settlement-rtgs-renewal-enabling-the-next-generation-ofpayments.pdf?la=en&hash=49E47B8951F6FD8D24E6307B36EDAFB7D214B4F5 for further details 2  2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  CHAPS (Clearing House Automated Payment System) is one of the payment systems which settles over RTGS. It is the UK’s high-value payment system, used for wholesale payments and known to many of you for making house purchases, but also for a range of time-sensitive or cross-border corporate payments. Origins and use of CHAPS This month marks the first anniversary of the operation of the CHAPS payment scheme being brought into the Bank. But CHAPS is rooted in centuries of payments history. Payments systems in the UK grew out of the 1770s arrangement of clerks meeting at a tavern in the City of London and exchanging paper cheques over lunch. This was more efficient than each clerk walking around the city visiting other banks. By the end of the 19th century, around 200 years after the creation of the Bank, the operation of payment systems was formalised, with the establishment of the Bankers’ Clearing House, which was owned and controlled by the major retail banks. In 1985 following a series of reviews the Association of Payments Clearing Services (APACS) was created as an umbrella organisation for three clearing companies, including the CHAPS & Town Clearing Company.