RTGS – CHAPS Tariff Consultation Response

Following the launch of a consultation on proposed revisions to the Bank of England’s fee structure, including the cost allocation method as well as the collection procedure, for recovering the costs incurred from operating the Real-Time Gross Settlement System (RTGS), the Bank has now published a response paper on this issue. Therein, the Bank of England (BoE) outlines the feedback it has received to its consultation and presents its final way forward.
To recall, in view of the move towards the new ISO 20022 standard for CHAPS (Clearing House Automated Payment System) payments, the participation of new financial market participants, and the introduction of a new core settlement regime in September 2024, the BoE sought to
(1) revise its fee structure in a way so as to enable the Bank to recover the costs of building the renewed RTGS service,
(2) require payment system operators (PSOs) to allocate the costs indicated by the Bank to their individuals users,
(3) allocate the costs based upon the gross values of processed payments by a payment system operator,
(4) increase the annual fixed fee for CHAPS direct participants, and
(5) increase the fees for additional settlement or other services such as onboarding.
Overall, the responses received by the Bank were supportive of the proposed revisions, noting that there „will always be a trade-off between principles, regardless of the ultimate approach“. Key concerns were raised, however, as regards the proposed changes to the CHAPS fee structure. Specifically, the Bank sought to increase the fixed portion of the total fees to anywhere between 20% and 40% in a tiered manner and revise the variable part so as to include both a volume and value component. Having taken into consideration these concerns, the BoE has now come up with a revised fee structure as specified in the document, whereby the new structure is based on the historic values of transactions (past 12 months) and no longer relying on a large, tiered fixed fee.
All other provisions will be implemented as proposed with only some minor non-substantive changes.