Real-Time Gross Settlement (RTGS)

Glossary

Banking

Real-Time Gross Settlement (RTGS)

Real-Time Gross Settlement is a specialist fund transfer systems where the transfer of money takes place from one party to another. These are typically used for high value transactions that require and receive immediate settlement. This method entirely removes any settlement risk associated with the banks instructing the payments. Payments are final and irrevocable. Payment obligations between settlement participants are executed individually on a gross basis throughout the business day. In the UK, RTGS is one of four settlement models supported by the Bank of England (alongside delivery versus payment, and pre-funded and unfunded models for deferred net settlement). The BoE operates CHAPS, the same-day high-value payment system that, currently, is the only UK RTGS service user. The RTGS payments infrastructure holds accounts for banks, building societies and other institutions for holding reserves or settling net obligations from payment systems. It enables balances in these accounts to be moved in real time between account holders, thereby delivering final and risk-free settlement.

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