Large Value Transfer System

Large Value Transfer System (LVTS) is an electronic wire system introduced by the Canadian Payments Association (CPA) in February 1999 to facilitate the transfer of irrevocable payments in Canadian dollars across the country. Through LVTS, funds can be transferred between participating financial institutions virtually instantaneously, and the money can thus be credited to the recipient’s account on a timely basis. As all LVTS payments are immediately final and irrevocable, the recipient may withdraw the money, invest it or use it to make another payment in full confidence that the incoming payment will not be reversed for any reason.

LVTS is the first model of its kind in the world, a hybrid that combines the benefits of the two main models for current payment systems. It achieves the real-time payment finality of a Real Time Gross Settlement (RTGS) system, with the added benefit of lower collateral costs associated with a netting system. Each payment is final and settlement is assured immediately, even though the actual settlement occurs at the end of the day on the books of the Bank of Canada.

On average in 2010, LVTS was used to clear and settle about $149 billion in Canadian dollar payments each business day, or approximately 90 per cent of the total value moving through the Canadian payment system. Close to 24,000 LVTS payments were processed each day, with the average value of a transaction in the range of over $6.2 million. LVTS is also particularly suitable for time-sensitive payments of any value.

LVTS is designed as an open and accessible system. CPA members that establish and maintain an LVTS settlement account at the Bank of Canada and provide an acceptable system interface may participate directly. There are no minimum payment value or volume requirements.

Currently 16 members of the CPA, including the Bank of Canada, participate directly in LVTS. All other CPA members can arrange LVTS payments for their customers through LVTS participants. Financial institutions may offer LVTS wire payments to their customers under various proprietary names.

The legal foundation for LVTS is provided in the CPA’s LVTS By-law and in the Payments Clearing and Settlement Act. The Bank of Canada is responsible for monitoring the flow of payments through LVTS and the settlement positions of the participants at all times. The CPA administers the daily operations of LVTS as well as the LVTS Rules. Participating CPA members fund the LVTS operating costs.