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LVTS is an electronic wire system
introduced by the 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 2007, LVTS was used to clear and settle about $183
billion in Canadian dollar payments each business day, or approximately
90 per cent of the total value moving through the Canadian payment
system. Over 21,000 LVTS payments were processed each day, with the
average value of a transaction in the range of over $8.7 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 15 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. |
