By concentrating banking functions and sharing of infrastructure and investments, banking market infrastructures function as central counterparties to banks, and add tremendous value to the banking sector. High and low value payments clearing & settlement systems, card switching systems, and trade repositories are all examples of banking market infrastructures in India that facilitate the safe and secure execution of inter-bank transactions.
As they play a critical role in the financial system, banking market infrastructures have come under increasing scrutiny from local and global regulators. To ensure markets operate safely and securely, regulatory bodies have come together to define how such market infrastructures should operate in fulfilling this critical role.
The CPSS-IOSCO Principles for Financial Market Infrastructures is one such key framework adopted by the Reserve Bank of India. This framework defines best practices in how banking market infrastructures should operate, and how Critical Service Providers to market infrastructures should operate.
SWIFT India is a natural trusted third party to market infrastructures, that fully complies with these best practices and expectations of Critical Service Providers, enabling market infrastructures to meet their own stringent obligations and expectations from regulators.
The primary goal of banking market infrastructures is to mitigate bilateral risks by centralising functions and establishing a common framework of operating guidelines. Banks no longer have to manage hundreds of bilateral relationships and operating protocols, but can instead rely on a trusted and independent central counterparty.
SWIFT India complements the services of banking market infrastructures by providing a common and standardised financial messaging platform for the banking industry. Market infrastructures now can focus on their core functionality, rather than managing the network and transmission of information.
A common SWIFT India channel also allows market infrastructures to reduce the operational complexity and cost of communcations for their bank customers.