RTGS vs Deferred Net Settlement

Two interbank settlement architectures — gross finality vs netted liquidity

RTGS vs Deferred Net Settlement Two interbank settlement architectures — gross finality vs netted liquidity RTGS lane — settle gross, now DNS lane — accumulate, net at window Sending Bank · payment instruction · Architecture component Sending Bank payment instruction Liquidity Check · balance >= amount · RTGS lane — settle gross, now Liquidity Check balance >= amount Payment Queue · waiting for funds · RTGS lane — settle gross, now Payment Queue waiting for funds Gridlock Resolver · offsetting solver · RTGS lane — settle gross, now Gridlock Resolver offsetting solver Gross Settlement · final, irrevocable · Architecture component Gross Settlement final, irrevocable Net Debit Cap · position limit · DNS lane — accumulate, net at window Net Debit Cap position limit Obligation Log · accumulate cycle · DNS lane — accumulate, net at window Obligation Log accumulate cycle Netting Engine · net position/bank · DNS lane — accumulate, net at window Netting Engine net position/bank Central Settlement · final positions · Architecture component Central Settlement final positions high-value funded short offset subset retail within cap at cutoff net figure Legend External Security Message bus Backend Database Cloud

RTGS

  • • Per-payment liquidity check
  • • Immediate, irrevocable finality
  • • Gridlock resolver recovers throughput

DNS

  • • Accumulate obligations over a window
  • • Net position per participant
  • • Cap + collateral bound settlement risk

Tradeoff

  • • Gross buys finality, costs liquidity
  • • Net buys liquidity, carries exposure

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