Regulatory Alerts2023-01-01
Bank of Zambia Circular No. 11/2023 on Straight-Through Processing for Government Securities Payments
The Bank of Zambia requires all commercial banks to implement a Straight-Through Process for government securities coupon and maturity payments, effective July 6, 2023. Participants must ensure correct settlement account configurations for clients on the Central Securities Depository and replace MT910 advice messages with MT103 payment messages. Incorrectly credited funds must be returned by 12:00 hours on the settlement day, with late returns subject to penalty fees calculated via the BoZ Overnight Lending Facility.
[Logo: Bank of Zambia]
Bank of Zambia OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
BOZ/EXEC/DGO/fmkts/bp
May 26, 2023
CB Circular No. : 11/2023
To : All Heads of Commercial Banks
IMPLEMENTATION OF STRAIGHT THROUGH PROCESS FOR GOVERNMENT SECURITIES PAYMENTS
The Bank of Zambia (BoZ) has been working on implementing a Straight-Through-Process (STP) for Government securities coupon and maturity payments to improve on the current process where commercial banks are credited with the proceeds for onward crediting of customers' accounts. The BoZ has received feedback from clients that in some instances, payments have been credited late to their accounts and the main reason for the delay is the manual process involved in crediting the investor accounts. The implementation of the STP will eliminate this manual process and ensure timely settlement to customers' accounts.
The Bank, in collaboration with commercial banks, has successfully concluded the STP User Acceptance Tests and is proceeding to replace the generation of advice message type – MT910s with Bank-to-Customer payment message type – MT103s. This change will be effective July 6, 2023. You are, therefore, advised to ensure that the settlement account details for all your clients on the Central Securities Depository are correctly configured before the Go-Live date.
In the case where the account number is incorrect, participants shall be required to return the funds as per provisions made in section 21.4 of the Zambia Interbank Payment and Settlement System (ZIPSS). The payment of any unsettled proceeds to the originating account at BoZ should be no later than 12:00 hours, on the settlement day.
In line with section 24.4.1 of the ZIPSS rules, participants are reminded that failure to return funds by 12:00 hours on the same day, will attract penalty fees calculated based on the BoZ Overnight Lending Facility and the Bank may take supervisory action in accordance with provision of the National Payment Systems Act, 2007.
Please contact the Government Securities team on 0211 399399 and/or email, government.securities@boz.zm, for any clarifications.
[Signature]
Francis Chipimo (PhD) DEPUTY GOVERNOR – OPERATIONS
cc Governor
Bank Square, Cairo Road, P.O. Box 30080, Lusaka, Zambia Tel:+260-211-399303, 399300, E-mail: dgo@boz.zm, Web: http://www.boz.zm