Browsing by Author "Leinonen, Harry"

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  • Leinonen, Harry (2003)
    Suomen Pankin keskustelualoitteita 7/2003
    Securities settlement is an area, where nobody seems to be content with the current international processing systems, but neither has a proposal for improvement emerged that has attracted common support.This paper describes a possible solution based on an international, harmonised and simplified institutional structure operating in an open real-time network structure.All deals are settled in immediate, t+0, real-time, which means that all assets and funds are delivered immediately and thereby removing settlement risk.Inter-custodian delivery problems of securities will disappear, because only securities available on investors' accounts can be settled, which continuously equals the amount on the omnibus-accounts.This will also take out the risks related to 'naked' short selling, because in most cases investors have to make securities and funds available before trading.This may divide the current market in a spot t+0 and a short term t+3 futures' market. Corporate actions can be organised in coordination and executed in synchronisation through the infrastructure network in which all custodians and registrars/CSDs participate.The paper describes the concrete new methods required (eg international custody account number system, ICAN, and DVP-codes for matching) also the probable impact of immediate real-time settlement on trading patterns, liquidity issues and risk containment.These are all areas, where the proposed new infrastructural solutions would bring benefits to the users, mainly faster/immediate delivery, less risks, lower processing costs, more competition and more efficient processing of corporate actions.Custodians' liquidity management will need to focus on the sufficiency of the real-time balance of settlement money, which might be more or less strained compared to the current situation depending on the off-setting patterns of incoming and outgoing settlements during the day.International implementation will require coordination and engagement by key players. Key words: Securities settlement, securities settlement infrastructure, DVP processing, securities trading interfaces
  • Leinonen, Harry; Lumiala, Veli-Matti; Sarlin, Riku (2002)
    Suomen Pankin keskustelualoitteita 23/2002
    Payment systems are undergoing rapid and fundamental changes stimulated largely by technological progress especially distributed network technology and real-time processing.Internet and e-commerce will have a major impact on payment systems in the future.User demands and competition will speed up developments. Payment systems will move from conventions that were originally paper-based to truly network-based solutions. This paper presents a solution - E-Settlement - for improving interbank settlement systems.It is based on a decentralised approach to be fully integrated with the banks' payment systems. The basic idea is that central bank money, the settlement cover, is transferred as an encrypted digital stamp as part of the interbank payment message.The future payment systems would in this model operate close to the Internet/e-mail concept by sending payment messages directly from the sending bank's account/payment server to the system of the receiving bank with immediate final interbank settlement without intervening centralised processing.Payment systems would become more efficient and faster and the overall structure would be come straightforward.The E-Settlement and network-based system concept could be applied with major benefits for correspondent banking, ACH and RTGS processing environments. In order to assess this novel idea the Bank of Finland built a prototype of the E-Settlement model.It consist of a group of emulated banks sending payments to each other via a TCP/IP network under the control of a central bank as the liquidity provider and an administration site monitoring the system security. This paper contains an introduction to network-based payment systems and E-Settlement, the specifications of the E-Settlement model and the description, results and experiences of the actual E-Settlement prototype. Key words: network-based payment systems, settlement systems, interbank settlement, payment system integration
  • Leinonen, Harry; Soramäki, Kimmo (2003)
    Suomen Pankin keskustelualoitteita 23/2003
    Published in Journal of Financial Transformation, No. 12, December 2004: 79-84
    The simulation technique provides a new means for analysing complex interdependencies in payment and securities settlement processing. The Bank of Finland has developed a payment and settlement system simulator (BoF-PSS2) that can be used for constructing simulation models of payment and securities settlement systems.This paper describes the main elements of payment and settlement systems (system structures, interdependencies, processing steps, liquidity consumption, cost and risk dimensions) and how these can be treated in simulation studies.It gives also examples on how these elements have been incorporated in the simulator, as well as an overview of the structure and the features of the BoF-PSS2 simulator. Key words: simulations, simulator, payment systems, clearing/settlement, and liquidity
  • Leinonen, Harry (2009)
    Suomen Pankki. E 42
    This publication consists of ten separate studies on payment and settlement systems employing simulation techniques. Most of these were carried out using the payment and settlement system simulator BoF-PSS2 provided by the Bank of Finland. The preliminary versions were presented at the annual simulator seminars arranged by the Bank in 2007 and 2008. The main focus of the analyses is on continuity arrangements, operational stability, liquidity requirements, liquidity economising, gridlock resolution, transaction queuing arrangements, network features and network topologies. The studies examine systems in several countries and cover different kinds of payment systems and regimes.
  • Leinonen, Harry (2007)
    Suomen Pankki. E 39
    Chapter 1 Harry Leinonen Introduction 9 Chapter 2 Kimmo Soramäki - Walter Beyeler - Morten Bech - Rober Glass New approaches for payment system simulation research 15 Chapter 3 Fabien Renault - Jean-Baptiste Pecceu From PNS to TARGET2: the cost of FIFO in RTGS payment system 41 Chapter 4 Neville M. Arjani Examining the tradeoff between settlement delay and intraday liquidity in Canada's LVTS: a simulation approach 87 Chapter 5 Kei Imakubo - James J. McAndrews Funding levels for the new accounts in the BOJ-NET 123 Chapter 6 Ana Lasaosa - Merxe Tudela Risks and efficiency gains of a tiered structure in large-value payments: a simulation approach 149 Chapter 7 Stefan W Schmitz - Claus Puhr Risk concentration, network structure and contagion in the Austrian Real Time Interbank Settlement System 183 Chapter 8 Elisabeth Ledrut How can banks control their exposure to a failing participant? 227 Chapter 9 Darcey McVanel The impact of unanticipated defaults in Canada's Large Value Transfer System 253 Chapter 10 Matti Hellqvist - Heli Snellman Simulation of operational failures in equities settlement 283
  • Leinonen, Harry; Saarinen, Veikko (1998)
    Bank of Finland studies. A 100
    Julkaisussa kuvataan maksujärjestelmien riskejä ja niiden vähentämismahdollisuuksia sekä luodaan kehikko maksujärjestelmien valvonnalle. Valvontakehikkoa ja -menettelyjä tulee kehittää edelleen valvontatyöstä saatujen kokemusten sekä erityisesti EMI:n ja EKP:n kautta toteutettavan valmistelutyön perusteella. Raportti tarjoaa myös tietoa valvottaville valvonnan tavoitteista ja sisällöstä eli siitä, minkälaiseen ajatteluun valvonta perustuu.
  • Leinonen, Harry; Pauli, Ralf (1999)
    EURO & TALOUS 3
    Euroalueen maksu- ja selvitysjärjestelmät ovat yhteisen rahapolitiikan ja yhteisen rahan myötä yhdentymis- ja keskittymishaasteiden edessä.Yleisvalvonnan keskeisiä kohteita ovat jatkossa kansainvälisen muutoskehityksen seuranta ja suotuisan kehityksen edistäminen.Suomen Pankki ja Rahoitustarkastus toimivat järjestelmien valvonnassa tiiviissä yhteistyössä kattavan ja tehokkaan valvonnan varmistamiseksi Suomessa.
  • Leinonen, Harry (2001)
    EURO & TALOUS 2
    Pankeilla on vähittäismaksujärjestelmien kehittämisessä kolme merkittävää haastetta: pankkien ja asiakkaiden järjestelmien integrointi, uuden tekniikan hyödyntäminen järjestelmien tehostamiseksi ja pankkijärjestelmien kansainvälinen standardointi ja 1 integrointi.