The Company welcomes enquiries about membership of the clearing system from prospective applicants. An Applicant may apply to participate in one or more of the Cheque system or Credit system.
To be eligible to become and remain a settlement member of the Company an Applicant must fulfil, in the reasonable opinion of the Applications Committee, the following criteria and regulations that underlie these. Note that the criteria are subject to change to reflect good practice or changes in the industry from time to time and the Company reserves the right to amend the criteria accordingly.
An Applicant must:
- be a bank or building society, a public authority or publicly guaranteed undertaking;
- the applicant must be authorised and regulated by the Financial Services Authority or, alternatively, must be authorised in its home state as a “credit institution” as defined in article 1 of the First Council Directive (77/780/EEC) and be entitled to passport rights under the Second Banking Directive (89/646/EEC) or be regulated by an organisation, which in the reasonable opinion of the Applications Committee, is a body that operates appropriate and relevant standards of supervision at all times. In addition the applicant must carry out business and operate an office within the European Economic Area;
- have an appropriate settlement account at each relevant settlement service provider for the relevant currency. In addition, the Applicant must have the ability to comply on a continuous basis with the technical and operational requirements of each clearing system in which it participates. The Applicant must also demonstrate to the reasonable satisfaction of the Applications Committee and the Board that it has previously honoured its settlement commitments and also demonstrate its ability to continue to honour all settlement commitments that may arise;
- provide, or provide upon becoming a member, a cheque and/or credit clearing service (for sterling cheques and / or sterling credits) to its customers through the clearing systems operated by the Company. In addition, the Applications Committee and Board must be satisfied that the Applicant has an appropriate level of experience, expertise, personnel and resources as required to operate the System and honour any commitments that may arise;
- where the Applicant acts or proposes to act as agent in the System, such Applicant must demonstrate it has and will have in place appropriate agency arrangements governed by written contract;
- the Applicant must pay any such reasonable application fee or costs in relation to the processing of a Membership application as may be prescribed by the Board from time to time;
- the Applicant must sign the legal agreements in respect of membership of the Company and of the settlement arrangements and must agree that it will, upon its application being successful, comply with all of the membership obligations (available on request); and
- meet the criteria for financial strength and stability to enter into settlement arrangements
An Applicant must satisfy the Applications Committee and the Board of the Company that it meets the following criteria:
- that it has appointed a settlement bank whose standing is satisfactory to the company;
- that, if appropriate, it has an adequate Stand-By Facility with its settlement bank;
- have a liquidity policy that in the reasonable opinion of the Company reflects good practice in the industry and considered workable by the Company and where deemed necessary by the Company provide details thereof in confidence to the Applications Committee of the Company;
- have adequate amounts of Tier 1 and / or Tier 2 Capital which reflect, in the reasonable opinion of the Company, industry norms from time to time and where deemed necessary by the Company provide details of their Capital Ratios for the last two years in confidence to the Applications Committee of the Company;
- have Credit Ratings which are satisfactory to the Company, and in the reasonable opinion of the Company, reflect industry norms from time to time; where an Applicant does not have a Credit Rating, as a consequence of being a subsidiary company, the Credit Rating of the parent company, or ultimate parent company, may be satisfactory to the Company, subject to the Company being reasonably satisfied with the group structure and / or legal undertaking and / or guarantee provided by the parent or ultimate parent;
- provide copies of their Audited Accounts and, where deemed necessary by the Company, copies of Audited Accounts of their parent company, and where appropriate, ultimate parent company;
- confirm that all operational risk issues associated with their clearing systems and processes are adequately managed and controlled;
- confirm that there are no significant issues outstanding as a result of Internal Audit work carried out on their clearing systems and processes;
- provide details or estimates of the volume and value of the cheques and credits drawn on or in favour of the other members of the Company together with details on how these figures / amounts were calculated;
- meet any costs incurred by the Company or the existing members thereof in adapting their systems and processes to facilitate membership of the Applicant. Such costs may be subject to independent review at the request of the Applicant;
- provide details of their Regulators and any information sought by the Company of a regulatory nature;
- provide details of the contingency arrangements that are in place to meet any unforeseen circumstances / disaster situation, and the results of testing thereof, together with the relevant Crisis Management systems and processes; and
- to the extent deemed necessary by the Applications Committee confirm adherence to the CPSS / IOSCO Principles for Financial Market Infrastructures.
The Company reserves the right to employ Consultants and / or Advisors to assist in the evaluation of any application received for membership of the Northern Ireland Clearing System and the Company.
An Applicant will be required to co-operate fully with the Company and any committee of the Company and with any Consultants / Advisors retained by the Company and to pay all the costs arising.