Settlement Risk Policy¶


Code	`PAY-002`
Domain	Payments & Settlement
Owner	Head of Payments
Status	Draft
Applicability	Platform
Jurisdiction	NZ + AU
Business domain	BD06
Review date	2027-03-25

Regulations: AU Payment Systems Act · NPP Rules ¶

Purpose¶

Govern intraday liquidity management, RTGS participation obligations, sponsor prefunding controls, and deferred net settlement (DNS) risk controls. Ensures the platform maintains adequate settlement liquidity at all times and operates within the risk tolerance defined by the Board for settlement exposure.

Scope¶

All settlement activity across real-time gross settlement (RTGS) rails, deferred net settlement batch systems, and bilateral correspondent arrangements in NZ and AU.

Policy statements¶

The platform SHALL maintain sufficient prefunded settlement liquidity at all times to meet its anticipated intraday settlement obligations. Liquidity positions SHALL be monitored in real time against defined minimum thresholds.

Where the platform operates through a sponsor bank for scheme access, the sponsor prefunding balance SHALL be monitored in real time. Where the prefunding balance falls below the defined minimum, the payment orchestration engine SHALL queue outbound instructions until the balance is replenished. The Head of Payments and treasury function SHALL be alerted immediately on a prefunding shortfall.

Where the platform participates in a deferred net settlement system, net positions SHALL be calculated, monitored, and capped in accordance with the settlement system rules and the platform's own risk appetite. Gross bilateral exposures SHALL also be tracked where DNS netting creates concentration.

Settlement fails SHALL be detected immediately and escalated in accordance with the operational incident procedure. The platform SHALL have a documented procedure for managing a settlement fail including funding fallback, counterparty notification, and regulatory escalation.

The platform SHALL not allow intraday settlement exposure to exceed the Board-approved limit without a documented and time-limited exception approved by the Chief Financial Officer.

Correspondent banking settlement arrangements SHALL be documented, with counterparty risk assessed as part of the treasury counterparty credit review.

Settlement positions SHALL be reconciled at each settlement cycle. Unreconciled positions at end of day SHALL be treated as a priority incident.

All settlement funding movements, position calculations, prefunding balance movements, and reconciliation outcomes SHALL be recorded in the immutable transaction log and SHALL be available for regulatory reporting.

Satisfying modules¶

Module	Name	Mode	Description
MOD-002	Immutable transaction log	`LOG`	Settlement records are permanent — provides legal certainty for all payment obligations
MOD-022	Payment audit trail	`LOG`	Settlement disputes resolved using immutable payment audit trail
MOD-067	Trade finance operations	`GATE`	Validates all conditions before executing the payment obligation on an LC or guarantee — settlement is blocked until conditions are confirmed.
MOD-081	Payment reconciliation engine	`AUTO`	Every payment instruction is reconciled against settlement confirmation — unmatched items are escalated automatically before close of business.
MOD-082	Nostro & FX treasury management	`GATE`	Outward cross-border payments are blocked if the correspondent nostro account balance is insufficient to fund settlement — overdraft of nostro positions is not permitted.
MOD-114	Direct debit mandate management	`LOG`	All mandate lifecycle events and debit presentations are logged immutably in payments.direct_debit_events, providing the settlement risk and scheme-rule audit trail required by NZ Payments NZ DDR and AU BECS.
MOD-122	NZ faster payments and A2A integration	`LOG`	Every NZ interbank payment instruction, clearing confirmation, and settlement batch entry is logged to the payment audit trail for settlement risk management purposes.
MOD-123	ATM network integration	`LOG`	All ATM authorisation decisions, reversals, and settlement entries are logged to the payment audit trail.
MOD-135	Batch payment and payroll file processing	`LOG`	Every batch file, every item within it, and every submission outcome is logged to the payment audit trail.
MOD-136	BPAY biller registration and inbound BPAY	`LOG`	Biller registration events and inbound payment transactions are logged to the payment audit trail.
MOD-137	Agency banking adapter	`LOG`	All agency batch files, individual items, and reconciliation outcomes are logged to the payment audit trail.
MOD-141	Intra-bank transfer engine	`LOG`	All intra-bank transfers are logged to the payment audit trail with both account IDs, the amount, the initiating channel, and the fraud score result.
MOD-154	Correspondent banking risk gate	`GATE`	Outbound payments are blocked when routing would cause the unsettled nostro exposure to a correspondent to exceed the configured settlement limit.

Part of Payments & Settlement · Governance overview Compiled 2026-05-22 from source/entities/policies/PAY-002.yaml