Delivering high reliability and system integrity to Reserve Bank

The Reserve Bank of New Zealand is the nation’s central bank and wholly owned by the New Zealand government. The three main functions of the bank are management of monetary policy to maintain price stability, promoting the maintenance of a sound and efficient financial system, and meeting the currency needs of the public.

The Challenge

The Reserve Bank provides mission-critical banking and settlement services via two systems: ESAS (the Exchange Settlement Account System), which processes payments between financial institutions; and NZClear, which processes securities and cash settlements. The average daily value of payments is $25 billion in ESAS and $8 billion in NZClear. The NZClear system holds about $187 billion of fixed-interest securities and equities for its members. The systems process in real time and operate for 23.5 hours each business day.

These systems have a continuous uptime requirement with key links between New Zealand financial organisations and the Continuous Linked Settlement (CLS) system, which is used by many banks for settlement of foreign exchange transactions.

Any downtime has immediate impact of transactional flows and is unacceptable. These systems are arguably among the most important in New Zealand.

The Solution

Since 2002, Datacom has provided software support and development services to ensure both availability and currency of the systems. During the tenure of the relationship, in addition to ensuring the system has a high level of availability, Datacom has undertaken several system refreshes and upgrades, as well as adding new functionality.

The latest example of this additional functionality is the 2012 project, Settlement Before Interchange (SBI). This industry-led project has reduced settlement risk with interbank payments being made before customer accounts are updated, and has allowed transactions to be processed by banks during the day rather than via an overnight process. As part of this, a new interface was added to ESAS, which allows banks to pay each other in ESAS for the net value of funds from customer transactions that are included in files sent between those banks. The implementation of SBI involved the Reserve Bank and eight other banks and was one of the most significant changes in retail banking in New Zealand for many years.

Datacom ensured that the Reserve Bank was able to fulfil its part of this major project by developing a new interface to ESAS that met industry requirements. The performance demands of this interface required Datacom to design and build a multi-threaded, eventdriven message processor. Limitations on concurrency imposed by an external component had to be overcome by implementing a ‘sliding window’ mechanism.

As a result of this change, 700 settlement files are transmitted each day and the average monthly settlement value exceeds $60 billion. Many bank customers can see transactions posted to their accounts during the day, rather than having to wait for overnight batch processes to run.

“The Bank and Datacom have worked together for over 10 years. The parties are constantly working together to make sure that the highest standards of system availability and integrity are achieved. The parties are in contact daily, ensuring goals are clear, feedback is given and progress is monitored.”

Mike Wolyncewicz – Chief Financial Officer, Financial Services Group, Reserve Bank of New Zealand

The Partnership

Datacom has a working relationship with the Reserve Bank that spans 12 years. Our enduring association is a reflection of our commitment to the organisation’s functionality and success. As part of the recent implementation, we will continue to work with the Bank to ensure the mission-critical system is fully supported and processes are further strengthened to reduce risk and ensure the highest quality outcomes are achieved.