About CIPS and how to use CIPs
About CIPS
Cross-border Interbank Payment System (hereinafter referred to as the “CIPS”) is a wholesale payment system authorized by the People’s Bank of China (hereinafter referred to as the “PBC”). Specializing in RMB cross-border payment clearing, CIPS takes efforts to provide reliable, efficient, convenient and low-cost clearing and settlement services. As one of important financial market infrastructures (FMIs) in China, CIPS has played a positive role in contributing to the development of Shanghai international financial center, promoting two-way opening-up of the financial sector, strengthening financial support to China’s real sector economy, serving the Belt and Road Initiative (BRI) financing and facilitating the global use of RMB.
With growing demand for RMB in the cross-border transactions and the expanding scale of RMB cross-border business, it is imperative to put in place a RMB cross-border payment and clearing system. In 2012,the PBC launched the construction of CIPS (phase 1) after in-depth research and discussion. On October 8th, 2015, CIPS (phase 1) was successfully put into operation, with 19 Direct Participants and 176 Indirect Participants from 50 countries and regions all over 6 continents. The launch of CIPS was another milestone in the construction of China’s financial market infrastructures, which marked the important progress in the development of China’s modern payment system that integrated domestic and overseas payments of RMB. CIPS played a significant role in facilitating RMB being officially included in the Special Drawing Rights (SDR).
As a China’s financial market infrastructure, the construction and operation of CIPS are in line with international standards in the spirit of self-discipline and compliance, and also strictly abide by Principles for Financial Market Infrastructures and Core Principles for Systemically Important Payment Systems in terms of system design and rule establishment.
CIPS has operated stably with a 100% availability after its launch. The expanding scale of participants, steadily increasing transaction volumes and progressive elaboration of the system functions are clearly observed.
As of the end of October 2023, there are 1,481 participants in the CIPS system, including 119 direct participants and 1,362 indirect participants. Among the indirect participants, there are 1,010 in Asia, 563 of which are domestic, 238 in Europe, 48 in Africa, 17 in South America, 28 in North America, and 21 in Oceania, distributed in 111 countries around the world. and regions, its actual business covers more than 4,300 corporate banking institutions in 182 countries and regions around the world. In the month of October 2023, CIPS added 18 new direct participants, including 3 overseas indirect participants.
As of the end of November 2023, CIPS can support the cross-border collection and payment needs of RMB and Hong Kong dollars in the real economy, and can also provide financial markets such as DvP (delivery of payment), PvP (synchronous delivery of RMB against foreign currencies), and CCP (central counterparty clearing). Cross-border RMB clearing for business and cross-border Hong Kong dollar clearing for DvP business.
CIPS is constructed in phases. After CIPS (phase 1)’s successful launch, its functions have been steadily improved, which led CIPS (phase 2) to operation consequently.
On October 9th, CIPS (phase 2) put into operation the DVP settlement and supported Northbound Trading of Bond Connect, which would reduce settlement risks and improve efficiency of cross-border bond transactions.
On March 26th, 2018, CIPS (phase 2) was launched on a pilot basis, with 10 Direct Participants. On May 2nd, 2018, CIPS (phase 2) was in its full operation with other qualified Direct Participants.
Compared with phase 1, CIPS (phase 2) has the following features:
(1) More settlement modes. The Deferred Net Settlement (DNS) mechanism has been introduced on the basis of the Real-Time Gross Settlement (RTGS) to offer a liquidity-saving hybrid settlement mechanism.
(2) Supporting financial market transactions. To meet needs for diverse financial transactions,
CIPS supports settlement and clearing for RMB remittance, Delivery versus Payment (DvP), Payment versus Payment (PvP), Central Counterparties (CCP), and other RMB cross-border transactions.
(3) Extended service hours. The operation time of CIPS has been extended from 5×12 hours to 5×24 hours + 4 hours, covering almost all financial markets in every time zone. Considering overseas participants and their local customer’s use of RMB, CIPS (phase 2) supports intra-day RMB settlements.
(4) More types of Direct Participants. FMIs as Direct Participants are introduced. CIPS is ready to have more overseas Direct Participants.
(5) Improved message design. CIPS enriches message types, enlarges message scalability and optimizes message field definition, which facilitates compliance management of participants and regulators.
(6) CIPS backup system. The capacity of real-time data transmission from main system to backup system improves business sustainability of CIPS.
How to use?
How to apply for a CIPS code?
An applicant who wants to be a CIPS participant shall have a SWIFT BIC. If not, the applicant shall submit application materials including a) Join CIPS form b) translation of Business License c) CIPS CODE APPLICATION SUMMARY to the CIPS Operator. An applicant who wants to be an indirect participant shall entrust a designated direct participant to do so.
Download:
CIPS CODE APPLICATION SUMMARY.xlsx
Flow Chart (How to apply for a CIPS code).pdf
Business License (certificate of incorporation).doc
Bylaws of Applying for CIPS Code.docx
How to establish or terminate a business relationship between an indirect participant?
An indirect participant could apply to establish or terminate a business relationship with the designated direct participant. Pursuant to the Article VII Chapter 3 of the Operating Guides on Cross-border RMB Payment System Business, the indirect participant shall entrust a designated direct participant to submit application materials to the CIPS Operator.
Download:
Flow Chart (How to establish or terminate a business relationship).pdf
APPLICATION FOR PARTICIPANT BUSINESS RELATIONSHIP UPDATE.docx
How to join CIPS as an indirect participant?
Pursuant to the Article III Chapter 3 of the Operating Guides on Cross-border RMB Payment System Business, an applicant shall entrust a designated direct participant to submit application materials to the CIPS Operator. If the applicant has no SWIFT BIC, applying for a CIPS code is also needed.
Download:
Flow Chart (How to join CIPS as an indirect participant).pdf
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