Category: ISO20022

The ISO 20022 Camt.054 is a notification message sent by the originator bank to the originator informing them of a credit(s) or debit(s) against their account. It does not contain balance information.

Even though, the Camt.054 is part of the ISO20022 standard, it is optional. A bank can choose whether to send it or not.

The definition of the Camt.054, along with its message definition reports, can be found here.

Building blocks of Camt.054

Camt.054 contains two blocks:

Group Header

Contains identifying information for all of the debits/credits in the message. The Group Header may also contain:

• message id – used to identify each message.
• creation date and time – indicates when the payments(s) referenced were created.
• number of transactions – count of the number of transactions in the message
• control sum – contains a sum of the total number of transactions in the message
• initiating party – contains information on the party who initiated the payment.

Ntfctn

Contains information about the transactions in the message. The ntfctn may also contain:

• Notification Message Identification – contains a unique id used to identify each notification in the message
• Notification Date – notification creation date.
• Additional Notification Information – used to provide additional information about the notification.
• Notification Message Name Identification – code indicating the category of notification message.

The originating bank sends the camt.056 message to the beneficiary bank to cancel a credit transfer.

You can find the definition of the camt.056 schema and its message definition report here

One of the most common reasons for issuing a camt.056 is a duplicate payment.

The camt.056 requires a response from the beneficiary bank within 15 working days.

This response can be:

1. Positive response to the recall. In this case a pacs.004 is sent by the beneficiary to the originator and the money is credited to the originator
2. Negative response to the recall. In this case a camt.029 is sent to the debtor bank. In this case stays with the beneficiary.

Building blocks of Camt.056

The Camt.056 will contain the following elements:

• Message Identification: A unique identifier assigned to the message.
• Related Reference: Reference to a related message or transaction.
• Payment Instruction Details: Details about the payment instruction being transmitted.
• Payment Transaction Information: Information about individual payment transactions, including amounts, dates, and parties involved.
• Settlement Details: Information related to the settlement of the payment, such as clearing and settlement system details.
• Remittance Information: Information about the remittance advice or additional payment details.
• Regulatory Reporting Information: Information required for regulatory reporting purposes.
• Additional Information: Any additional relevant information associated with the payment message.
• Supplementary Data: Optional additional data included with the message.

Introduction

Clearing and Settlement is the process that takes place once a commitment to make a payment is made and the activities that occur to ensure that that payment is fully completed.

The European Central Bank defines clearing as ‘the process of transmitting, reconciling and, in some cases, confirming transfer orders prior to settlement, potentially including the netting of orders and the establishment of final positions for settlement‘

It defines settlement as ‘the completion of a transaction or of processing with the aim of discharging participants’ obligations through the transfer of funds and/or securities. A settlement may be final or provisional.‘

When a payment is initiated, the sender’s bank submits payment instructions to an interbank clearing network. This clearing network aggregates all orders for transactions from that senders bank to other banks. It also aggregates all orders to and from other banks including the senders bank.

The clearing company is then able to net all of the orders; the net amount is moved to each bank. This is known as the final position. The transaction is now said to settled.

What is a clearing house?

A clearing house acts as an intermediary between a buyer and seller in a financial market. It validates and finalises the transaction ensuring that the buyer and seller meet their financial obligations.

It is important to note that a clearing house will require its members provide collateral/margin deposits. This is done that in the event of a participant bank being unable to fulfil its obligations.

Examples of well-known clearing houses are EBA Clearing and The Clearing House.

Who are direct/indirect participants?

Banks can join a clearing system as either direct or indirect participants. Direct participants have a direct connection to the CSM and exchange transactions directly with it. Indirect participants exchange transactions with direct participants who will make transactions on their behalf with the CSM.

Indirect participants open a correspondent bank account with direct participants in order to make/receive payments. Direct participants are responsible for collecting / depositing funds with their indirect participants.

The CSM acts as a single counter party for each direct participants. This means that the CSM assumes the risk in the event that one direct participant cannot fulfil its obligations.

Types of CSMs

CSMs can vary in size. For example EBA Clearing Step 2 is a Pan-European Automated Clearing House and is available throughout the Eurozone. Others are smaller, equensWorldline, offers CSM services to some but not all Eurozone countries.