The Bank of England’s consultation into new rules expected to launch next year of extending settlement hours has been supported by the Payments Association but warned not to alienate businesses.
The Payments Association has backed the Bank of England’s proposal to extend settlement hours of payments as part of a consultation that closes today (10 August).
The Bank of England’s proposal would see from September 2027, CHAPS settlement hours will be opened from 01:30am on Monday to Friday, changing from its usual time of 06:00am.
Benjamin David, Head of Intelligence, for The Payments Association, welcomed the proposals and believes it should bring long-term benefits for cross-border settlement and enhancing competition.
“The Payments Association welcomes the Bank of England’s consultation on extending RTGS and CHAPS settlement hours as part of its roadmap towards near 24/7 settlement,” says David.
“Building on the Early Morning Extension due in September 2027, the roadmap represents a significant step towards improving liquidity management, supporting cross-border settlement and enhancing operational resilience.
“Our members welcome the decision to prioritise a stable, well-tested rollout. Institutions recognise the long-term benefits of extended settlement windows, including supporting innovations such as payment synchronisation, and reinforcing the UK’s competitiveness as a global financial centre.”
What could the potential pitfalls be?
An additional settlement day at the weekend, most likely on Sundays, alongside settlement on certain UK bank holidays, has also been proposed by the UK central bank. The Bank of England is looking to extend weekend and bank holiday settlement by 2029.
By 2031, the bank plans to extend settlement hours every weekday and one full day at the weekend, Sundays, as well as for daily 22 hours settlement availability across all seven days.
David believes that this approach should be “carefully managed” as continuing trying to build for the future could alienate business needs for standard settlement times as it should be treated optional.
“As the Bank considers weekend settlement after 2029 and a 22:00 to 06:00 framework after 2031, it’s important that the principle of optional participation outside core hours is preserved,” says David
“Firms should be able to align resourcing and technical readiness with client demand.
“Longer settlement hours will require firms to rethink staffing models, operational support and maintenance windows, and the transition must preserve sufficient time for critical system maintenance while avoiding unnecessary operational burdens.”
A response to blockchain innovations?
Decentralised finance (DeFi) has begun to gradually become widely accepted by its traditional counterparts primarily due to the speed of blockchain networks and distributed ledger technology to settle transactions.
Digital currencies can be processed and settled in mere seconds, 24/7 and are a much more cost effective way of settling payments. DeFi transactions also come with no intermediaries to slow down the process and come with no chargebacks.
Some of the world’s largest banks, including JP Morgan, Bank of America and HSBC, have begun exploring and settling on DLT and blockchain via tokenised deposits, digital representations of commercial deposits.
Near-instant blockchain settlement also extends to stocks and equities. The New York Stock Exchange and London Stock Exchange have announced plans and even launched support systems integrated in their services for 24/7 trading capabilities and being able to settle in multiple currencies.
