Modernizing the Canadian payment experience

The modernization of Canada’s payments systems supports an increasingly digital economy through a more timely, efficient and secure payment experience. The first release of Lynx, Canada’s new high-value payments system, went live in August 2021, while release two, which supports the new ISO 20022 global messaging standard, will go live in late 2022. Meanwhile, the new Real-Time Rail (RTR) for low-value payments will provide instant exchange, clearing and settlement of payments in real time.

High-value payments

Lynx has replaced the existing Large-Value Transfer System (LVTS), which served the Canadian market for over 20 years. Release one of the Lynx system was successfully implemented in August 2021 and initial feedback has been favourable. The new high-value payments system includes:

  • Real-time gross settlement
  • Payments finality and settlement certainty in line with global risk standards
  • Flexibility to adopt new technologies, including application programming interfaces (APIs)
  • Enhanced cyber security and resiliency
  • Improved risk management, including compliance with Canadian and international risk standards

Release one is a critical step for Lynx, representing the culmination of a significant collaborative effort on the part of Payments Canada, SWIFT and the Canadian financial industry, including RBC. The second release of the new high-value payments system, to follow in late 2022, will:

  • Deliver end-to-end support for the ISO 20022 messaging standard
  • Meet SWIFT ISO 20022 global requirements, including the transition from MT to MX message types for cross-border payments

We are currently finalizing implementation plans for release two of this important initiative and will provide further details in the coming months.

Same-day FX settlement

RBC is the first Canadian bank to support same-day foreign exchange (FX) settlement through CLSNow, the CLS Bank’s new gross payment-versus-payment (PvP) settlement service.

CLSNow enables RBC to exchange trades on a near real-time basis, serving as our clients’ FX trading partner and providing access to an intra-day currency network that settles total daily values in excess of USD 300 billion. Clients benefit from:

  • Reduced counterparty credit risk through timely exchange, matching and settlement finality that simultaneously funds trades
  • Improved operational efficiency and enhanced access to liquidity
  • Ability to receive and process daily CAD settlement payments via the CLS Bank’s account with Bank of Canada, from 7:30 am to 6:00 pm ET each business day, based on instructions received from RBC's foreign financial institution clients
  • Near real-time access to trade-by-trade matching and PvP settlement in CAD, EUR, CHF, GBP and USD

Low-value payments

The Real-Time Rail (RTR) introduces real-time exchange, clearing and settlement of low-value payments in Canada, providing the ability to initiate payments and receive final and irrevocable funds in seconds—24 hours a day, seven days a week, 365 day per year.  RTR will deliver faster, data-rich payments in accordance with the ISO 20022 standard, complemented by the flexibility and scalability to introduce new payment products and innovations as they become available.

Payments Canada is working closely with RBC and other industry participants to develop the new RTR. Priorities in 2022 including:

  • System development and testing
  • Completion of the bylaws, rules and standards for the new system

The implementation plan includes multiple releases to get to full functionality over two to three years. Further details will be available as we develop the necessary policies and procedures for a smooth launch of RTR.

Settling payments through RTR

Upon launch of RTR, RBC’s Settlement Agent Service will provide domestic Indirect Settlement Participants (ISPs) with the ability to settle low-value Real-Time Rail (RTR) payments in the Canadian market. As the ISP’s exclusive settlement agent, we will settle RTR payment transactions on a 24/7/365 basis, leveraging RBC’s position as the Lynx participant with the largest market share of CAD clearing.

Our strong balance sheet and sizeable collateral at the Bank of Canada will enable us to meet the payment capacity needs of ISPs. RBC will accept cross-border RTR payments once Payments Canada rules are in place to facilitate these payments.

Payments modernization calendar

  2021 2022 2025
Lynx High-Value Payment System Release 1:  August 
  1. Real-time gross settlement
  2. Enhanced risk model
Release 2:  Late 2022
  1. ISO 20022-compliant
SWIFT ISO 20022-Compliant MX Message Format   November
  1. Receive and receive/forward cross-border payment messages
  1. All cross-border payment messages

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