On 5 August 2013, the banking community marks the 20th anniversary of putting the SEP into operation in Ukraine. On this very day in 1993 the System of Electronic Payments run by the National Bank of Ukraine (hereinafter referred to as the SEP) processed the first electronic payments. The SEP provides a clear indication that Ukraine takes the lead in introducing new banking technologies.

"Over the past 20 years, the SEP has proved its reliability and efficiency and demonstrated that it possesses the potential to process the growing volume of payments. So far the SEP has successfully exercised its functions of the national system of interbank settlements. According to the Law of Ukraine "On the National Bank of Ukraine" the National Bank of Ukraine is responsible for the smooth, reliable and efficient operation of the SEP. The funds placed by the SEP participants with the National Bank of Ukraine are used to execute funds transfers. The principles underlying the SEP operation promote confidence among the banking community in it," noted Deputy Governor of the National Bank of Ukraine Valerii Prokhorenko.

The SEP is Ukraine's systemically important payment system. It has been assessed by the international experts who, in particular, have acknowledged that the SEP broadly complies with the "Core Principles for Systemically Important Payment Systems and the "Central Bank's Responsibilities" (the BIS Committee on Payment and Settlement Systems (Basel, 2001)

"The CEP handles 98% of interbank funds transfers in the national currency in Ukraine, whereas 2% of such transfers are processed through the correspondent accounts opened by banks with other banks. As of 1 August 2013, 452 institutions are the SEP participants," said Ms. Nataliia Syniavska, Director of General Department of Information Technologies and Payment Systems.

In the first half of 2013, the SEP participants executed 164 million initial payments and sent the electronic settlement notices amounting to UAH 5, 680 billion, being by 2% more in quantity and by 8% in value, compared with the first half of the previous year. The SEP is a real time gross settlement system (according to the international classification – RTGS). Payments processed through the SEP in the online mode are executed immediately. It takes 20 minutes to process payments in the file mode (75% of payments). It takes about one hour to execute 99.5% of payments. On average, 1.2 – 2 million payments are processed per day. The money turnover on the SEP participants' accounts ranges from 1.5 to 2, reaching 3.8 on certain days. The value of payments processed through the SEP in 2012 exceeds approximately 8 times GDP.

"The SEP fully meets Ukraine's needs in interbank settlements in the national currency. The National Bank of Ukraine makes continuous efforts to develop and improve the SEP and introduce new mechanisms and facilities to meet Ukrainian banking system's needs. The key goal is to ensure sustained and reliable operation of the SEP. Among other things, the National Bank of Ukraine is set to deploy up-to-date and reliable information exchange standards involving up-to-date integration tools based on the ESB-related architecture and technology. In the long run, the SEP servers are expected to undergo a transition to J2EE and XML-related technologies and web-service based on open standards," noted Ms. Vira Rychakivska, Deputy Governor of the National Bank of Ukraine.

For reference:

The SEP is the national system of interbank settlements in Ukraine, which is designed to execute a transfer of funds through the correspondent accounts and other accounts opened by the system participants with the National Bank of Ukraine. It is equipped with electronic means for acceptance, processing, transmitting and protection of information. The National Bank of Ukraine acts as a payment institution and a settlement bank for the SEP.

All Ukrainian banks and their branches (176 banks and 212 branches), the State Treasury Service of Ukraine and its 28 bodies, regional branches and educational institutions of the National Bank of Ukraine, "Clearing Center on Servicing of Agreements on Financial Markets" PJSC are among the SEP participants. The SEP settles net settlement positions within Ukraine between banks on behalf of banks’ customers as well as under commitments of banks and other system participants.

The SEP has software-based security facilities to ensure that payment instruments are protected against forgery and unauthorized access from the moment they are created until their delivery to the recipient; multi-pillar processing and accounting control facilities, the system of data reservation and recovery.

Putting the SEP into operation has brought the following benefits:

time required for settlements has shortened, and consequently money circulation has accelerated;

the banking industry has undergone a transition to truncation (a procedure in which a paper-based financial instrument is replaced, by an electronic record of the content of that instrument for the purposes of further processing and transmission);

it has eliminated the likelihood of distortion of interbank payment instruments, which has ruled out the possibility of putting funds into circulation against forged payment instruments;

the National Bank of Ukraine has gained control of money circulation;

putting the SEP into operation has brought a much higher level of automation to the banking industry, and has redefined the banking system as a whole.