Financial infrastructure

The financial infrastructure consists of systems where payments are made and where transactions with financial instruments are handled. The concept "system" refers to the systems included in the financial infrastructure, that is, the systems that manage financial positions and enable financial flows between the various participants.

 

The financial infrastructure can be said to be the core of the financial system.

 

Picture of Financial infrastructure

 

The financial infrastructure is comprised of payment systems, central securities depositories and security settlement systems, central counterparties and trade repositories.

 

  • The payment systems transfer funds between users of the system. There are two types of payment systems; systems for large-value payments and systems for retail payments. Systems for large-value payments are systems that manage payments with high value and high priority. RIX is the system for large-value payments in Sweden. The retail payment system is the system that handles large volumes of payments with low value. Examples of retail payments include account-to-account transfers, direct debit and card payments. Bankgirocentralen BGC AB (Bankgirot) is the retail payment system in Sweden.

  • Central securities depositories supply securities accounts, safekeep dematerialised securities and play an important role in carrying out corporate actions. In many countries, central securities depositories also run the securities settlement system. This is the case in Sweden, where Euroclear Sweden acts as both central securities depository and securities settlement system.

  • Securities settlement systems makes it possible for securities transactions to be transferred and settled in accordance with predetermined regulations.

  • A central counterparty goes in as seller to all buyers and buyer to all sellers to take on the counterparty risk that arises when trading in securities. In addition to counterparty risks, the central counterparty also clears securities transactions. As the central counterparty goes in as seller and buyer in many transactions, there is an opportunity to make use of netting and thus make the clearing process more efficient.

  • A trade repository is a centralised database with transaction data. Trade repositories are currently used to a minor extent in Sweden.
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The financial infrastructure functions on the whole well

See the Riksbank's assessment of the stability and efficiency of Sweden's financial infrastructure 2017.

Cyberattacks are a serious threat to the financial infrastructure
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