Access criteria are the conditions an institution must meet to become a participant in a payment system, central securities depository, central counterparty or other financial market infrastructure. They usually cover the applicant's legal form and licence, its financial resources, its technical and operational capacity, and its supervision. Operators set them, publish them in their rulebooks, and apply them both at admission and on an ongoing basis.
Access criteria balance two goals that can pull in different directions. Open access promotes competition and lets new types of firm reach core payment rails. Strict access protects the system from participants that could fail, misuse it, or bring in risks the operator cannot manage. International standards ask operators to strike this balance with objective, risk-based and publicly disclosed criteria, and regulators in several countries have pushed systems to open up to non-bank payment firms.
Access criteria in plain terms
A members' club with a shared kitchen needs rules about who can join. If anyone could walk in, someone careless might start a fire that harms everyone. If the rules are too strict, good cooks are kept out for no reason and the existing members enjoy a cosy monopoly.
Access criteria are the club's membership rules for a payment system. They try to let in anyone who can safely use the shared kitchen, keep out anyone who would put it at risk, and write the rules down so applicants know where they stand. Those who do not join directly can still cook there as a guest of a member.
Typical requirements
The details differ by system, but most access criteria draw on the same building blocks:
- Legal and regulatory status. Many systems admit only supervised banks, or banks and specified payment or e-money institutions, and may require the applicant to be established in a particular jurisdiction.
- Financial soundness. Applicants may need minimum capital, a credit assessment, or the ability to provide collateral and contribute to loss-sharing arrangements.
- Settlement capability. Direct participants usually need a settlement account at the central bank or a designated settlement bank.
- Operational capacity. Participants must pass technical tests, meet security and resilience standards, and maintain business continuity arrangements.
- Compliance and conduct. Systems may require sound anti-money-laundering controls and adherence to the rulebook, with the right to suspend or expel participants that breach it.
Direct and indirect access
Institutions that do not meet the criteria, or choose not to bear the cost of direct membership, can usually reach a system indirectly. An indirect participant holds an account with a direct participant, which submits and settles payments on its behalf. This is common in CHAPS, in T2, and in cross-border systems such as CIPS, where the distinction between direct and indirect participants is formal. In card payments, a smaller issuer may reach a network through a sponsor bank.
Indirect access creates tiered participation. The direct participant takes on credit risk and liquidity risk from its indirect clients, and the system can become dependent on a few large banks. The Principles for Financial Market Infrastructures therefore ask operators to understand and manage risks from tiered arrangements, not just from their direct members.
Standards and oversight
Principle 18 of the PFMI, issued by the Committee on Payments and Market Infrastructures and IOSCO, sets the international benchmark. It says an FMI should have objective, risk-based and publicly disclosed criteria for participation that permit fair and open access, should justify any restriction in terms of risk, and should monitor compliance on an ongoing basis with clear procedures for suspension and orderly exit.
National authorities apply these ideas in their own ways. In the European Union, the Settlement Finality Directive and payment services legislation have shaped which institutions may join designated systems, and recent reforms aimed to let payment and e-money institutions participate more directly. In the United Kingdom, the Bank of England has extended settlement account access in its RTGS service to non-bank payment service providers that meet its conditions. Eligibility for an account at the Federal Reserve, and so for direct Fedwire participation, is governed by US law and Federal Reserve account access guidelines.
Criticism and debate
Fintech firms and competition authorities argue that strict access criteria entrench incumbent banks and raise costs for end users, who pay for the extra layer of indirect access. Operators and central banks reply that loosening criteria without matching supervision would import risk into systems that the whole economy relies on. The current trend is towards wider access for supervised non-banks, paired with tougher ongoing monitoring and clear exit rules.