What is the Swiss Interbank Clearing (SIC)?

Published by Thomas Herold in Banking

'Swiss Interbank Clearing (SIC)' is explained in detail and with examples in the Banking edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Swiss Interbank Clearing is the interbank clearing system that Switzerland uses for payments within the country and between its banks. SIX Interbank Clearing Limited launched the system on June 10, 1987. They have been operating it since then for the Swiss National Bank.

The primary eligible users of the SIC are all of the Swiss banks along with German Post Finance. Cash handling companies, insurance companies, and securities dealers which are based in either Switzerland or Liechtenstein are also able to participate. The system allows for foreign based banks to utilize it once they fulfill the added requirements and conditions which the Swiss National Bank sets.

Swiss Interbank Clearing handles large transactions as well as retail transfers that connect service providers to the banks. This includes automatic debits, card payments, and bank transfers. The system has grown continuously in the amount volume it settles and quantities of transactions it processes since SIX first launched it.

Ten years after SIX created and launched the Swiss Interbank Clearing, they developed a similar system to enable the Swiss financial center and Liechtenstein to have access to the European Union’s TARGET2 clearing system. This is called the euro Swiss Interbank Clearing, or simply euroSIC. It permits Swiss banks settle any payments in Euros between themselves quickly, simply, and cheaply. Thanks to this expansion of the system, they do not have to keep mutual euro accounts. It saves them the additional trouble, paperwork, and expense.

EuroSIC also makes it possible for Swiss and Liechtenstein banks to send payments in real time to other Euro zone banks. The participating members can process Euro payments across borders with almost any Euro zone institution. The system works effectively both ways. Euro zone banks and institutions gain convenient access to more than 3,200 banks and branches throughout both Switzerland and Liechtenstein.

Banks and financial institutions which the Swiss National Bank supervises may participate in euroSIC. This also applies to any of their branches, joint institutions, or clearing organizations that are located outside the country of Switzerland. These groups must be able to demonstrate that they have a comparable amount of operational and legal standards in the countries where they are based as do their partners or parent organizations in Switzerland.

The Swiss Euro Clearing Bank manages the system. This joint venture between SIX, UBS, Credit Suisse, and Post Finance bears the responsibility for both monitoring and supervising the euroSIC system. SECB has the advantage of being a German licensed bank as well. This means it provides a link to the real time clearing system of the Deutsche Bundesbank.

The system manager the SECB Swiss Euro Clearing Bank provides access to make rapid payments to Germany. The payments which euroSIC processes must be non urgent payments. Banks can send as much as much as 50,000 euros on behalf of their clients with reasonable transaction costs thanks to the system that the Deutsche Bundesbank provides. This is handled through the German EMZ bulk payment system. The SECB also provides its euroSIC members with a means for making inexpensive transfers and payments using the STEP2 system. This is the European Union wide bulk payments system.

Euro Swiss Interbank Clearing operates using the settlement accounts of the member institutions. SIX actually runs the system in Zurich, the Swiss financial center. Every transaction processes through the settlement accounts. There must be enough funds in the bank’s account in the system at the Swiss Euro Clearing Bank for the transaction to go through in real time. Otherwise, the transaction is put aside until enough funds are present to cover the transaction.

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The term 'Swiss Interbank Clearing (SIC)' is included in the Banking edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.