LVTS is a real-time net settlement system which was introduced in 1999.
Although it is not a gross settlement system, LVTS is similar to RTGS systems in two important ways.
Payments in the LVTS system can be sent through two distinct channels, called tranches.
The vast majority of payments over LVTS are tranche 2 payments.
LVTS will gradually change the way Canadians do business.
LVTS can transfer Canadian dollar payments between LVTS participants anywhere in Canada, in a matter of seconds.
As a result, LVTS payments are final and irreversible.
Moreover, because of the real-time risk controls and certainty of settlement on a same-day basis, LVTS will greatly reduce systemic risk - the risk that the failure of one financial institution to meet its payment obligations will cause one or more other financial institutions to fail.
Before the LVTS was put in place, Canadian banks settled billions of dollars in payments by using a combination of paper checks and wire transfers.
The LVTS has two types of transactions: actual payments, and queries and messages relating to the payments.
Security becomes an issue when CPA members query the LVTS database, which is stored on a mainframe system.
Therefore, it is very important that external vendors involved with LVTS
have established track records.