Notice No. 11/2015 of December 24, 2015: Classification of Subsystems of the Angola Payment System

NOTICE NO. 11/2015 SUBJECT: ANGOLA PAYMENT SYSTEM

• Classification of Subsystems

Given the need to update the regulation of the compensation and settlement subsystems of the Angola Payment System (SPA), with a view to adopting risk control mechanisms.

Considering, equally, the need to establish guidelines for the operation of the aforementioned subsystems, as well as the responsibilities related to their operationalization.

Considering the provisions of paragraph 2 of Article 3 of Law No. 05/2005, of July 29, the Angola Payment System Law.

Under the combined provisions of Article 7 of Law No. 05/2005, of July 29, the Payment System Law, and Article 51 of Law No. 16/2010, of July 15, the National Bank of Angola Law.

I DETERMINE:

Article 1. (Object and Scope)

1. This Notice aims to regulate the classification of the compensation and settlement subsystems of the Angola Payment System (SPA), with a view to adopting risk control mechanisms, as well as to provide for the operation and operationalization of the aforementioned subsystems, and the responsibilities of their respective operators.

CONTINUATION OF NOTICE NO. 11/2015 Page 2 of 15 2. The following entities are subject to the provisions of this Notice and the complementary norms published by the National Bank of Angola (BNA): a) the operators of the compensation and settlement subsystems of the SPA; b) payment service providers; c) direct and indirect participants of the compensation and settlement subsystems.

Article 2. (Definitions) For the purposes of this Notice, the following are understood: a) Payment Subsystem: a set of rules, procedures, and instruments that allows the transfer of funds between participating institutions. It includes the participants and the entity that operates the central mechanism. b) Systemic Importance Subsystem: a subsystem that, due to the nature or amounts of transactions processed therein, may shake public confidence in the payment system and currency, or generate risk to the solidity and regular functioning of the national financial system as a result of its non-functioning or functioning in disagreement with its respective manuals of norms and procedures. c) Relevant Importance Subsystem: a subsystem that may jeopardize the credibility of the financial system, causing a decrease in public confidence in banks, the payment system, or currency, or negatively interfere with the achievement of the SPA's objective regarding the replacement of the use of paper payment instruments and cash with electronic payment instruments, as a result of its non-functioning or functioning in disagreement with its respective manuals of norms and procedures.

d) Operator of a compensation and/or settlement subsystem: any entity that operates a subsystem whose functioning may originate interbank fund transfers. e) Credit Risk: the risk that the counterparty does not settle its obligation in full, whether when due or subsequently. f) Liquidity Risk: the risk that the counterparty does not settle an obligation in full when due.

Article 3. (Classification of Subsystems in the SPA)

1. The following are classified as Systemic Importance Subsystems: a) Real-Time Payments Subsystem (SPTR), which ensures the automatic processing and real-time, transaction-by-transaction settlement of electronic interbank fund transfers in national currency; b) Market and Asset Management Subsystem (SIGMA), which ensures the registration and custody of book-entry securities issued by the Treasury or the BNA and the gross settlement of transactions in national and foreign currency of the aforementioned securities; c) Securities and other financial instruments clearing and settlement system created under the terms of the Securities Law.

2. The following are classified as Relevant Importance Subsystems: a) Multicaixa Subsystem (MCX) which ensures the processing of operations carried out with valid bank cards at service points of the Multicaixa network, with deferred time settlement of the multilateral compensation balance of these operations; b) Credit Transfers Subsystem (STC), which ensures the processing of fund transfers ordered by payers, with deferred time settlement of the multilateral compensation balance of the transfers sent and received by participants; c) Check Clearing Subsystem (SCC) which ensures the interbank clearing of standardized checks, deposited in an institution different from the drawee, with deferred time settlement of the multilateral compensation balance of the checks sent and received by participants; d) Direct Debits Subsystem (SDD) which ensures the processing of fund transfers initiated by payment beneficiaries, with deferred time settlement of the multilateral compensation balance of the debit instructions sent and received by participants.

Article 4. (Settlement of Rights and Obligations)

1. The financial settlement of rights and obligations is final, irrevocable, and unconditional at the moment when the respective debits and credits occur in the settlement accounts maintained at the BNA and managed in the SPTR.

CONTINUATION OF NOTICE NO. 11/2015 Page 3 of 15 2. Financial settlement is executed exclusively through sufficient available funds in the settlement account to be debited in the operation or in the reserve accounts associated with it. 3. The responsibility for managing the conclusion of the financial settlement of the net compensated results, on the value date and at the time established for this purpose, lies with the subsystem operator, which, for this purpose, must establish operational procedures and measures for containing credit, liquidity, and operational risks, which can be executed safely and quickly, as well as allow for total transparency regarding the obligations of participants and the central counterparty, if existing. 4. In the transfer of securities in custody accounts maintained in securities registration systems, resulting from transactions with these assets that require interbank financial settlement, the following must be observed: a) if the transaction is in national currency, the transfer of the traded asset must be carried out simultaneously with the confirmation of the final financial settlement sent by the SPTR and received in the relevant system, automatically; b) if the transaction is in foreign currency, the transfer of the traded asset must occur simultaneously with the electronic confirmation of the financial settlement in the respective securities registration system by the participant receiving the payment.

Article 5. (Subsystem Operators)

1. The BNA is the operator of the following subsystems: a) Angola Real-Time Payments Subsystem (SPTR); b) Market and Asset Management Subsystem (SIGMA).
2. The Management Company of the Settlement System and the Centralized Securities Depository is the operator of the securities and other financial instruments clearing and settlement system created under the terms of the Securities Law.
3. Interbank Services Company (EMIS) is the operator of the Automated Clearing House of Angola (CCAA), which comprises the following payment subsystems, with specific and distinct processing and controls for each of the subsystems: a) Multicaixa Subsystem (MCX); b) Credit Transfers Subsystem (STC); c) Check Clearing Subsystem (SCC); d) Direct Debits Subsystem (SDD).
4. The operators of the other payment, clearing, and settlement subsystems of the SPA that may be implemented will be authorized to operate, on a case-by-case basis, by the BNA, under the terms of this Notice and other applicable legislation.

Article 6. (Regulation, Authorization, and Oversight)

1. It is incumbent upon the National Bank of Angola, regarding the CCAA and payment subsystem operators: a) to regulate their activities, according to the provisions of the SPA Law, this Notice, and other applicable legislation; b) to approve the norms and procedures established by the operator, in a document called Manual of Norms and Procedures (MNP), regarding each subsystem; c) to authorize the functioning of the subsystems, through proof, via tests, of consistency between the provisions of the respective MNP and the functions executed by the supporting computer systems; d) to exercise control and oversight of their activities, in conformity with the provisions of the SPA Law, this Notice, and other applicable legislation.

2. Regarding risk containment measures in the clearing and settlement of transactions processed in the subsystems for the financial settlement of transactions with securities, and after hearing the Supervisory Body of the Securities Market, it is also incumbent upon the National Bank of Angola: a) to regulate their activities, according to the provisions of the SPA Law, the Securities Law, and this Notice, as well as to publish or transmit technical instructions and others, necessary for the good legal execution thereof; b) to approve the "Manual of Norms and Procedures - MNP" established by the operator; c) to authorize the functioning of the subsystems, through proof, via tests, of consistency between the provisions of the respective MNP and the functions executed by the supporting infrastructure; d) to exercise oversight of their activities, in conformity with the provisions of the SPA Law, this Notice, and other applicable legislation.

Article 7. (Responsibilities of Operators)

1. The operator of a Systemic Importance Payment Subsystem must ensure compliance with all principles applicable to payment systems, defined in the 2012 report "Principles for Financial Market Infrastructures" by the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO), summarized in the Annex to this Notice.

CONTINUATION OF NOTICE NO. 11/2015 Page 4 of 15 2. For the purposes of the preceding paragraph, when a securities clearing and settlement subsystem is involved, compliance with all principles applicable to the type of subsystem in question, defined in the 2012 report "Principles for Financial Market Infrastructures" by the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO), and summarized in the Annex to this Notice, must be ensured.

3. The operator of a Relevant Importance Payment Subsystem must ensure compliance with principles numbers 1, 2, 3, 8, 9, 13, 17, 18, 21, 22, and 23, defined in the 2012 report "Principles for Financial Market Infrastructures" by the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO), summarized in the Annex to this Notice.

4. All operators of clearing and settlement subsystems in the SPA, including those operating subsystems that process transactions with securities, must: a) ensure in the subsystems they operate: i) the execution of procedures and routines that contribute to achieving public interest objectives, defined in Art. 3 of the SPA Law; ii) compliance with the provisions of this Notice and its complementary norms, to be published by BNA Instruction; b) provide, regarding the subsystems they operate and before their entry into operation, the following minimum documentation: i) Manual of Norms and Procedures, mentioned in numbers 1.b) and 2.b) of Article 6 of this Notice; ii) model of participation contract in the subsystem, to be celebrated between the operator and each participant; iii) Internal Procedures Manual, with the responsibilities of the employees, the operator, and the routines to be executed in the operation of the subsystem.

5. The operators of payment subsystems or subsystems that process transactions with national currency securities must celebrate a service provision contract with the BNA, with a view to financial settlement in the SPTR and the management of limits and guarantees constituted by their respective participants.

Article 8. (Sanctioning Regime) Violation of the provisions of this Notice is punishable under the terms of Law No. 05/2005, of July 29, the Angola Payment System Law.

Article 9. (Doubts and Omissions) Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the National Bank of Angola.

Article 10. (Repealing Norm) Notice No. 01/09, of March 24, is repealed.

Article 11. (Entry into Force) This Notice enters into force 30 (thirty) days after the date of its publication.

PUBLISH Luanda, December 18, 2015 THE GOVERNOR JOSÉ PEDRO DE MORAIS JÚNIOR

CONTINUATION OF NOTICE NO. 11/2015 Page 5 of 15 ANNEX Principles for Financial Market Infrastructures (FMI) General Organization

1. Legal Basis An FMI should have a well-founded, objective, transparent, and binding legal framework for all its material activities in all relevant jurisdictions.

2. Governance An FMI should have clear and transparent governance arrangements that promote its safety and efficiency, and reinforce not only the stability of the financial system generally, but also public interest objectives and those of relevant stakeholders.

3. Comprehensive and robust risk management framework An FMI should have a sound risk management framework for the comprehensive and robust management of legal, liquidity, credit, operational, and other risks.

Management of Credit and Liquidity Risks 4. Credit Risk An FMI should effectively measure and monitor its credit exposures to participants and those arising from its payment, clearing, and settlement processes. It should have sufficient financial resources to cover fully its credit exposures to each participant with a high degree of confidence.

Additionally, a central counterparty (CCP) that participates in activities with a more complex risk profile or that has systemic importance in several jurisdictions, should maintain additional financial resources sufficient to cover a wide range of stress scenarios that should include, but not be limited to, the default of the two participants and their affiliates that would generate the largest aggregate credit exposure to the CCP under extreme but plausible market conditions. Other CCPs should maintain additional financial resources that are sufficient to cover a wide range of stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would generate the largest aggregate credit position to the CCP under extreme but plausible market conditions.

5. Collateral If collateral in the form of securities is used to manage credit exposures, these should have low credit, liquidity, and market risk. Thus, an FMI should impose sufficiently prudent haircuts and concentration limits.

6. Margin A CCP should cover its credit exposures to participants through an effective, risk-based margin system that is reviewed periodically.

7. Liquidity Risk An FMI should effectively measure, monitor, and manage liquidity risk. In this regard, it should possess sufficient liquid resources, in all relevant currencies, to ensure the settlement of payment obligations on the same day and, when appropriate, intraday, with a high degree of confidence under a wide range of possible stress scenarios, including, but not limited to, the default of the participant and its affiliates, which could generate the largest aggregate liquidity obligation for the FMI, in extreme but possible market situations.

CONTINUATION OF NOTICE NO. 11/2015 Page 6 of 15 Settlement 8. Finality of Settlement An FMI should provide for final settlement clearly and securely, at least at the end of the value date. When necessary or preferable, the FMI should provide for intraday or real-time final settlement.

9. Settlement Currency Whenever possible (if feasible and resources exist), the FMI should effect settlement in central bank money. If central bank money is not used, the credit and liquidity risks resulting from the use of commercial bank money should be minimized and strictly controlled.

10. Physical Deliveries An FMI should clearly define its obligations regarding the delivery of physical instruments or raw materials and should identify, monitor, and manage the risks associated with such deliveries.

Securities Depositories and Delivery-versus-Payment Systems 11. Securities Depositories (SDs) An SD should have adequate rules and procedures that contribute to ensuring the integrity of securities issues and minimize and manage the risks associated with the custody and transfer of securities. An SD should hold securities immobilized or dematerialized in a way that allows for book-entry transfer.

12. Delivery-versus-Payment (DvP) Settlement Systems If an FMI settles transactions involving the settlement of two related obligations (e.g., securities or foreign exchange transactions), it should eliminate principal risk by conditioning the final settlement of one obligation to the final settlement of the other (DvP or PvP, respectively).

Default Management 13. Rules and Procedures for Participant Defaults An FMI should have clear and effective rules and procedures to manage the default of a participant. These rules and procedures should be designed to ensure that the FMI can trigger timely actions to contain losses and liquidity pressures, and continue to meet its obligations.

14. Segregation and Portability A CCP should have rules and procedures that allow for the segregation and portability of client positions of a participant and the collateral delivered to the CCP regarding these positions.

General Business and Operational Risk Management 15. General Business Risk An FMI should identify, monitor, and manage its general business risk, and maintain sufficient liquid assets funded by equity, to cover potential general business losses, so that it can continue its operations if such losses materialize. Additionally, at any time, liquid assets should be sufficient to ensure a recovery or orderly wind-down of critical operations and services.

16. Custody and Investment Risks An FMI should protect its assets and those of participants, minimizing the risk of loss and delays in access to these assets. The investments of the FMI should be in instruments with minimal credit, liquidity, and market risks.

CONTINUATION OF NOTICE NO. 11/2015 Page 7 of 15 17. Operational Risk An FMI should identify likely sources of operational risk, internal and external, and mitigate their impact through the implementation of appropriate systems, policies, procedures, and controls. The systems should be designed to ensure high levels of operational security and reliability, with adequate and scalable capacity. Business continuity management should have as its main objective the rapid recovery of operations and the fulfillment of the FMI's obligations, including in the event of a significant disruption.

Access 18. Entry and Participation Requirements An FMI should adopt objective, risk-based, and publicly disclosed participation criteria that allow for fair and open access.

19. Tiered Participation Models An FMI should identify, monitor, and manage the main risks resulting from tiered participation regimes.

20. Links with Other FMIs An FMI that establishes links with another or several FMIs, should identify, monitor, and manage the risks related to these links.

Efficiency 21. Efficiency and Effectiveness An FMI should be efficient and effective in meeting the needs of its participants and the markets it serves.

22. Communications Standards and Procedures At a minimum, an FMI should use, or at least accept, the main internationally accepted communications procedures and standards, with a view to promoting the efficiency of payment, clearing, settlement, and data registration processes.

Transparency 23. Disclosure of Rules, Key Procedures, and Market Data An FMI should have clear and comprehensive rules and procedures, and should provide sufficient information to allow participants to understand the risks, fees, and other relevant expenses they incur by participating in the FMI. All relevant rules and key procedures should be publicly disclosed.

24. Disclosure of Market Data by Trade Repositories (TR) A TR should provide accurate and timely information to relevant authorities and the public, according to their respective needs.