Decision on Operational Rules for the Clearing House System

Based on Articles 2(3)(c) and 7(1)(b) of the Law on the Central Bank of Bosnia and Herzegovina ("Official Gazette of BiH", nos. 1/97, 29/02, 08/03, 13/03, 14/03, 9/05, 76/06, and 32/07), and at its 5th session held on May 13, 15, and 22, 2019, the Governing Board of the Central Bank of Bosnia and Herzegovina adopts

DECISION ON OPERATIONAL RULES FOR THE CLEARING HOUSE SYSTEM

PART I – GENERAL PROVISIONS

Article 1. (Subject and Purpose) (1) This Decision establishes the operational rules for the clearing house system (hereinafter: clearing house), participants and their responsibilities, conditions for inclusion in the clearing house, the clearing procedure and settlement of net positions of participants in the clearing house, and the operation of the clearing house under extraordinary circumstances. (2) The purpose of this Decision is to prescribe unified operational rules in the clearing house necessary for the uninterrupted conduct of domestic payment traffic.

Article 2. (Participants in the Clearing House) Participants in the clearing house are the Central Bank of Bosnia and Herzegovina (hereinafter: Central Bank) and banks that meet the conditions set forth in this Decision.

PART II – OPERATIONAL RULES OF THE CLEARING HOUSE

Article 3. (Operation of the Clearing House) (1) The clearing house operates on the principle of net settlement of orders that are less than or equal to 10,000.00 BAM. (2) The calculation of net positions in the clearing house is performed via the clearing house center and branches in the organizational units of the Central Bank: the Central Office of the Central Bank of Bosnia and Herzegovina (clearing house center), the Main Bank of the Republic of Srpska of the Central Bank of BiH in Banja Luka (clearing house branch Banja Luka), the Central Bank of Bosnia and Herzegovina – Main Unit Sarajevo (clearing house branch Sarajevo), and the Central Bank of Bosnia and Herzegovina – Main Unit Mostar (clearing house branch Mostar). (3) The calculation of net positions and settlement takes place in four daily cycles during the working day: 09:30, 11:30, 13:30, and 15:30. (4) After the final settlement for each daily cycle, original orders are forwarded to banks for their final realization.

Article 4. (Working Hours of the Clearing House) (1) Working days in the clearing house are Monday through Friday. (2) Non-working days in the clearing house are Saturday, Sunday, January 1 and 2, May 1 and 2, and other days determined by the Governor of the Central Bank in accordance with regulations and for justified reasons. (3) The Governor adopts the Decision on the work schedule and daily activities in the clearing house.

Article 5. (Technical Equipment and Software) (1) Participation in the clearing house requires appropriate technical equipment and software, the specification of which is determined by the Central Bank. (2) The Central Bank determines the minimum equipment configuration and ensures the necessary software for communication in the clearing house, provides instructions, and delivers appropriate documentation on the use of equipment and software. (3) The Governor adopts the Decision on minimum computer configurations and the backup location for the clearing house. (4) The Governor also adopts other acts that define the operational work of the clearing house related to technical equipment and software.

Article 6. (Backup Location for the Clearing House) (1) Participants are obliged to secure a primary and backup location for the operation of the clearing house. (2) In the event of inability to operate at the primary location, the backup location is put into function. (3) The primary location of the CH center is in Sarajevo, and the backup location is at the Main Bank of the Republic of Srpska of the Central Bank of BiH in Banja Luka.

Article 7. (Control and Supervision of Work in the Clearing House System) (1) The Central Bank manages, controls, and supervises the operation of the clearing house system and monitors the procedures of participants in the clearing house system. (2) The Central Bank ensures that settlements of claims and debts arising from the clearing house are executed in accordance with the Decision on Determining Operational Rules for BPRV. (3) For the purpose of protecting payment systems, the Central Bank may suspend or restrict the settlement of payment orders between participants and suspend the operation of the clearing house for a longer or shorter period. (4) In the event of problems in the operation of the clearing house and/or settlement of payment orders in the BPRV system, the Central Bank may modify the working hours of the clearing house.

Article 8. (Liability for Damages Arising in the Operation of the Clearing House) (1) The Central Bank is not liable for interruptions in the operation of the clearing house caused by problems in the telecommunications network or caused by participants, third parties, unforeseeable or unavoidable events, or force majeure. (2) The Central Bank is not liable for non-execution, incorrect execution, or delayed execution of orders caused by participants, third parties, or unforeseeable or unavoidable events. (3) The Central Bank is not liable for damages arising in the situations described in paragraphs (1) and (2) of this Article and paragraphs (3) and (4) of Article 7 of this Decision.

PART III – INCLUSION IN THE CLEARING HOUSE

Article 9. (Conditions for Inclusion in the Clearing House) (1) To be included in the clearing house, a bank is obliged to meet the following conditions:

• it has approval for conducting payment traffic business,
• it has an opened reserve account at the Central Bank of Bosnia and Herzegovina,
• it has an opened settlement account in the BPRV,
• it possesses appropriate technical equipment and software at the primary and backup locations,
• it has signed the Declaration of Acceptance of Operational Rules for the Clearing House,
• it has been successfully tested for operation in the clearing house according to the Central Bank's test scenarios,
• it has notified the Central Bank in writing of the start date of operation in the clearing house, and
• it has submitted data on the authorized person for conducting payment traffic on the form that is an integral part of this Decision. (2) After the conditions in paragraph (1) of this Article are met, the Central Bank notifies the bank of the start date of operation in the clearing house and includes it in the clearing house system.

Article 10. (Test of the Clearing House System) The clearing house system is tested in the following cases:

• inclusion of a new bank into the clearing house system,
• upon request of a participant, and
• upon request of the Central Bank.

PART IV – CLEARING PROCEDURE AND SETTLEMENT OF NET POSITIONS (ORDERS)

Article 11. (Orders in the Clearing House) (1) Orders in the clearing house must be denominated in BAM. (2) Orders are exchanged in messages that are compressed, signed, and encrypted. (3) Certificates designated by the Central Bank are used for signing and encrypting messages. (4) Messages used in communication between participants in the clearing house are in accordance with the ISO 20022 standard and the version of the European Payments Council Rulebook. (5) The Central Bank determines which version of the European Payments Council Rulebook will be used as current and notifies banks thereof.

Article 12. (Liability for Orders) (1) Participants are responsible for the correct completion, routing, and authenticity of orders in the clearing house. (2) Participants route orders to:

• the clearing house center – for orders to banks with an opened reserve account in a Central Bank organizational unit different from the one where the sending bank has its opened reserve account, and
• the clearing house branch – for orders to banks with an opened reserve account in the same Central Bank organizational unit as the one where the sending bank has its opened reserve account, specifically:
  • clearing house branch Sarajevo – banks with reserve accounts at Main Unit Sarajevo,
  • clearing house branch Mostar – banks with reserve accounts at Main Unit Mostar, and
  • clearing house branch Banja Luka – banks with reserve accounts at Main Bank of RS Banja Luka and Pale Branch. Orders in favor of the Central Bank are sent to the CH center. (3) A participant is responsible for the accurate and correct acceptance of an authorized order received from another clearing house participant during working hours.

Article 13. (Acceptance of Orders) Each order is executed on the same day it is received in the clearing house in the settlement cycle by which it was delivered.

Article 14. (Clearing) Clearing of payment orders of all clearing house participants is performed by determining the net position of each individual participant as a result of the calculation of all claims and debts of participants for each clearing cycle.

Article 15. (Settlement) (1) Settlement of net positions of clearing house participants is performed via the BPRV in accordance with the Decision on Determining Operational Rules for BPRV. (2) Settlement is considered final and irrevocable at the moment when net positions of all participants are executed on settlement accounts in the BPRV.

Article 16. (Lack of Funds in the BPRV Settlement Account) (1) The Central Bank initiates a settlement revocation procedure when it determines that the net debts and claims of clearing house participants cannot be executed due to a lack of funds in the BPRV settlement account and if funds cannot be secured in accordance with Article 18(5) of the Decision on Determining Operational Rules for BPRV. (2) All orders in the given clearing house cycle are rejected for the participant referred to in paragraph (1) of this Article, and settlements of orders for other participants are performed. (3) The participant referred to in paragraph (1) of this Article is prevented from sending orders until the end of the working day, but may receive orders from other participants. (4) The Central Bank, as necessary, notifies the competent institution supervising the bank's work of the situation described in this Article.

Article 17. (Procedure for Clearing House Operation in Case of Interruption of Regular Network Communication) (1) In the event of an interruption of regular network communication, the clearing house is conducted via email, exchanging messages with the Central Bank exclusively in signed and encrypted form at the clearing house center and branches. (2) Messages from banks forwarded via email to the Central Bank during a specific clearing cycle are processed in that clearing cycle only if received no later than 30 minutes before settlement. (3) Email operation is carried out upon request submitted by a participant to the clearing house center and/or branch, and is established after acceptance of the request and sending of notification to participants on their authorized email addresses. (4) For each order sent via email, the participant notifies the Central Bank via telephone or email, which confirms receipt of data via email to the participant's authorized person. If the clearing house participant does not receive confirmation within 15 minutes, they contact the responsible persons at the Central Bank. (5) In the event of an interruption of regular network communication at the time of sending results, settlement results are sent to the participant via email, and the participant confirms receipt of data via email. (6) Upon completion of the working day in the clearing house, any established exchange of data via email is considered concluded. (7) Email operation ceases upon the establishment of regular network communication.

PART V – WITHDRAWAL AND EXCLUSION FROM THE CLEARING HOUSE

Article 18. (Withdrawal from the Clearing House) (1) A bank may withdraw from the clearing house system by submitting a written request to the Central Bank. (2) The Central Bank notifies other participants of the bank's withdrawal from the clearing house system. (3) All payments in favor of or to the detriment of clients of the bank that has withdrawn from the clearing house but continues to operate in the BPRV system are conducted in the BPRV system.

Article 19. (Exclusion from the Clearing House) (1) The Central Bank may temporarily or permanently exclude a participant who does not comply with the operational rules of the clearing house. (2) The Central Bank immediately excludes from the clearing house system a bank whose approval for conducting payment traffic business has been revoked. (3) The Central Bank acts in accordance with paragraph (2) of this Article in other cases of prohibition on conducting payment traffic business. (4) If a bank withdraws from or is excluded from the BPRV system, the Central Bank simultaneously excludes the bank from the clearing house system on the same day as for the BPRV.

PART VI – FEES

Article 20. (Payment of Fees) (1) For services in the clearing house system, the Central Bank charges a fee in accordance with the Central Bank's regulation on determining the fee tariff. (2) The Central Bank charges the fee by debiting the bank's reserve account.

PART VII – OPERATION UNDER EXTRAORDINARY CIRCUMSTANCES

Article 21. (Activities Under Extraordinary Circumstances) (1) Participants in the clearing house are obliged to have a plan for extraordinary circumstances with established measures and procedures necessary for the operation and functioning of the clearing house. (2) Under extraordinary circumstances, the Central Bank takes all necessary measures within two hours at the latest to ensure the proper operation and functioning of the clearing house. (3) Participants are obliged to ensure the implementation of the plan from paragraph (1) of this Article at the backup location. (4) The backup location for the clearing house branch is the clearing house center, and in the event of the non-functioning of a clearing house branch, participants route orders to the clearing house center.

PART VIII – TRANSITIONAL AND FINAL PROVISIONS

Article 22. (Alignment of Regulations) Participants are obliged to align their regulations and other acts with this Decision.

Article 23. (Signing of the Declaration of Acceptance of Operational Rules) (1) Before the start of operation, a bank must sign the Declaration of Acceptance of Operational Rules for the Clearing House. (2) The Declaration from paragraph (1) of this Article is an integral part of this Decision.

Article 24. (Termination of Validity) With the start of application of this Decision, the Decision on Determining Operational Rules for the Clearing House ("Official Gazette of BiH", no. 31/16) and the Decision on Amendment of the Decision on Determining Rules for the Clearing House ("Official Gazette of BiH", no. 9/17) cease to be valid.

Article 25. (Entry into Force) (1) This Decision enters into force on the day following its publication in the "Official Gazette of BiH", and is applied from June 1, 2019. (2) This Decision is published in the "Official Gazette of BiH", "Official Gazette of the Republic of Srpska", "Official Gazette of the Federation of BiH", and "Official Gazette of the Brčko District of BiH".

Chairman of the Governing Board of the Central Bank of Bosnia and Herzegovina GOVERNOR dr. Senad Softić No.: UV-122-01-1-1405-4/19 KS Sarajevo, May 22, 2019

CENTRAL BANK OF BOSNIA AND HERZEGOVINA

FORM: DECLARATION OF ACCEPTANCE OF OPERATIONAL RULES for Clearing House

DATA ON PARTICIPANT Name of participant (from court registry) Address Postal Code City Phone

I declare that I fully accept the operational rules for the clearing house prescribed by the Decision on Operational Rules for the Clearing House System ("Official Gazette of BiH", no.: ____________).

Place and Date Stamp and Signature of Authorized Person

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M.P. Note: Send the completed declaration by mail to the address Maršala Tita 25, 71000 Sarajevo.

CENTRAL BANK OF BOSNIA AND HERZEGOVINA

FORM: REQUEST FOR ACCESS OF AUTHORIZED PERSON OF PARTICIPANT TO CLEARING HOUSE

CH CENTER CH BRANCH SARAJEVO CH BRANCH BANJA LUKA CH BRANCH MOSTAR (indicate the CH for which participant access is requested)

DATA ON PARTICIPANT Name of participant (from court registry) Address Postal Code City Phone

DATA ON AUTHORIZED PERSON First and Last Name Date of Birth Contact Phone Address Postal Code City Participant's Email Address

Place and Date Stamp and Signature of Authorized Person

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M.P. Note: Send the completed request by mail to the address Maršala Tita 25, 71000 Sarajevo.

CENTRAL BANK OF BOSNIA AND HERZEGOVINA

FORM: REQUEST FOR DEACTIVATION OF AUTHORIZED PERSON OF PARTICIPANT IN CLEARING HOUSE

CH CENTER CH BRANCH SARAJEVO CH BRANCH BANJA LUKA CH BRANCH MOSTAR (indicate the CH for which deactivation of participant's authorized person is requested)

DATA ON PARTICIPANT Name of participant (from court registry) Address Postal Code City Phone

DATA ON AUTHORIZED PERSON First and Last Name Date of Birth Contact Phone Address Postal Code City Deactivation of participant's authorized person from: ..__________. Email address to which confirmation of deactivation of participant's authorized person is sent

Place and Date Stamp and Signature of Authorized Person

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M.P. Note: Send the completed request by mail to the address Maršala Tita 25, 71000 Sarajevo.

CENTRAL BANK OF BOSNIA AND HERZEGOVINA

FORM: AUTHORIZED EMAIL ADDRESSES FOR WORK IN CLEARING HOUSE

DATA ON PARTICIPANT Name of participant (from court registry) Address Postal Code City Phone

AUTHORIZED EMAIL ADDRESSES OF PARTICIPANT 1. 2. 3. 4. 5. 6.

In accordance with Article 17 of the Decision on Operational Rules for the Clearing House System ("Official Gazette of BiH" no.: ___________), I confirm that the above-mentioned email addresses are authorized for sending orders in case of interruption of regular network communication.

Place and Date Stamp and Signature of Authorized Person

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M.P.

Note: Send the completed form by mail to the address Maršala Tita 25, 71000 Sarajevo.