Code of Conduct on the Operation of Payment Systems

CEMAC REGIONAL PAYMENT SYSTEMS SURVEILLANCE COMMITTEE CODE OF CONDUCT ON THE OPERATION OF PAYMENT SYSTEMS IN CEMAC

Considering the importance of the harmonious functioning of payment systems to ensure financial stability in a monetary zone; Considering the statutory mission of the Bank of Central African States (BEAC) to ensure the efficiency and proper functioning of payment systems and means in the Economic and Monetary Community of Central Africa (CEMAC); Considering the crucial role of participants in payment systems, respectively BEAC and members, to ensure efficiency and proper functioning; Considering the credibility of payment instruments to establish and maintain public confidence in book money usage; Considering Instruction No. 01/GR/2014 of March 17, 2014 on the surveillance of payment systems in CEMAC and its associated Surveillance Framework; Mindful of the need to ensure optimal management and operation of CEMAC payment systems; Adopts the Code of Conduct as follows:

CHAPTER I: GENERAL PROVISIONS Article 1 The acronyms and expressions used in this Code are understood as defined by Instruction No. 01/GR/2014 of March 17, 2014 on the surveillance of payment systems in CEMAC.

Article 2 This Code aims to define the rights and obligations of parties, with a view to efficient and optimal operation of payment systems in CEMAC.

Article 3 Any participant in payment systems undertakes to adhere to this Code, subject to exclusion from CEMAC payment systems. To this end, it initials and signs the relevant approval form.

CHAPTER II: RIGHTS AND OBLIGATIONS OF BEAC SECTION 1: RIGHTS Article 4 BEAC reserves the right to modify, when necessary, the rules governing payment system activities.

Article 5 When a member's participation threatens the proper functioning of endogenous payment systems, BEAC reserves the right to take appropriate measures against it. These measures may include, where applicable, temporarily suspending the member pending the outcome of disciplinary proceedings against it, in accordance with prevailing legal, regulatory, and contractual provisions.

SECTION 2: OBLIGATIONS Article 6 BEAC undertakes to manage optimally and efficiently the infrastructure of endogenous payment systems. To this effect, it rigorously implements all safeguard measures to ensure the longevity of the production tool. It also ensures that its departments master operational risks, notably negligence, handling errors, and system malfunctions.

Article 7 BEAC undertakes to make available to members operational procedures and any other documents for operating endogenous payment systems, regularly updated. It also undertakes to develop and update the directory of interlocutors for SYSTAC and SYGMA.

Article 8 BEAC undertakes to ensure, except in cases of force majeure, the service continuity of endogenous payment systems. To this effect, it develops and implements a Business Continuity Plan (BCP) for payment systems. It ensures through periodic tests that the implemented BCP is effectively operational.

Article 9 BEAC undertakes to ensure the daily functioning of endogenous payment systems, except on weekends and public holidays common to all CEMAC countries.

Article 10 BEAC undertakes to implement essential security measures for the proper functioning of endogenous payment systems, notably guaranteeing the reliability and authenticity of financial transactions.

Article 11 To ensure the fluidity of financial transactions, BEAC undertakes to guarantee members' availability and access to its telecommunications network during exchange periods. It implements all network security measures to protect against system intrusions.

Article 12 In accordance with the fundamental principles of the BIS, BEAC undertakes to supervise all endogenous and exogenous payment systems deemed systemically important operating in CEMAC, except for systems covered by Article 3 of Instruction No. 01/GR/2014 of March 17, 2014 on the surveillance of payment systems in CEMAC.

Article 13 BEAC undertakes to establish a functional and technical organization that strictly separates its supervisory responsibilities from those of managing endogenous payment systems.

Article 14 BEAC undertakes to establish a functional and technical organization that strictly separates its management responsibilities for payment systems from those of being a member to payment systems.

Article 15 BEAC is prohibited from prioritizing the settlement of its own financial transactions in the systems to the detriment of other members. However, priority settlement is established for monetary policy operations. The same applies to any other operation deemed critical for fulfilling its core functions as an Issuing Bank.

Article 16 BEAC undertakes to implement all provisions aimed at managing operational risks related to the management of endogenous payment systems.

Article 17 BEAC undertakes to establish and make operational all financial protection mechanisms for endogenous payment systems. It ensures these protective measures are effective in covering liquidity and credit risks.

Article 18 BEAC undertakes to ensure rapid and final settlement of operations transiting through CEMAC payment systems. Settlement occurs in real time for nominal transactions of systemic importance, and deferred on the same accounting session date for other operations.

Article 19 BEAC undertakes to ensure complete transparency of the rules governing membership, operation, and supervision of payment systems.

Article 20 BEAC undertakes to inform members of any modifications affecting the pricing of its services. It is prohibited from charging fees based on:

• the geographic location of the transaction sender and recipient;
• the nominal value of the transaction.

Article 21 BEAC undertakes to make accessible and available all legal instruments related to payment systems, notably regulatory, normative, and contractual texts.

Article 22 BEAC undertakes to preserve and make available electronic data exchanged via payment systems for a period of ten years from the transaction date.

Article 23 BEAC undertakes to provide second-level software maintenance for members, notably for anomalies and malfunctions not within their competence.

Article 24 BEAC undertakes to be responsive to members, notably for functional and technical assistance needs, as well as capacity-building needs for their staff.

Article 25 BEAC undertakes to make a "counter service" available in each of its National Directorates and, as needed, in other centers, for the presentation of their values, under conditions defined in payment system participation agreements.

Article 26 BEAC undertakes to inform members within a reasonable timeframe of any difficulty likely to block the operation of payment systems.

CHAPTER III: RIGHTS AND OBLIGATIONS OF MEMBERS SECTION 1: RIGHTS Article 27 The member has the right to receive all information regarding membership, operation, and exit from payment systems. This information covers technical, functional, normative, contractual, and regulatory aspects related to payment systems.

Article 28 The member benefits from all financial protection measures implemented by BEAC to prevent liquidity risks in the system.

Article 29 The member benefits from technical and functional assistance by BEAC in operating the technical platforms of systems, notably second-level software maintenance.

Article 30 The member benefits from the availability of a local "counter service" located in each National Directorate of BEAC and, as needed, in other BEAC centers, for presenting its values, under conditions defined in payment system participation agreements.

Article 31 The member benefits from priority access to BEAC's cash desks to cover, if necessary, a debit position in clearing.

Article 32 Members may group together to defend their interests. They are of right represented in the various governance bodies of payment systems: CRSP and Regional Financial Normalization Committee (CORENOFI).

SECTION 2: OBLIGATIONS Article 33 The member undertakes to operate optimally and efficiently the technical participation platforms. To this effect, it implements in relation with BEAC and rigorously all safeguard measures to ensure the longevity of the production tool. It also ensures that its staff master operational risks, notably negligence, handling errors, and payment system malfunctions.

Article 34 The member undertakes to ensure, except in cases of force majeure, service continuity of the technical platforms for operating payment systems. To this effect, it develops and implements a BCP for payment systems. It ensures through periodic tests the operationality of this plan. The member undertakes to ensure service continuity both at its head office technical platform and at agency technical platforms.

Article 35 The member undertakes to establish a private telecommunications network that is available and reliable, covering its entire agency network. It implements all measures to ensure the security and priority of data related to payment systems to guarantee financial transaction fluidity.

Article 36 The member undertakes to avoid any substantial modification of the technical participation platforms without prior notification to BEAC.

Article 37 The member undertakes to ensure the daily functioning of payment systems on working days. It ensures minimum staffing, based on its own needs and those of its clients, on non-common public holidays in CEMAC.

Article 38 The member undertakes to establish a suitable technical organization allowing clear separation of tasks between technical administrators and functional administrators of payment systems.

Article 39 The member undertakes to develop management manuals for payment systems and implement them. These manuals must clearly describe controls inherent in the validation process of operations exchanged with systems and be consistent with operational procedures made available by BEAC.

Article 40 The member undertakes to process with utmost care and due diligence payment orders received from its clients, presenting them daily according to schedules defined in the systems.

Article 41 The member undertakes to make available to clients secure, reliable, and adapted payment means. In all cases, it undertakes to respect CORENOFI standards regarding payment instruments.

Article 42 The member undertakes to process daily in its information system the financial data received from payment systems, for its own account or for its clients. In all cases, it undertakes to post client accounts within the deadlines prescribed by CORENOFI standards.

Article 43 The member undertakes, except in proven emergencies, to present its unit operations of less than 100 million FCFA in SYSTAC. It is prohibited from aggregating nominal values of less than 100 million FCFA to create a single large-value operation. Otherwise, the receiving member reserves the right to return the funds thus received.

Article 44 The member undertakes to inform its clients about the elements constituting the billing of transactions settled via endogenous payment systems. In accordance with CORENOFI recommendations, the member is prohibited from charging fees based on:

• the location of the transaction beneficiary;
• the nominal value of the transaction.

Article 45 The member undertakes to communicate spontaneously and systematically to BEAC, by any means leaving a written record, any information deemed useful or concerning for the proper functioning of payment systems.

Article 46 The member undertakes to implement efficient treasury management to preserve payment systems from potential liquidity crises.

Article 47 The member is prohibited from blocking in any form the settlement of its clients' financial transactions for any reason, subject to prevailing legal and regulatory provisions.

Article 48 The member undertakes to permanently maintain a substantial cushion of instruments with BEAC to avail itself, if necessary, of essential intra-day facilities for settling payment system liquidity crises.

Article 49 The member undertakes to make accessible and available for its staff all legal instruments related to payment systems, notably regulatory, normative, and contractual texts.

Article 50 The member undertakes to communicate to BEAC and other members the names and contact details of designated interlocutors for each system, regularly updated. The member undertakes to develop and implement a continuous training plan for its personnel assigned to payment system operations.

Article 51 Members undertake market-wide solidarity aiming to prioritize, as a first resort, the superior interest of the regional financial community. In particular, taking into account regional interbank market rules, they undertake to mutually provide, as needed, the liquidity necessary for settling their financial transactions.

Article 52 Members undertake to mutually administer and supervise private telecommunications networks ("APEC") dedicated to payment systems. They implement all security measures, notably protecting against intrusions in these networks.

Article 53 Members are prohibited from entering into agreements among themselves, outside any framework defined by BEAC, to impose on the public common commercial practices regarding transactions passed through payment systems.

Article 54 Members are prohibited from establishing parallel multilateral clearing houses. Values that cannot be processed in payment systems may undergo bilateral settlement.

Article 55 Without prejudice to the principle of irrevocability of settlements in payment systems, members undertake to act in good faith and with due diligence when a justified request for fund return is submitted by a counterparty. In case of non-return of funds within a reasonable timeframe, BEAC reserves the right to debit the settlement account concerned automatically, after file review and prior notification of the member in question.

CHAPTER IV: FINAL PROVISIONS Article 56 In the context of managing CEMAC payment systems, members benefit from equal treatment, excluding BEAC's prerogatives covered by Article 14 of this Code.

Article 57 The Regulated Entities undertake to ensure the confidentiality of information made available to them through payment systems. They ensure that their staff know and respect this obligation.

Article 58 Except for the confidentiality obligation, the withdrawal or exclusion of a member from payment systems terminates all its rights and obligations arising from this Code, subject to a notice period fixed upon the exclusion or withdrawal decision.

Article 59 The Regulated Entities are informed of any modification to the provisions of this Code.

Article 60 The Regulated Entities agree to prioritize, as much as possible, the amicable settlement of disputes related to the operation of payment systems or participation therein. Failing amicable settlement, they undertake to submit their disputes to an ad hoc arbitral tribunal composed of independent professionals accepted by all parties. Arbitration procedures and terms are defined by agreement between the parties. The arbitral award is binding on the parties. This arbitration clause does not apply to BEAC, before which the CEMAC Court of Justice is solely competent.

Article 61 Any breach by a Regulated Entity of the provisions of this Code, materially established by a CRSP surveillance report, exposes it to sanctions provided for in the payment system participation agreements. These may result, upon CRSP request, in the suspension or exclusion of the defaulting party from the systems.

Done at N'Djamena, June 20, 2014. President of the Committee / Governor

APPROVAL FORM FOR THE CODE OF CONDUCT ON THE OPERATION OF PAYMENT SYSTEMS Signatory's full name: Entity represented: Position within the entity: Date and place: Signature (handwritten mention "read and approved"):