Regulation No. 0115/BCRG/2020 on Rules for the Automated Clearing House

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Conakry, April 30, 2020 Regulation No. 0115/BCRG/2020 establishing the rules applicable to the automated clearing house

The GOVERNOR

Having regard to Law No. L/2017/017/AN of June 8, 2017, repealing Law No. L/2016/064/AN of November 9, 2016, which itself amended Law No. L/2014/016/AN of July 2, 2014 on the status of the Central Bank of the Republic of Guinea;

Having regard to Law No. L/2013/060/CNT of August 12, 2013 on banking regulation in the Republic of Guinea;

Having regard to Decree No. D/2010/PRG/SGG of December 27, 2010 on the appointment of the Governor of the Central Bank;

DECIDES:

Article 1: Definitions of Terms

For the purposes of this agreement, the following terms are defined as:

CNSP: acronym given to the National Committee of Payment Systems established by the BCRG. This Committee represents the heads of all participating banks in the market.

It may be expanded as needed to include the Postal Check Center, the Public Treasury, Chambers of Commerce, consumer associations, and any other body authorized by the BCRG.

Collaterals: eligible securities deposited with the BCRG to guarantee the settlement of clearing balances and mobilizable by it when necessary.

Settlement Account: account opened by a participant in the RTGS/SSS system within the books of the BCRG for managing all its liquidity and within the limits of its Required Reserves.

Clearing Agreement: set of rules issued and updated by the BCRG, binding participating institutions to each other and vis-à-vis the clearing system manager.

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Value Date, Interbank Settlement Date: date on which an operation is posted to the settlement accounts of the two counterparties of the operation. It is expressed as J+n where J represents the day of presentation of the value for clearing and n, the settlement period.

Settlement Period: number of business days between the day a value is presented for clearing and its interbank settlement date. It is defined according to the nature of the payment instrument.

Rejection Period: number of business days, from the date a value is submitted for clearing, during which the counterparty may reject the operation. For bills of exchange and promissory notes, the rejection period runs from the date of presentation of the matured instrument or the maturity date of the unmatured instrument.

Book Payment Instruments: payment instruments used to generate a fund exchange in book form, without physical cash exchange.

Participating Institution: any bank or financial institution approved by the BCRG as such, which issues to its clients or receives from them book payment instruments that it exchanges in clearing. It holds a settlement account within the BCRG's books on which the algebraic sum of its clearing balances will be charged.

Submitting Institution: any participating institution responsible for creating dematerialized operations and scanned images of paper supports for their presentation to clearing.

Presenting Institution: any participating institution presenting operations to clearing, for its own account or on behalf of another participant.

Operator: Authority responsible for the establishment, organization, and management of the payment system's functioning.

Direct Participant: Any financial institution that submits and receives values for clearing for its own account and, where applicable, on behalf of other institutions at the clearing center. Indirect Participant: Any institution that does not participate directly in exchanges. It must appoint a direct participant to access, on the one hand, to receive values drawn on its accounts, and, on the other hand, to present the operations it issues. The relationships between direct and indirect participants are governed by agreements between institutions that must expressly refer to the provisions contained in this document.

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Clearing Market: Ensemble of cities connected to a single clearing access point.

Clearing Access Point (PAC): Connection point to the clearing system enabling data and value exchange with the clearing system.

RTGS: (Real Time Gross Settlement System) Real-time gross settlement system.

Clearing System: Interbank system for exchanging retail payment orders that institutions have agreed to settle by clearing within the Central Bank's books.

Interbank Values or Operations: values or operations exchanged where both counterparties are different participating institutions.

Local Values / Moved Values: values presented in the clearing system / All values are admitted regardless of their place of issue or payment.

Article 2: Object of the Regulation The present regulation establishes the rules applicable at the level of Teleclearing. It must be strictly observed by all participants in the system, regardless of their status as per Article 4.2 of this Regulation.

Article 3: Role of the Central Bank The Central Bank plays a triple role:

Article 3.1: System Operator The Central Bank of the Republic of Guinea is the manager of the clearing system.

At any time, it may delegate this role to another existing or newly created entity. The participants in the system will be consulted on all system developments through their participation in the National Committee of Payment Systems and banking regulation.

As system operator, BCRG takes all necessary measures to optimally secure all components of the clearing system to prevent it from being taken out of service. BCRG commits to remedying, within a reasonable time, any failure or operational anomaly, notably by using appropriate backup procedures defined in the contingency plan.

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The operator incurs no liability:

• in case of service interruption or operational disruption, even temporary, of the computers or software and applications it uses for processing operations of participating institutions in the clearing system;
• in case of destruction or erasure of data when it is established that BCRG has taken all necessary measures and triggered all procedures for the proper functioning of the system;
• in case of fraud attributable to a participating institution or a third party, or any other force majeure case assessed according to the contingency plan.

Article 3.2: Supervisory Authority BCRG ensures the proper functioning and security of payment systems. It verifies the relevance of applicable standards in this area. If it considers that one of these payment methods offers insufficient security guarantees, it may recommend to its issuer to take all necessary measures to remedy this.

BCRG conducts expert reviews and receives all necessary information regarding the management of payment methods by system participants.

BCRG chairs the National Committee of Payment Systems. BCRG reserves the right to refuse direct participation of an applicant whose technical means are deemed insufficient or non-compliant.

Even if a participant is homologated by BCRG, it may be suspended or excluded if a number of technical errors are found in its submissions and the warnings issued by BCRG have not been followed by appropriate corrections within the set deadline.

Article 3.3: System Surveillance BCRG, in its role as supervisor, must ensure the proper settlement and resolution of clearing operations. To this end, it regularly receives information on the progress of exchanges from the Clearing Center and takes necessary anticipatory measures to prevent risks of non-settlement of clearing balances.

Article 4: Conditions of Participation These conditions identify system participants, describe modes of participation, and the change in participant status.

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Article 4.1: System Participants The participants in the clearing system are:

• the Central Bank,
• commercial banks,
• the Public Treasury,
• postal check centers,
• any other entity approved by the Central Bank which determines by Instruction the eligibility procedures related thereto.

Article 4.2: Modes of Participation The participants in the clearing system may operate under different statuses:

• Direct Participant: acts either for its own account or on behalf of another Institution. It assumes technical and financial responsibility vis-à-vis all system participants for operations transiting through its intermediary;

• Indirect Participant: is known to the clearing system, holds a settlement account, but uses the technical infrastructure of a direct participant for its exchanges with the clearing center. It has full financial responsibility for its exchanges and their settlement;

• Sub-participant: is unknown to the clearing system, it is the "client" of a direct or indirect participant who acts in its name and on its behalf following an agreement to that effect. The direct and indirect participants must:

• have mandatorily a centralized settlement account opened in the RTGS System;

• sign agreements related to checks and bills of exchange.

Article 4.3: Change in Participant Status The Participants may change their participation regime upon notification addressed to the System Manager and subject to a one-month advance notice.

A Direct Participant wishing to become indirect must propose a solution ensuring service continuity for the Indirect Participants it intermediates.

The Indirect Participant wishing to become a Direct Participant must additionally undergo probationary tests conducted by the system manager under the conditions set forth in the technical specifications.

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It is important that to properly negotiate sub-participation conditions, sub-participants have precise knowledge and understanding of the rules and possibilities of the clearing system.

Article 5: Rules for a Participant's Admission to the Clearing System The direct or indirect participant must sign an admission application subject to BCRG approval. It must also sign:

• the agreement related to checks,
• the agreement related to bills of exchange and
• the procedure for physical archiving of paper tags/stubs.

The participant must comply with the technical and financial specifications imposed by the system manager and undergo prior tests before admission.

Article 6: Rules for Suspension or Exclusion of a Participant from the System The termination of membership may occur by decision of BCRG or unilaterally by the participant.

The cases of automatic exclusion by the system manager result from non-compliance with all or part of the participant's obligations mentioned in the clearing agreement or the opening of judicial reorganization or liquidation proceedings against it.

BCRG, as system supervisor, may decide to temporarily suspend a participant when it observes, within its risk surveillance framework (surveillance of multilateral debit balance limits relative to reserves), that a participant may not be able to settle its daily net balance.

Upon exclusion of a participant, the system manager must inform all participants of the exclusion date.

Upon suspension of a participant, the system manager must inform all participants of the suspension.

The final exclusion can only occur after a ten (10) day period. From the date of suspension or exclusion, the participant may no longer submit operations to other participants, nor receive submissions from other participants, excluding bank rejections resulting from flows exchanged in the days preceding suspension or exclusion.

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The termination of membership implies in all cases:

• the debit of the Settlement Account for all Operations related to the termination of membership,
• the end of authorization for the concerned Participant to perform Operations in the clearing system,
• the end of capacity for the concerned Participant to receive Operations in the system.

Indemnities payable by the suspended or excluded participant to the clearing system may be envisaged.

A suspended or excluded participant is entitled to no compensation for any prejudice suffered due to this suspension or exclusion.

Article 7: Liability of a Participant A Participant is liable for damages caused by it and its agents due to:

• material errors committed in the Operations it transmits either directly or through another Participant;
• delays attributable to Rejections, cancellations of operations,
• non-compliance with financial obligations related to the functioning of its settlement account.

Each Participant handles exclusively the resolution of disputes from its client principals (submitting to its counters orders for transfers, checks, or bills, or debtors thereof). A Direct Participant is responsible for maintaining the continuous functioning of the technical platform of the Clearing System. It must perform all necessary steps required by system documentation to transmit Submissions from Indirect Participants using its services, including formatting as required by the system.

It has an obligation of means that must be implemented.

Conversely, it incurs no liability regarding the verification of the quality of values submitted by Indirect Participants using its services, nor regarding financial obligations arising from said Submissions.

Vis-à-vis the Manager and other Participants, a Direct Participant is responsible for the operations of its sub-participants as if they were its own operations.

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Article 7.1: Obligation to Receive A participant who has adhered to this agreement is obligated to receive submissions addressed by other participants even if it is unable to issue its own submissions for technical reasons.

Article 8: Settlement of Values

Article 8.1: Principle for Calculating Settlement Dates Some basic definitions and principles:

• Value Date of an Operation: The value date applied to the client (debit or credit) is calculated based on the customer order date communicated to the branch. This date must account for interbank settlement periods and internal processing delays to route its operation to the clearing system.

In accordance with legislative provisions, the posting to client accounts cannot exceed 48 hours (business day).

However, each bank is free to apply the conditions it wishes while respecting relevant legal and regulatory provisions.

• Settlement Date: Date on which operations transiting through the clearing system will be settled between banks by debit or credit to the settlement account held by each bank at the Central Bank.

• Settlement Account: The automated clearing system allows each bank to manage only a single settlement account for clearing managed at the Central Bank's headquarters within the RTGS system. Interbank settlement occurs on J or J+1 from the day of presentation of the initial operation, with rejection operations presented on J+1 from the day of presentation of the initial operation. The settlement of the operation occurs on the day of its presentation, either on J or J+1.

In this case, the submitting bank is credited or debited on its settlement account on the day of presentation of the initial operation.

Article 8.2: Applied Settlement Dates and Rejection Periods J corresponds to the date of presentation of the operation.

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	Initial Operation DDR	Rejection Period
Ordinary Check	J	2 days (J and J+1)
Bank Check	J	2 days (J and J+1)
Customer Transfers	J	1 day
Bank-to-Bank Transfers	J	1 day
Transfers from Abroad	J	1 day
Direct Debit (Prélèvement)	J	2 days
Bill of Exchange	J	2 days

Article 8.3: Settlement of Net Balances The multilateral net balances of participants are calculated by the clearing system after the cutoff time of the Teleclearing day and communicated to participants. They are transmitted by BCRG's RTGS system no later than the cutoff time for loading into the RTGS system.

The participants give irrevocable mandate to BCRG to automatically charge their current accounts in the RTGS system, the amount of debit or credit balances generated by the day's operations. The clearing balances can only be settled if all participants have sufficient provision.

In the contrary case, under the "all or nothing" rule, if at least one balance cannot be settled, all balances are put on hold until BCRG implements system self-protection measures.

BCRG may act as the lender of last resort. In case of default observed at the designated settlement time, and if the participant's implementation of various defined settlement guarantees does not cover the debit position. The Central Bank reserves the right to proceed with clearing inversion. All participating institutions in the clearing receive notification of this action.

BCRG also reserves the right to suspend the participating institution from clearing, until it reconstructs the guarantees it has used, or even exclude it from the system in case of repeated failures.

All other participating institutions then receive a motivated notification of suspension or exclusion, by electronic message from the clearing system and by mail.

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Article 8.4: Inversion of Clearing The clearing inversion operation is an ultimate recourse, used in extreme cases.

It consists of taking back all operations for which the defaulting participating institution is counterparty and whose settlement date is the current day, whether resulting from presentations of the current day or previous days, reversing the entries, and then recalculating multilateral balances.

The operations not involving the defaulting participating institution are not impacted. The clearing system communicates to the concerned participating institutions their new clearing balances, as well as the list of operations cancelled by the inversion.

Article 9: Rule of Evidence In the context of electronic clearing, transactions retained by the system will serve as evidence in case of disputes between participants.

In case of discrepancies between computer records and when the physical document exists, the latter serves as the basis for constituting evidence.

The check stubs, bills of exchange, promissory notes, check and transfer statements are the only ones that serve as proof vis-à-vis third parties relative to participants.

Article 10: Archiving of Paper Stubs The clearing and verifications will now be based on electronic transactions and check images (front/rear photos of checks).

The procedure for exchanging and archiving paper stubs is the responsibility of participants. The submitting bank remains responsible for any fraud or anomaly resulting from the usage of a value submitted in the system up to their physical exchanges.

Article 11: Self-Protection of the Clearing System The Clearing System must be a system self-protected against financial risk.

The participants and BCRG have agreed to use as guarantee for the payment of the daily clearing balance, a minimum required reserve amount that participants must leave on their current account in order to settle their balance in case of liquidity problems.

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Article 12: Admitted Values The following book payment instruments are accepted in the clearing system:

o financial values ✓ The check; ✓ The transfer; ✓ The commercial bill (effet de commerce); ✓ The interbank direct debit; ✓ Any other payment instrument defined by the system operator. o non-financial values ✓ Free messages; ✓ Non-payment notices; ✓ Provision reconstruction notices.

Article 12.1: Amount The Teleclearing system is reserved for operations with an amount less than 1,000,000,001 GNF. This threshold may be modified by BCRG depending on the economic situation. A BCRG Instruction must notify Participants at least one month before the implementation of said decision.

Article 12.2: Lifecycle of Operations The operations admitted in the National Clearing System are: ✓ Presentations of operations; ✓ Cancellations of initial transactions and rejections within the time frame separating the submission of this operation into the system and the cutoff time for exchanges; ✓ Bank rejections for reasons listed in the annex; ✓ Resubmissions of already rejected values.

Article 12.3: Information System (IS) Interface with ACP/ACH System Each participant is required to generate ENV files for transfers and direct debits respecting the structural standard as indicated in the ACP/ACH Participants Guide document. The files generated by the IS must allow managing:

• Presentations: record code 21;
• Rejections: record code 22;
• Cancellations: record code 23;
• Rejection cancellations: record code 24.

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Article 13: Organization of the Exchange Day

Article 13.1: Profile of the Exchange Day The Teleclearing day comprises an exchange period spanning two consecutive business calendar days. BCRG reserves the right to modify the Teleclearing day profile. It is required to inform participants at least ten (10) business days before the effective date of the decision.

Article 13.2: Profile of the Clearing Day The profile of the clearing day is defined as follows:

PLATFORM	Description	Value
	Day start time	08:00
	Clearing end time	15:30
	Control session start time	08:05
	Control session end time	15:25
CLEARING CENTER PLATFORM	Collection start time	08:15
	Collection end time	15:

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