Central Bank of Luxembourg Regulation 2016/N° 21 of 15 January 2016 on the Oversight of Payment Systems, Securities Settlement Systems, and Payment Instruments in Luxembourg

BANQUE CENTRALE DU LUXEMBOURG
Central Bank of Luxembourg Regulation 2016/N° 21 of 15 January 2016 on the Oversight of Payment Systems, Securities Settlement Systems, and Payment Instruments in Luxembourg

Domain: Oversight

The Management of the Central Bank of Luxembourg,

Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 127(2) and (5) thereof;

Having regard to Articles 3.1 and 22 of the Statutes of the European System of Central Banks (hereinafter the 'ESCB') and of the European Central Bank (hereinafter the 'ECB');

Having regard to Article 108bis of the Constitution;

Having regard to the Law of 23 December 1998 (hereinafter the 'Law') on the monetary status and the Central Bank of Luxembourg (hereinafter the 'Central Bank'), as amended, in particular Articles 2(5), 27-3, and 34(1);

Whereas, pursuant to Article 2(5) of the Law, 'In view of its mission regarding the promotion of the sound operation of payment systems, the Central Bank ensures the efficiency and safety of payment systems and securities settlement systems, as well as the safety of payment instruments. The modalities of coordination and cooperation for the exercise of this mission are the subject of agreements between the Central Bank and the Commission for the Supervision of the Financial Sector, in respect of the legal competences of the parties';

Whereas Article 27-3 of the Law provides that 'For the purpose of carrying out the mission defined in Article 2(5), the Central Bank may request information from payment systems and securities settlement systems regarding the operation of these systems, which it needs to assess their efficiency and safety, and it may request information from issuers of payment instruments regarding the payment instruments, which it needs to assess their safety. The Central Bank is authorized to carry out on-site visits to collect the information referred to in paragraph 1. For this purpose, it coordinates with the Commission for the Supervision of the Financial Sector.';

Whereas Article 34(1) of the Law provides that 'Within the limits of its competences and missions, the Central Bank has the power to adopt regulations. The regulations of the Central Bank are published in the Mémorial.';

Having regard to the Law of 10 November 2009 on payment services, the electronic money institution activity, and the finality of settlement in payment systems and securities settlement systems, as amended;

Whereas Regulation (EU) No 795/2014 of the ECB of 3 July 2014 concerning oversight requirements for systemically important payment systems (ECB/2014/28).

HAS ADOPTED THIS REGULATION:

Art. 1. Definitions

'system': a system enabling the transfer of funds and/or securities and which is governed by standardized formal procedures and common rules for the processing, clearing, or settlement of payment transactions and/or securities transactions.

'system operator': the entity or entities legally responsible for the operation of a system. A system operator may also act as a settlement agent, central counterparty, or clearing house.

'payment instrument': a personalized device and/or a set of procedures enabling a natural or legal person to make, transfer, or withdraw funds.

'payment instrument issuer': a legal entity that, as part of its commercial activity, makes a payment instrument available to the public.

'governance authority': a central organization responsible for the sound operation of the payment instrument and compliance with the rules by the actors involved. It is the primary contact for the authorities.

'technical agent': a service provider with whom a system operator, a payment instrument issuer, or a governance authority has placed or centralized a significant part of its operational and/or technical infrastructure.

Art. 2. Scope

1. The Central Bank exercises oversight of the systems it designates and operating in Luxembourg, in application of Article 2(5) of the Law.

2. The Central Bank exercises oversight of payment instruments, which include in particular transfers, direct debits, payment cards, and electronic money schemes. The Central Bank is authorized to ensure oversight of payment instruments in other forms made available to the public in Luxembourg.

Art. 3. General Oversight Framework

1. To exercise its oversight, the Central Bank applies in particular the decisions adopted by the Governing Council of the ECB relating to recommendations, principles, and standards, including evaluation methodologies. The Central Bank ensures in particular the application of the recommendations set out in the annex to this regulation.

2. The Central Bank's oversight covers the safety and efficiency of systems; it also covers the safety of payment instruments.

3. The Central Bank exercises its oversight regarding the operating rules and contracts of the system. Its oversight also extends to the system itself, including operators, services (in particular operational and IT services) provided by technical agents or third-party entities, and participants, depending on the risks arising from their participation in the system.

4. The Central Bank's oversight of payment instruments applies in particular to issuers and governance authorities, services (in particular operational and IT services) provided by technical agents or third-party entities, operating rules, and contracts.

Art. 4. Implementation Modalities

1. The Central Bank monitors systems and payment instruments by collecting all useful information available to it under its various missions and through cooperation with other central banks and prudential supervisory authorities. The Central Bank indicates to the entities concerned the qualitative and quantitative information that must be provided to it, as well as the frequency of this information. The Central Bank determines the communication and transmission modalities for the purposes of this regulation.

2. The Central Bank may require system operators, payment instrument issuers, and governance authorities concerned to conduct regular self-assessments of their level of compliance with the applicable recommendations, principles, and standards referred to in Article 3.

3. The Central Bank carries out the controls it deems appropriate. It is in particular authorized to conduct on-site inspections of system operators, payment instrument issuers, and governance authorities concerned.

4. The Central Bank may, within the framework of its oversight, issue specific recommendations or instructions to system operators, payment instrument issuers, and governance authorities concerned.

Art. 5. Obligations of System Operators, Payment Instrument Issuers, and Governance Authorities

1. System operators, payment instrument issuers, and governance authorities must establish a risk management framework for the system and/or payment instrument adapted to the volume and complexity of their activity. The framework is based on an organization, procedures, and internal rules enabling effective governance, monitoring, and control of the safety and/or efficiency of the system and/or payment instrument, associated risks, and applicable legal and operational environments. System operators, payment instrument issuers, and governance authorities follow the recommendations, principles, and oversight standards referred to in Article 3.1.

2. System operators, payment instrument issuers, and governance authorities are required to provide the Central Bank with all information it deems useful for carrying out its oversight mission.

These information include, inter alia:

• general information regarding systems or instruments;
• data relating to activity, incidents, and fraud;
• financial data;
• information relating to the risks to which systems or instruments are exposed, as well as internal risk mitigation tools;
• information relating to changes affecting systems or instruments;
• information regarding governance and internal rules and procedures.

3. System operators, payment instrument issuers, and governance authorities designate one or more duly authorized contact persons to deal with the Central Bank within the framework of its oversight mission.

Art. 6. International Cooperation

The Central Bank cooperates, within the framework of its oversight mission, with other central banks, in particular within the Eurosystem and the ESCB, as well as with prudential supervisory authorities.

Art. 7. Sanctions

1. Without prejudice to financial sanctions, the Central Bank may impose administrative sanctions up to the implementation of the procedure for revocation of the system's designation in case of non-compliance with the provisions of this regulation.

2. The Central Bank may report any breach of the provisions of this regulation to other financial sector supervisory authorities or to the Minister responsible for the financial center. It may make public the recommendations or instructions it is required to issue.

Art. 8. Miscellaneous Provisions

1. The Central Bank adapts its oversight of systems and payment instruments in application of the principle of proportionality.

2. This regulation is supplemented by annexes.

Art. 9. Entry into Force and Repeal

This regulation enters into force on the day of its publication and repeals on the same day the Central Bank Regulation 2010/N° 6 of 8 September 2010 on the oversight of payment systems, securities settlement systems, payment instruments, central counterparties ('central counterparties'), and trade repositories ('trade repositories') in Luxembourg, as amended by the Central Bank Regulations 2011/N° 10 of 14 July 2011 and 2012/N° 11 of 10 July 2012.

Art. 10. Publication

1. This regulation is published on the Central Bank's website (www.bcl.lu). It is also published in the Mémorial.

2. The updated annexes to the regulation are published on the Central Bank's website (www.bcl.lu).

3. The Central Bank also makes the official table of systems it oversees available to the public via its website (www.bcl.lu).

BANQUE CENTRALE DU LUXEMBOURG
The Management