Communication No. 32,927 of 21 December 2018 — Discloses the fundamental requirements for the Brazilian instant payments ecosystem (Pix)

COMUNICADO No. 32.927, OF 21 DECEMBER 2018

Discloses the fundamental requirements for the Brazilian instant payments ecosystem.

I announce that the Board of Governors of the Central Bank of Brazil, in an ordinary session held on 20 December 2018, approved the fundamental requirements for the Brazilian instant payments ecosystem under the terms of this document. The fundamental requirements establish the basic characteristics of the ecosystem, including the governance for defining rules, the forms of participation, the centralized settlement infrastructure, the connectivity services and the provision of liquidity.

2. The Central Bank of Brazil shall lead the development of instant payments in Brazil, with the objective of creating, from a perspective neutral in relation to business models or specific market participants, the necessary conditions for the development of an instant payments ecosystem that is efficient, competitive, secure, inclusive and that accommodates all use cases.

3. The rules of the instant payments ecosystem shall be defined by the Central Bank of Brazil. In the process of forming these rules, the Central Bank of Brazil shall have a permanent advisory committee, under its coordination, whose composition shall be defined in due course, including participants, connectivity service providers and representatives of end users.

4. Some specific rules of the ecosystem, of a strictly operational nature, may, at the discretion of the Central Bank of Brazil, be defined through a governance structure created specifically for that purpose, composed of market agents and under the coordination of the Central Bank of Brazil, with the premise of transparency and adequate representativeness of all those involved in the operationalization of the ecosystem.

5. The ecosystem shall have a flexible and open participation structure, in order to guarantee access and the emergence of participants that offer innovative and differentiated services that meet the needs of end users, allowing three different forms of participation for payment service providers:

i. direct participation: financial or payment institution that offers a transactional account to the end user and that, for purposes of settlement between institutions, has an account at the Central Bank of Brazil and connection to the centralized settlement infrastructure;

ii. indirect participation: financial or payment institution that offers a transactional account to the end user and that, for purposes of settlement between institutions, does not have an account at the Central Bank of Brazil, nor connection to the centralized settlement infrastructure; in this case, the indirect participant performs its settlements through a direct participant, by means of a contractual relationship for the provision of services; and

iii. participation as a payment initiation service provider (this form of participation is subject to specific regulation): institution that does not offer a transactional account (checking account, payment account, etc.) to the end user, but that offers a payment service using the transactional account that the user holds at

a financial or payment institution; for purposes of settlement between institutions, the institution at which the end user holds his transactional account may appear, in the ecosystem, as a direct or indirect participant.

6. The centralized settlement infrastructure (set of rules and computational structure for the processing and settlement of instant payment transactions between participating institutions) shall be operated by the Central Bank of Brazil and shall be available 24 hours a day, seven days a week and every day of the year. Transactions shall be settled one by one, at the moment the settlement order is accepted by the infrastructure (real-time gross settlement).

7. Connectivity between direct participants and the centralized settlement infrastructure may be carried out flexibly, directly or through connectivity companies (switch). These specialized companies may, moreover, aggregate several participants into their connectivity structure (aggregator). Within the scope of the connectivity service, these companies may offer the functionality of standards translation, in which the connectivity service provider receives the payment instructions in a given format and translates these instructions into the ecosystem's communication standard. Finally, in addition to the services more directly related to connectivity, these companies may offer additional services to their clients, such as anti-fraud solutions.

8. The connectivity service (switch) may be offered by multiple agents, similarly to what occurs today with information technology service providers that provide data processing services for purposes of access to the Network of the National Financial System. There shall, however, be technical requirements that must be met by these companies and that may be subject to a certification process.

9. With regard to the provision of liquidity for the settlement of instant payment transactions between participating institutions, within the scope of the centralized settlement infrastructure, two modalities are envisaged:

i. reserves: during the regular operating hours of the Reserve Transfer System (STR), direct participants may freely move funds between their Reserve Account or their Settlement Account and the account they will have in the centralized settlement infrastructure; and

ii. federal public securities: it will be possible to use the balances of federal public securities held in custody in the Special Settlement and Custody System (Selic), outside the regular operating hours of the STR, by means of a mechanism to be created for that purpose.

10. The figure attached to this Communiqué summarizes the structure of the Brazilian instant payments ecosystem.

Reinaldo Le Grazie
Director of Monetary Policy

Annex: 1.