Instruction No. 01-2016 of January 22: Regulation of the Clearing and Settlement Subsistemas of the Angola Payments System

INSTRUCTION NO. 01/16 of January 22 SUBJECT: ANGOLA PAYMENTS SYSTEM

• Regulation of the Clearing and Settlement Subsistemas

Considering the need to update the requirements for the authorization to operate clearing houses and the clearing and settlement subsistemas of the Angola Payments System (SPA), as well as to establish the mandatory minimum risk containment measures for the subsistemas, in accordance with Notice No. 11/2015 of December 24, 2015.

Under the combined provisions of Article 7 of Law No. 5/05 of July 29, the Payments System Law, and Article 51 of Law No. 16/10 of July 15, the Law of the Bank of Angola.

I DETERMINE:

1. Object This Instruction aims to set rules regarding the regulation of the clearing and settlement subsistemas of the Angola Payments System.

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2. Definitions For the purposes of this Instruction, the following are understood: a) CCAA – the Automated Clearing House of Angola; b) Clearing – the process of transmitting and reconciling payment orders and/or transfer instructions for values before settlement, including the determination of balances for settlement; c) Payment Finalization – the making available of the payment to the final beneficiary or their legal representative, through deposit or release of funds in the respective bank account; d) Settlement Account – the deposit account of an authorized institution, held at the BNA, intended to ensure the settlement of balances determined in the clearing processes and managed in the Real-Time Gross Settlement System (SPTR); e) Payment Settlement – the definitive, irrevocable, and unconditional settlement of the payment of fund transfers carried out through accounting records of debits and credits in the settlement accounts of Participants; f) Securities Settlement – the transfer, concurrent with financial settlement, recorded in accounting positions of the respective sellers and buyers, maintained in an appropriate electronic subsistema for the management of accounts with securities positions; g) Payments System Operator – any entity, duly authorized by the BNA, that manages a payments subsistema in the SPA, whose operation may result in interbank fund transfers; h) Participant – in singular or plural, means direct or indirect participant, unless indicated in the text that the provision applies only to one type of participant, defined in relation to financial settlement, as a direct participant being the participant whose settlement account at the BNA is moved as a result of the multilateral balances determined in the clearing process, and an indirect participant being the participant represented by a direct participant; i) Clearing Session – the time interval during which interbank payment instructions or securities transactions are considered for the calculation of the balance of each participant, through a processing that concludes at the end of that interval, with the multilateral clearing of instructions; j) Subsistema – in singular or plural, each set of rules, stakeholders, procedures, routines, and infrastructures applicable to the processing and settlement of each type of payment instrument or securities transaction.

3. Requirements for Authorization to Operate a Subsistema 3.1 The request for authorization to operate a subsistema, in accordance with paragraph 4 of Article 7 of Law No. 05/2005 of July 29 - SPA Law, must observe the following: a) the operator must present to the Department of Payments Systems (DSP) of the Bank of Angola, with a minimum advance of 60 (sixty) days before the start of the operation of the subsistema, the documentation referred to in letter b) of paragraph 4 of Article 7 of No. 11/2015 of December 24, 2015; b) the operator must present to the DSP, after the acceptance of user tests by the Operator itself, the following documents: i. a test plan of the main functions of the subsistema, among them, obligatorily, all those that execute risk containment measures; ii. an action plan for the execution of said tests by the Operator together with the BNA.

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c) the operator must enter into a service provision contract with the BNA, in accordance with the provisions of paragraph 5 of Article 7 of No. 11/2015 of December 24, 2015. 3.2 Subsistemas that process securities transactions must present to the Securities Market Supervisory Body the documents referred to in number 3.1 of this Instruction, which will articulate its position with that of the BNA, in accordance with the Protocol to be established between these two entities.

4. Participation in Payments Subsistemas 4.1 In the SPTR, authorized institutions may participate in accordance with their respective Manual of Norms and Procedures (MNP). 4.2 Regarding participation in subsistemas covered by the CCAA, the following must be observed: a) financial institutions and other institutions authorized to operate by the BNA, whose activities include operations subject to clearing in the subsistemas covered by the CCAA, must be accepted as participants of these subsistemas, with the requirements for direct or indirect participation defined in the respective MNP of the subsistema, without prejudice to the provisions of the following letter b); b) entities or institutions not authorized to maintain a settlement account at the BNA are permitted to participate in an indirect form, in accordance with the provisions in the MNPs of the subsistemas, with each institution referred to in this number indicating an institution participating in the SPTR for the financial settlement of their respective rights and obligations in national currency; c) with the authorization of the BNA, other non-financial entities providing payment services, institutions, or companies, may participate in the subsistemas covered by the CCAA, provided that such participation contributes to the benefit of the users of these subsistemas and is provided for and defined in the MNP of the respective subsistemas, without prejudice to the provisions in paragraphs 4.1 and 4.2, letter a) above. 4.3 Participation in any subsistema is conditioned at any time to the technical and operational adequacy of the participant to the provisions of the MNP of the respective subsistema.

5. Manual of Norms and Procedures (MNP) 5.1 The MNP of each subsistema must contain clear and objective information on all relevant aspects related to its operation. 5.2 Proposals for changes to the MNP approved by the BNA must be submitted to the DSP at least 15 (fifteen) days before its entry into force. Within a period of 15 (fifteen) days counted from the date of receipt of the communication, the Bank may approve, determine changes in them, or communicate to the Operator the need for more time for the analysis of the proposals. The non-expression of the DSP after that period corresponds to the tacit approval of the changes. 5.3 The Operator must disclose the MNP of the subsistema it operates to its respective participants, before its entry into operation, as well as any change related to the operation of said subsistema, before the entry into force of the change. The advance notice must be such as to allow participants adequate technical and operational preparation. 5.4 In exceptional cases of manifest urgency and duly justified, the Operator may implement changes in processes that, in turn, may translate into changes in the MNP, submitting them to the DSP in the shortest possible time, never later than the day following their entry into force. 5.5 Without prejudice to any other aspects considered relevant by the Operator, the Annex - Content of the Manual of Norms and Procedures, which is an integral part of this Instruction, identifies the aspects that must be included in the MNP of the subsistema, considering the nature of each subsistema. 5.6 The provisions in the MNP regarding penalties must comply with the provisions in number 8 of this Instruction.

6. Rights and Duties of the Operator 6.1 The rights of the Operator are: a) receive the remuneration provided for in the MNP of the subsistema for its service provision, in the established periodicity; b) be reimbursed by the bankrupt Participant, for the costs incurred to guarantee the settlement of its obligations up to the date and time limits established in the MNP of the subsistema; c) receive the additional service fees provided for in paragraph 8.1 of this Instruction. 6.2 Considering the nature of the subsistema in question and, in accordance with the provisions of Notice No. 11/2015 of December 18, 2015, in this Instruction and in the MNP of the subsistema, the duties of the Operator of the subsistema are the following: a) execute the clearing of transactions accepted in the subsistema, in distinct clearing processes for each subsistema; b) ensure communication with the SPTR and the necessary procedures for the financial settlement in that subsistema, in deferred time, of the multilateral balances calculated in the subsistema that operates; c) manage the risk containment measures provided for in the subsistema, to guarantee the deferred-time financial settlement of the multilateral balances calculated in the subsistema, within the timeframes established in the same subsistema; d) establish the requirements for access and the conditions for suspension and exclusion of participants from the subsistema operated by it, as well as exclusion at the request of the participant itself, apply the sanctions provided for in the said manual and inform the DSP of occurrences subject to such information; e) ensure compliance by participants with the MNP of the subsistema, apply the sanctions provided for in the said manual and inform the DSP of occurrences subject to such information; f) enter into a participation contract with each participant in the subsistema, through which both commit to compliance with the MNP of the subsistema, especially with the settlement by the participant, within the established period, of the obligations assumed; g) make available means for participants to monitor their respective reserves or operational limits, as well as for the management of their reserves according to needs, to guarantee the settlement of clearing balances; h) be responsible for the execution of guarantees deposited by participants, if the constitution of such guarantees is provided for in the MNP of the subsistema; i) execute its activities according to adequate standards: i. of security and reliability, so as not to compromise the operation of the subsistema it operates; ii. of integrity and professional ethics, keeping confidentiality of all operations carried out through its intermediation; j) be responsible for the acts or omissions of its representatives or assistants, when exercising functions related to the subsistema it operates; k) provide the necessary support to participants for the resolution of any conflict situation arising from activities in the subsistema it operates, in accordance with Articles 34 to 37 of the SPA Law;

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l) make available to participants a support service (“helpdesk”), in the technical area and in the business area, in accordance with the nature of the subsistema it operates; m) send to the DSP the statistics of the subsistema it operates, in the form and periodicity regulated.

7. Rights and Duties of Participants 7.1 The rights of Participants, defined in the MNP of the subsistema, are: a) use, on equal terms, the services provided by the Operator within the subsistema in which they operate; b) receive, daily, reports regarding their compensated, rejected, returned, canceled and/or settled transactions, according to the nature of the subsistema; c) if they are participants of a subsistema with deferred-time balance settlement, receive electronically, detailed information on each compensated transaction of which they are recipients, per clearing session. 7.2 The duties of participants, defined in the MNP of the subsistema, according to the specific characteristics of the subsistema, as well as the following obligations, common to all subsistemas: a) strictly comply with the MNP of the subsistema, so as not to create risks for other participants; b) honor the payment of their obligations within the period established in the MNP of the subsistema; c) constitute reserves and guarantees for the containment of liquidity and credit risks, provided for in the MNP of the subsistema, within the period and conditions established in the same manual; d) be responsible for the acts practiced by their representatives or assistants, when related to their participation in the subsistema. 7.3 Regarding exit from the subsistema at the request of the participant itself, the following must be observed, at minimum, without prejudice to other provisions at the discretion of the Operator: a) the exit is conditioned to the payment of all obligations, pending items, and debts existing with the subsistema and with the Operator; b) The Participant may only exit the subsistema after the definitive settlement of transactions related to all clearing sessions already initiated when the request is presented. 7.4 Regarding the clearing and settlement subsistemas of securities, the matters defined in the previous numbers are fixed by the Securities Market Supervisory Body, in coordination with the BNA, in the manner that these two entities establish in a protocol.

8. Penalties 8.1 The MNP of the subsistema must specify the penalty applicable to any participant who infringes the said manual, as well as the provisions of the contract with the Operator and other applicable norms. In these terms, the following penalties, common to all subsistemas, must be considered: a) warning; b) additional service fee; c) payment of financial charges to the Operator; d) temporary suspension of participation in the subsistema or participation with limitation of services; e) exclusion from participation in the subsistema. 8.2 The penalty of warning is applied to the participant by the Operator of the subsistema and must be communicated to them in writing and delivered under protocol, with the fact being communicated to the DSP, by electronic mail. 8.3 Regarding the payment of the penalty additional service fee: a) the additional service fee is limited to the average monthly value due to the Operator for service provision in the last six billed months or to the value of the last billed month, whichever is greater; b) monthly, the Operator must communicate to the DSP the occurrences of application of the additional service fee, indicating the name of the participant, reason, and value. 8.4 Regarding the penalty of suspension or participation with limitation of services: a) the MNP of the subsistema must establish the deadline for the participant to remain in the situation of suspended or with limited services, after which, if the cause is not corrected, the participant may be excluded from the subsistema; b) the operator must communicate to the DSP and to the other participants of the subsistema the application of the penalty of suspension or limitation of services, on the same date and with maximum advance notice relative to the date of its application. 8.5 Regarding the penalty of exclusion: a) this does not exempt the excluded from the responsibility of payment of all obligations, pending items, and debts existing with the subsistema; b) it must be communicated to the DSP and to the other participants of the subsistema on the same date and with maximum advance notice relative to the date of its application. 8.6 Regarding the application of the penalties provided for, the Operator must establish in the MNP of the subsistema the following: a) the right to file an appeal by the participant, with suspensive and devolutive effect;

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b) the deadline for filing the appeal; c) the entity responsible for the analysis of the appeal and final decision.

9. Exoneration and Limitation of Liability 9.1 The Operator of a subsistema or a participant is not responsible for any act, omission, or failure to comply with their obligations, namely those provided for in this Instruction or in the MNP of the subsistema, if such occurrences are caused by facts that are outside their control and prevent the fulfillment of obligations. Facts of this kind are called Force Majeure Events. 9.2 A fact is not a Force Majeure Event if: a) it could have been avoided, had the defaulting party fulfilled all its other responsibilities in the subsistema related to the failure; b) it could have been prevented or avoided, had it been executed by the defaulting party with a reasonable standard of caution; or c) the defaulting party or any of its representatives or assistants is directly responsible. 9.3 The party unable to comply with its obligations due to a Force Majeure Event must, immediately: a) if it is a Participant, notify the Operator; if it is the Operator, notify the participants, in writing, of the Force Majeure Event and its inability to fulfill its obligation as a consequence of “Force Majeure”, the reasons and the expected duration of said Force Majeure Event; and b) make all reasonable efforts to avoid or overcome the origin of the Force Majeure Event and execute its obligations as soon as possible, as well as mitigate the effect of such Force Majeure Event while it lasts. 9.4 The Operator is not responsible for any act or inability to fulfill its obligations provided for in No. 11/2015 of December 24, 2015, in this Instruction or in the MNP of the subsistema, nor for the consequences of such act or omission, nor is it responsible to the participant for any loss, costs, claims, demands, or other damages suffered or incurred by the participant, that arise outside the operation of the subsistema, unless such responsibility results from negligence, omission, or serious misconduct, fraud, or theft by the Operator or any of its representatives or assistants. 9.5 In the case of negligence, omission, or serious misconduct, fraud, or theft by the Operator, or any of its representatives or assistants, the Operator must reimburse the participant the amount of any lost amount that resulted directly from such proven negligence, deliberate misconduct, fraud, or theft: a) the amount to be reimbursed is limited to the average monthly value billed by the Operator as a result of service provision to the participant in question, in the last six months or to the value billed in the last month, whichever is greater; b) the contract to be established between the Operator and the BNA must provide for the possibility of its termination following the occurrence of one of the situations referred to in this number. 9.6 In the situation referred to in the previous number, the participant must make all efforts and provide all collaboration to the Operator for the recovery of the value paid by this, even if the immediate cause of any loss of the participant did not result from any act or omission of the participant. 9.7 The Operator is not responsible to the participant for any indirect, special, accidental loss or damages or damages of any other type that may arise (including loss of revenue or profits, lost data, business interruptions), or damages that arise from errors, or security failures, in the participant's own subsistemas, even having been warned of such possibility.

10. Financial Settlement 10.1 The financial settlement of transactions in national currency processed in any of the subsistemas is carried out in the settlement accounts of institutions authorized to maintain deposit accounts at the BNA and that are administered in the SPTR, observing the following: a) the financial obligations and rights processed in a subsistema, in its own name or on behalf of others, of indirect participants in that subsistema, are settled, obligatorily, in the settlement account of the respective direct participant; b) the net results of the National Treasury, in Subsistemas in which it participates, in accordance with the MNP of the subsistema, must be settled in the Single Treasury Account, held at the BNA. 10.2 For the financial settlement of clearing balances, the respective Operator must send electronically to the SPTR information on the balance of each direct participant, per clearing session in each subsistema. The balances are settled in the SPTR on a all-or-nothing basis, that is, if any participant with a debtor clearing balance does not have sufficient balance in its respective settlement account, also considering the positions of the reserves, for the settlement of its obligation at the time provided for in the regulation of the subsistema in question, none of the debtor or creditor balances indicated in the same communication will be settled, and such situation will be communicated to the Operator. 10.3 The non-settlement by the SPTR of the information on balances, due to the absence of sufficient funds in some settlement account, whose holder is responsible for a net debtor position, is grounds for immediate intervention of the DSP, together with the Department of Supervision of Financial Institutions (DSI) of the Bank of Angola and, if applicable, with the Securities Market Supervisory Body, in the subsistema in question and in the holder of the relevant settlement account, with a view to determining the causes, establishing responsibilities, and preventing future repetitions.

11. Control of Liquidity and Credit Risks 11.1 The Operator of the subsistema must adopt adequate mechanisms for the control of liquidity and credit risks. 11.2 In the constitution of guarantees for the settlement of obligations arising from transactions processed in the subsistema, titles denominated in national currency issued by the National Treasury or by the Bank of Angola, registered in the SIGMA subsistema, may be eligible, as specified in the MNP. 11.3 The guarantee in titles constituted in SIGMA by each participant may be executed by the Operator of the subsistema whenever the balance of the Participant's settlement account, managed in the SPTR, is insufficient to ensure the settlement of the balance determined in the clearing session of the subsistema. 11.4 Between the moment when the insufficiency of funds for the settlement of the clearing balance occurs and the moment of its effective settlement or the exclusion of the participant, following communication by the Operator of the subsistema, the participant's settlement account cannot be debited.

12. Automated Clearing House of Angola (CCAA) 12.1 The Automated Clearing House of Angola (CCAA)...