Notice No. 02/GBM/2019, January 18 – Interbank Clearing and Settlement Subsystem Regulation

Bank of Mozambique Governor

NOTICE NO. 02/GBM/2019

Maputo, January 18, 2019

SUBJECT: Regulation of the Interbank Clearing and Settlement Subsystem

Given the need to review Notice No. 17/GBM/2013, of December 31, on Interbank Clearing and Settlement Regulation, and to align it with internationally accepted best practices regarding its operation, the Bank of Mozambique, exercising the competence attributed to it by Article 6(2)(c) of Law No. 2/2008, of February 27 – National Payments System Law, determines:

1. The Regulation of the Interbank Clearing and Settlement Subsystem attached hereto is approved, forming an integral part of this Notice.
2. Notice No. 17/GBM/2013, of December 31, on Interbank Clearing and Settlement Regulation, published in the Republic Gazette No. 104 of December 31, is revoked.
3. This Notice enters into force on the date of its publication.

Any doubts arising from the interpretation and application of this Notice shall be submitted to the Payments Systems Department of the Bank of Mozambique.

[Signature] Rogério Lucas Zandamela Governor

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ANNEX

(to which number 1 refers)

REGULATION OF THE INTERBANK CLEARING AND SETTLEMENT SUBSYSTEM

CHAPTER I

General Provisions

Article 1 Object

This Notice regulates the operation of the Interbank Clearing and Settlement Subsystem (CEL) for payment instruments and documents, as well as the settlement of payment operations.

Article 2 Scope of Application

This Notice applies to CEL participants.

Article 3 Definitions

For the purposes of this Regulation, the following terms are understood as: a) Final beneficiary – the client who receives funds through credit to their bank account; b) Clearing house – the central processing location or mechanism through which participants exchange instructions, payment instruments, and documents subject to physical exchange or other financial obligations; c) Electronic clearing – the process of sending and calculating the net sum of debtor and creditor balances of each participant relative to others, exclusively using information and communication technologies; d) Multilateral clearing – the procedure for calculating the net sum of debtor and creditor balances of each participant relative to others; e) Settlement – the allocation of participants' positions, as debits or credits, resulting from their financial obligations in clearing relative to others; f) Receiving participant – the institution that receives files for electronic clearing; g) Sending participant – the institution that sends files for electronic clearing; and h) Participants – the institutions authorized to participate in the CEL, listed in Article 4.

CHAPTER II

Interbank Clearing and Settlement Subsystem

Section I Conditions for Participation in the CEL

Article 4 Participants

The following may participate in the CEL: a) The Bank of Mozambique; b) Credit institutions authorized to receive deposits and other repayable and transferable funds through payment instruments; and c) Other institutions eligible by the Bank of Mozambique.

Article 5 Types of Participation

1. Participation in the CEL may be direct or indirect.
2. Indirect participation in the CEL may be carried out through representation by a direct participant, who assumes, vis-à-vis other participants, the rights and obligations of the institutions represented by them.
3. The Bank of Mozambique may, to ensure the regular and sound functioning of the National Payments System and prevent payment system risks, decide on a participant's transition from direct to indirect participation, or vice versa.

Article 6 Participation Requirements

1. The requirements for participation in the CEL, for institutions listed in Article 4(b) and (c), are: a) The designation by the direct participant of a current account for financial settlement purposes; b) The holding, by the participant, of securities that the Bank of Mozambique considers eligible for monetary policy purposes; c) Compliance with the prudential limits and ratios of the participant, defined by the Bank of Mozambique for clearing; d) Compliance by the participant with the technical requirements and procedures required for clearing, defined in the respective subsystem and operations manuals, which must be previously tested by the Bank of Mozambique.
2. Whenever a participant joins electronic payment networks and the Mozambique Stock Exchange, it must submit a letter to the Bank of Mozambique authorizing the allocation of its current account by the results from those networks or the Stock Exchange.
3. The Bank of Mozambique may, at any time, request additional information and documents from applying or participating institutions and conduct the investigations it deems necessary.

Article 7 Application and Communication of Participation

1. Applications for participation, changes in the type of participation, as well as cessation of participation in the CEL must be submitted by eligible or participating institutions to the Bank of Mozambique at least 30 days prior to the expected date for verification of their claim.
2. The applications referred to in the preceding paragraph must be submitted with the following elements: a) Application form for participation, change of type of participation, or cessation of participation in the CEL, according to the model in Annex I; b) Supporting documents proving the information provided or situations indicated in Article 6(1), where applicable.
3. Participation in the CEL is communicated by the Bank of Mozambique to all participants with sufficient advance notice.

Section II Interbank Clearing and Settlement

Article 8 Nature of Clearing and Settlement

1. In the CEL, payment instruments and documents, as well as payment operations, expressed in Metical are presented.
2. Clearing is electronic and multilateral.

Article 9 Processing in the CEL

Clearing is carried out through daily processing, by the Bank of Mozambique or another institution authorized by it, of electronic files of payment instruments and documents eligible for clearing, submitted by participants, in at least one session of acts, observing: a) The transmission of the file of payment instruments and documents to be presented by participants; b) The calculation of results and the availability of the results file; c) The physical exchange of cleared payment instruments and documents; d) The transmission of the file of payment instruments and documents to be returned by participants; e) The calculation of results, as well as the availability of the results and returns file; and f) The availability to the final beneficiary of funds from cleared payment instruments and documents.

Article 10 Processing and Coordination Entity

1. The Bank of Mozambique ensures for participants: a) The receipt, processing, and availability of electronic files; b) The financial settlement of participants' balances; and c) The coordination of physical exchange sessions for payment instruments and documents subject to physical exchange.
2. The Bank of Mozambique may designate a processing and/or coordinating entity for electronic clearing, whose responsibilities and obligations are established in a specific document and previously communicated to participants.

Article 11 Calendar, Hours, Procedures, and Operating Venues

1. Clearing and financial settlement follow a calendar, hours, and procedures defined by the Bank of Mozambique.
2. Clearing takes place in at least one daily settlement session nationwide, with various venues for presentation and exchange of physical payment instruments and documents, which have specific coding.
3. The physical exchange of cleared payment instruments and documents takes place in the venues where the receiving participant is represented, or alternatively, in the venue that best suits them.
4. In venues where there is more than one participant and the Bank of Mozambique is not represented, the physical exchange of payment instruments and documents is done in a location agreed upon by participants, with the Bank of Mozambique's approval.
5. Clearing takes place on all business days, except Saturdays, Sundays, holidays, and point tolerances verified in the venue hosting electronic clearing processing, which cover the entire day.
6. The physical exchange of payment instruments and documents related to clearing sessions for days preceding holidays and nationwide point tolerances, as well as in the venue hosting electronic clearing processing covering the entire day, is carried out on the next business day following the national holiday or point tolerance.

Article 12 Fees and Commissions

Fees and commissions for the use of clearing are charged according to the Schedule of Fees and Commissions approved by the Bank of Mozambique.

Article 13 Payment Instruments and Documents

1. The following payment instruments or documents may be processed in the CEL: a) Cheques; b) Interbank electronic transfers; c) Direct debits; d) Discrepancy adjustment document; and
2. Payment operations processed in electronic payment networks, namely transfers, payments, withdrawals, and deposits, as well as at the Mozambique Stock Exchange, are only subject to financial settlement in the CEL.
3. Other payment instruments or documents not provided for in this Notice are subject to clearing and financial settlement, under the terms and conditions established by the Bank of Mozambique.
4. The Bank of Mozambique defines the terms and conditions for issuing and sending the discrepancy adjustment document.

Article 14 Language for Filling Out Payment Instruments and Documents

All payment instruments or documents presented for clearing must be filled out in Portuguese.

Article 15 Participants' Responsibilities

1. Participants must: a) Ensure high levels of technical competence, in general, and specifically operate with adequate human and material resources to guarantee the integrity, security, quality, and efficiency of data and all activities in the CEL; and b) Ensure the existence of well-documented technical and operational procedures that are strictly followed, and whenever there are changes, that these are previously and duly tested.
2. The participant, whether receiving or sending: a) May, when demonstrably prejudiced, seek adjustment with the participant, sender or recipient, through remuneration negotiable between the parties; and b) Must assume half of the assessed loss value, when there is concurrent error between sending and receiving participants.
3. The issuing participant of payment instruments or documents is responsible for errors arising from poor quality of materials used in their production or non-compliance with specifications and instructions contained in the system manual and clearing and payment instrument standards established by the Bank of Mozambique.
4. The sending participant must: a) Guarantee the exact reproduction of data contained in payment instruments and documents to be cleared, as well as assume consequences that may arise from possible errors in that reproduction; and b) Reimburse the amount in question on the same day, through the Real-Time Gross Settlement Subsystem (Metical in Real Time – MTR), whenever duplication of clearing files occurs.
5. The receiving participant must: a) Verify the conformity of information sent to them, and in case of non-conformity, proceed with its return, indicating the reasons provided for in this Regulation; and b) Ensure correct information on the reason for return and reproduction of other original record information.
6. The Bank of Mozambique ensures the faithful reproduction and availability of data related to the movement destined for each participant, at the determined time, except in case of contingency or system unavailability.

Article 16 File Transmission

1. Clearing is carried out from the transmission of information regarding payment instruments to be cleared or cleared between participants, in accordance with specifications established by the Bank of Mozambique.
2. Payment instruments included in transmitted files, whose physical exchange is mandatory, must be sent to receiving participants in the form established by the Bank of Mozambique.
3. Until the clearing cycle is complete, the receiving participant is a faithful custodian of documents sent to them by the sending participant.
4. Hours for transmission and processing of electronic files, as well as the clearing cycle, are defined by the Bank of Mozambique.

Article 17 Reasons for Return

1. CEL participants may only return eligible payment instruments and documents for the following reasons: ... 11 – Lack or insufficiency of funds; 12 – Account closed; 13 – Account frozen or blocked; 14 – Written order from the issuer duly justified; 15 – Discrepancy and/or insufficiency in the issuer's signature; 16 – Improper clearing: 16.1 – Presentation out of time; 16.2 – Cancellation of passbook by the drawn participant; 16.3 – Cheque previously returned for reasons 12, 14, 15 and 18; 16.4 – Forged cheque; 16.5 – Falsified cheque; 16.6 – Payment instrument issued without prior control or responsibility of the participant; 16.7 – Payment instrument returned twice for reason 11; 16.8 – Payment instrument filled out in a language other than Portuguese; 16.9 – Payment instrument lacking indication of issue date and place; 16.10 – Crossed or irregularly endorsed cheque; 17 – Absence or irregularity in the clearing stamp; ... 18 – Expiration of legal time limits determined by the Commercial Code; ... 51 – Payment order – beneficiary is not the client; ... 80 – Failure to deliver the cleared cheque/document by the participant; 81 – Logical file not processed or partially processed; 82 – Electronic clearing – inconsistent record; 83 – Duplicated record.

2. Returned payment instruments and documents must bear on the reverse a stamp with the following information: date and place of return, reason for return written legibly without correction, with the mention "Returned via the Interbank Clearing and Settlement Subsystem", as shown in Annex II.

3. In case of concurrent reasons, provided for in paragraph 1, the participant must indicate only one reason to justify the return.

4. In case of concurrent reasons, provided for in paragraph 1, one of which is lack or insufficiency of funds, the participant must indicate only reason 11 to justify the return.

5. In returning cheques sent for clearing, physical delivery of the cheques must be ensured in the same venue where they were presented.

Article 18 Re-presentation of Returned Payment Instruments and Documents

Returned payment instruments and documents may be re-presented by participants in subsequent sessions.

Article 19 Settlement and Calculation of Clearing Results

1. The financial settlement of interbank clearing results in current accounts is considered definitive, irrevocable, and unconditional, and may not be annulled in any way.
2. Each clearing participant is obliged to provision the current account they hold at the Bank of Mozambique to guarantee settlement of the clearing result.
3. The financial results of clearing sessions calculated by the Bank of Mozambique are made available to participants immediately after processing and closing.
4. In case of lack or insufficiency of funds for settlement of the clearing result, intraday credit is granted to the defaulting participant up to their securities portfolio limit, under terms defined by the Bank of Mozambique.

Section III Physical Exchange of Payment Instruments and Documents

Article 20 Clearing Certification by Stamps

1. Only certification means and models whose standards have been approved by the Bank of Mozambique are used in clearing.
2. Cleared payment instruments subject to physical exchange must bear on the reverse a stamp with the following information: date and place of exchange, name of the sending participant, and the mention "Processed via the Interbank Clearing and Settlement Subsystem", as shown in Annex II.
3. The affixation of the stamp referred to in the preceding paragraph on any payment instrument subject to clearing is equivalent, for all purposes, to the signature of the sending participant's representative.
4. For cheques, it must also be observed that the affixation of the stamp makes the sending participant responsible, vis-à-vis the receiving participant, for the series of endorsements.

Article 21 Representation of Participants in Physical Exchange Sessions

1. Participants must be represented, in physical exchange sessions for cheques and other documents cleared electronically, by accredited persons strictly necessary for their execution and accepted by the Clearing House Coordinator of the respective physical exchange venue.
2. The provisions of the preceding paragraph do not apply to participants who do not provide cheques and other documents requiring physical exchange.
3. The Bank of Mozambique or the Clearing House Coordinator, in venues where the Bank of Mozambique is not represented, may reject a proposed representative when possessing discrediting information indicating that their presence may compromise the sound functioning of sessions.

Article 22 Presentation of Physical Documents

Irregularities found in the presentation of physical documents are the responsibility of the sending participant, when they relate to the lack of requirements provided for in Article 14 and paragraph 2 of Article 20.

Article 23 Conservation and Integrity of Payment Instruments and Documents

The sending participant who holds physical payment instruments and documents included in the logical file is considered a faithful custodian and must conserve and ensure the integrity of said payment instruments and documents, during the periods established by clearing.

Article 24 Dispatch Guide

1. The physical delivery of documents whose records have been sent electronically in clearing sessions must be accompanied by a dispatch guide to participants, specifying the document type, movement date, total quantity of documents, and total value.
2. The provisions of the preceding paragraph do not apply to payment instruments and documents eligible for clearing that are exempt from physical exchange.

Article 25 Closing of the Clearing Session

Clearing is only considered closed after processing and closing of the returns session.

CHAPTER III

Fund Availability in the CEL

Article 26 Timeframes for Fund Availability to Final Beneficiary

1. The availability of funds to the final beneficiary of a cheque or similar document drawn on a participant represented in the physical exchange venue must occur by 21:00 on the second business day, counted from the date of transmission of the electronic file by the sending participant.
2. The availability of funds to the final beneficiary of a cheque or similar document drawn on a participant not represented in the physical exchange venue must occur by 21:00 on the sixth business day, counted from the date of transmission of the electronic file by the sending participant.
3. The availability of funds to the final beneficiary of interbank electronic transfers must occur by 21:00 on the first business day, counted from the date of transmission of the electronic file by the sending participant.

CHAPTER IV

Complementary and Final Provisions

Article 27 Contingencies

Business continuity and contingency procedures for cases of electronic system failures and other serious situations are established by the Bank of Mozambique.

Article 28 Suspension, Exclusion, and Readmission of the Participant in Clearing

1. Suspension and exclusion of the participant from clearing are applied under the terms of Article 27 of Law No. 2/2008, of February 27 – Law Establishing the National Payments System.
2. Within the coordination and promotion of sound functioning of the payment system, provided for in Article 6(2)(b) of Law No. 2/2008, of February 27, the Bank of Mozambique communicates suspension, exclusion, and readmission of clearing participants to others.
3. A suspended participant may apply for readmission into Clearing after the suspension period ends, providing proof of cessation of the cause determining the suspension.

Article 29 Sanction Regime

Violation of the provisions of this Notice constitutes an offense provided for and punishable under the National Payments System Law, approved by Law No. 2/2008, of February 27.

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Annex I

Application Form for Participation, Change of Type of Participation, and Cessation of Participation in the Interbank Clearing and Settlement Subsystem

(Fill in uppercase)

Type of application: Admission: _____ Change: _____ Cessation: _____

Applying Institution:

Name: Bank Code: NIB:

Identification of the settlement account holder(a)

Name: Bank Code: NIB:

Contact Persons for CEL Monitoring:

Principal Name: Position: Landline: _________________ Mobile: E-Mail:

Substitute Name: Position: Landline: _________________ Mobile: E-Mail:

Date: ___ / ___ / ___ (dd/mm/yyyy)

Authorized Signatures of the Participating Institution:

Name: _________________________ Position: _________________ Name: _________________________ Position: _________________

(a) Only for indirect participants.

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Annex II

Clearing Stamp

[ ]

| PROCESSED VIA THE | | INTERBANK CLEARING AND | | SETTLEMENT SUBSYSTEM | | | | DD/MM/YYYY | | BANK ALPHA | | "PLACE" |

50 mm

40 mm

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Annex III

Return Stamp

[ ]

| RETURNED VIA THE | | INTERBANK CLEARING AND | | SETTLEMENT SUBSYSTEM | | | | REASON: _________________ | | DD/MM/YYYY | | (PLACE) | | | | SIGNATURE | | BANK ALPHA |

50 mm

40mm