Instruction (Archive) No. 3/2023

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 .................................................................................................................................................................................................. Topics Payment Systems :: Large Value Payment System Mod. 99999940/T – 01/14

Index Text of the Instruction Text of the Instruction Subject: Main Cash Account (MCA) co-management service provided by the Bank of Portugal

On December 6, 2017, the Governing Council of the ECB approved the TARGET2 and TARGET2-Securities consolidation project. ECB Guideline (EU) 2022/912, relating to a new generation trans-European automated transfer system for real-time gross settlement (TARGET), materialized the consolidation project, allowing euro payments to be settled in central bank money by TARGET, and was implemented in Portugal by Instruction No. 16/2022, of October 17.

According to Article 2(1)(c) of Part II of Annex I of Instruction No. 16/2022, of October 17, Main Cash Accounts (MCAs) for the settlement of transactions with central banks may be co-managed by the Bank of Portugal (MCAs are considered to be accounts opened in the TARGET centralized liquidity management service).

Under Article 9(9) of the same Instruction, the Bank of Portugal shall apply the principle of full cost recovery when setting its fees for co-management services it intends to provide and shall pass on at least the total costs arising from such services.

In this context, the Bank of Portugal has decided to make the MCA co-management service available to TARGET-PT participants who are holders of an MCA.

Thus, the Bank of Portugal, using the competence attributed to it under Article 14 of its Organic Law, approved by Law No. 5/98 of January 31, in its current version, and by Article 2(1)(c) of Part II of Annex I of Instruction No. 16/2022, of October 17, determines the following:

1 Guideline (EU) 2022/912 of the European Central Bank of February 24, 2022.

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 Topics Payment Systems :: Large Value Payment System .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

I – SCOPE OF APPLICATION AND GENERAL PROVISIONS

1. Object This Instruction regulates the Main Cash Account (MCA) co-management service (hereinafter, the service) provided by the Bank of Portugal, in accordance with Article 9(9) of Section I and Article 2(1)(c) of Part II of Annex I of Instruction No. 16/2022, of October 17, relating to the operation of the national component of TARGET – TARGET-PT.

2. Eligibility All institutions participating in TARGET-PT that hold at least one MCA in euros and do not intend to establish their own connection to the centralized liquidity management service through one of the network service providers are eligible to join the service.

II – SERVICE PROVIDED BY THE BANK OF PORTUGAL

3. Service characterization The service is provided through the Market Infrastructure Link System (SLIM), an application of the Bank of Portugal that allows connection to TARGET services and is available on the BPnet portal.

4. Method of joining 4.1. Candidates wishing to join the service must submit an express request to the Bank of Portugal, signed by the person with powers to perform the act, in accordance with Articles 16.2 and 16.3 of this Instruction, which will only be considered valid after confirmation by the Bank of Portugal of receipt of the request. 4.2. Approval of the request is conditional upon compliance with eligibility criteria and operational requirements established in this Instruction. 4.3. Approval of the request presupposes the correct completion of the TARGET-PT Participation Form, where candidates wishing to join must indicate their intention to join the Bank of Portugal's MCA co-management service. 4.4. By requesting the provision of the service by the Bank of Portugal, candidates wishing to join are obliged to comply with this Instruction and the Technical Manual, which specifies the technical conditions regarding the provision of the service and the relationships between them and the Bank of Portugal.

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 Topics Payment Systems :: Large Value Payment System .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

5. Operational requirements for access to the service 5.1. Operational requirements for access to the service are that the candidate wishing to join: 5.1.1. Possesses a Business Identifier Code (BIC) that identifies each MCA of which they are the holder; 5.1.2. Contracts access to the BPnet portal for at least two users, in accordance with Bank of Portugal Instruction No. 21/2020, of July 15; 5.1.3. Subscribes to SLIM services for at least two users, in accordance with this Instruction; and 5.1.4. Successfully completes the joining tests proposed by the Bank of Portugal. 5.2. After joining the service, and as a condition for its maintenance, participants are obliged to keep updated, without prejudice to Bank of Portugal Instruction No. 21/2020, of July 15, which regulates the BPnet system: 5.2.1. Information regarding the identification of the participant; 5.2.2. Information regarding their respective users of the BPnet portal and SLIM; 5.2.3. The confidentiality of the access password to the BPnet portal; 5.2.4. Other information considered relevant by the Bank of Portugal and which is requested from them accordingly. 5.3. The Bank of Portugal may require participants in the service to participate in regular or sporadic business continuity and contingency procedure tests, training, or other preventive measures that the Bank of Portugal deems necessary.

6. Functionalities inherent to the service 6.1. Participants will have access, in User-to-Application (U2A) mode, via the BPnet portal, in SLIM, to the following functionalities: 6.1.1. Insertion of liquidity transfers, through a screen made available for this purpose, subject to the application of the four-eyes principle, dependent on technical and business validations performed automatically by SLIM; 6.1.2. Consultation of operations debited and credited in their account(s); 6.1.3. Consultation of the balance(s) of their account(s); 6.1.4. Consultation of the daily account statement, in XML ISO 20022 format (camt.053 - BankToCustomerStatement), with the possibility of downloading it.

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 Topics Payment Systems :: Large Value Payment System .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

7. Functions of the Bank of Portugal 7.1. The Bank of Portugal, as co-manager of the participant's MCA in the service, has its own connection to the centralized liquidity management service and may, on behalf of the participant, perform the following activities: 7.1.1. Obtain information regarding the account(s); 7.1.2. Receive credit and debit movements in the account(s) and send debit movements in the account(s). 7.2. The Bank of Portugal will have, regarding the MCA co-managed by it, the same rights and privileges that the participant has regarding their own MCA in the centralized liquidity management service.

8. Schedule and processing hours for operations 8.1. The service calendar is the same as the TARGET services calendar, so all TARGET business days are considered working days: Monday to Friday, except for closing days established in Instruction No. 16/2022, of October 17, and published on the Bank of Portugal website (www.bportugal.pt/). 8.2. The insertion of liquidity transfers may be carried out between 8:00 and 17:00, Portugal mainland time, on TARGET business days (except in exceptional cases, where the Bank of Portugal will communicate the applicable schedule). 8.3. Participants in the service should bear in mind that the connection between SLIM and the systems with which it interacts may affect the execution of liquidity transfers.

9. Procedures between the Bank of Portugal and the participant in contingency situations 9.1. The Bank of Portugal may process operations on behalf of and at the request of the participant, in case of impossibility of access to SLIM, the BPnet portal, and also in unexpected contingency situations, provided they are duly justified. 9.2. Payment processing in contingency situations will be ensured between 9:30 and 16:00, Portugal mainland time, except in exceptional cases, where the Bank of Portugal will communicate the applicable schedule. These operations will be processed manually, on a first-come, first-served basis and on a best-effort basis. 9.3. Communications between the Bank of Portugal and the participant in contingency situations will be carried out through the following alternative means, in order of priority: 9.3.1. Sending, to the email target@bportugal.pt, the template made available by the Bank of Portugal for this purpose, duly completed and digitally authenticated by the persons responsible for account movements, with telephone validation by the persons responsible for account management;

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 Topics Payment Systems :: Large Value Payment System .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

9.3.2. Hand delivery of the template made available by the Bank of Portugal for this purpose, duly completed and signed by the person with powers to perform the act.

10. Duties of participants in the service 10.1. Participants are obliged to: a) Comply with the provisions of this Instruction and abstain from actions that may jeopardize the integrity and security of the systems underlying the service in question; b) Respond, in accordance with the law, for damages caused to the Bank of Portugal by acts or omissions that are inconsistent with the rules emanating from this Instruction. 10.2. Without prejudice to the provisions of Instruction No. 21/2020, of July 15, participants are responsible for keeping information regarding their respective interlocutors on the BPnet portal duly updated and for maintaining the confidentiality of the access password to the BPnet portal and safeguarding access to SLIM, with any unauthorized use thereof by third parties being their exclusive responsibility. 10.3. Failure to comply with the duties established in this Instruction may jeopardize the maintenance of the service by the Bank of Portugal and lead the Bank of Portugal, after assessing the gravity of the facts attributable to the holders, to unilaterally cancel the service.

11. Cessation of the service 11.1. The participant may request the cessation of the service at any time, by written request sent to the Bank of Portugal in accordance with Articles 16.2 and 16.3 of this Instruction, made with a notice of 14 TARGET business days prior to the planned date of cessation of the service provision by the Bank of Portugal, except in exceptional cases where a shorter notice is authorized. 11.2. The communication referred to in the above point will only be considered valid after confirmation by the Bank of Portugal of receipt of the request. 11.3. The Bank of Portugal reserves the right to cease the provision of the service unilaterally whenever it deems necessary, notably in cases of non-compliance with the duties established in Article 10 of this Instruction.

III – OTHER PROVISIONS

12. Liability 12.1. The Bank of Portugal shall not be liable for any damages or losses resulting from the non-execution or defective execution of operations, in cases where:

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 Topics Payment Systems :: Large Value Payment System .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

a) The participant does not respect the technical and operational requirements defined in this Instruction; b) The damages or losses arise from transmission errors or technical deficiencies, or result from interference or illegal interceptions that occur during the transmission of information in contingency situations; c) The means of information transmission are used improperly or fraudulently by the participant or by third parties; d) Force majeure situations occur, including, notably, measures taken by public authorities, violent actions, breakdowns in companies providing services to the Bank of Portugal, strikes, among others; e) Breakdowns or disruptions in the operation of TARGET services occur. 12.2. Liability for the non-execution or defective execution of credit or debit operations, instructions, or other notifications of the participant attributable to the Bank of Portugal on grounds of negligence is limited to the amount of "lost interest." 12.3. Liability arising from breakdowns or disruptions in the operation of the BPnet portal will be assessed in accordance with the provisions of Instruction No. 21/2020, of July 15.

13. Data protection and prevention of money laundering and terrorist financing Participants, in their capacity as participants in TARGET-PT, are obliged to comply with the provisions of Instruction No. 16/2022, of October 17, relating to data protection and prevention of money laundering and terrorist financing, notably the provisions of Article 29 of Part 1 of its Annex I.

14. Jurisdiction 14.1. The provision of the co-management service by the Bank of Portugal and the execution of operations by the Bank of Portugal as co-manager of participants' MCAs are subject to Portuguese law in general and, in particular, to the provisions of Bank of Portugal Instructions. 14.2. For any dispute, notably regarding the validity, interpretation, and application of this Instruction, as well as the resolution of any conflicts, a voluntary Arbitral Tribunal competent under the applicable law shall be constituted. 14.3. The Tribunal will operate in Lisbon and its object will be defined in the arbitration agreement, unless a restriction is decided by the arbitrators at the request of any of the parties, and the decision will be rendered according to equity and without appeal. 14.4. Nothing limits the right of the Bank of Portugal, at its exclusive discretion, to initiate any actions in any national or foreign jurisdiction.

Instruction No. 3/2023 BO No. 2/2023 Supplement • 2023/02/23 Topics Payment Systems :: Large Value Payment System .................................................................................................................................................................................................. Mod. 99999940/T – 01/14

IV – PRICING

15. Pricing 15.1. The pricing applied by the Bank of Portugal for the provision of the service complies with Article 9(9) and Appendix VI of Annex I of Instruction No. 16/2022, of October 17, and consists of: a) A fixed monthly fee per account, of 25 euros; and b) A fee per message sent/received, of 0.007 euros. 15.2. The defined pricing may be unilaterally revised by the Bank of Portugal whenever justified and will be communicated to participants in the service with a notice of 30 days prior to the date on which it becomes applicable. 15.3. The pricing is applied monthly, with payment of the monthly invoice being made via debit to the participant's MCA. Exceptionally, the Bank of Portugal may agree on an alternative charging mechanism, if there are reasons justifying it. 15.4. In addition to the pricing applicable to the service, each participant must bear the costs of joining the BPnet portal, in accordance with the pricing established in Instruction No. 21/2020, of July 15, in its current version.

V – FINAL PROVISIONS

16. Communications under this Instruction 16.1. Any clarifications regarding the content of this Instruction may be obtained from the Payment Systems Department of the Bank of Portugal, preferably via email: target@bportugal.pt. 16.2. Correspondence that, within the scope of the application of this Instruction, is addressed to the Bank of Portugal must be sent to: Direction of the Payment Systems Department of the Bank of Portugal (Payment Infrastructures Area, Avenida Almirante Reis, 71, 7th floor, 1150 - 012 Lisbon). 16.3. All communications must be drafted in Portuguese or English. 16.4. Participants are bound by all Bank of Portugal forms and documents completed and signed by them, including, without exclusivity, the TARGET-PT participation forms and the service configuration forms.

17. Final provisions This Instruction enters into force on March 20, 2023, and may be amended at any time, after consulting entities considered relevant by the Bank of Portugal, whenever this proves necessary.