Instruction (Archive) No. 8/2023

Instruction No. 8/2023 BO No. 3/2023 Supplement • 2023/03/17 .................................................................................................................................................................................................. Topics Payment Systems :: Clearing Mod. 99999940/T – 01/14 Index Text of the Instruction "Annex II - SICOI Monitoring Committee Text of the Instruction Subject: Amending Instruction No. 8/2018 The TARGET-PT Regulation, the national component of TARGET – Instruction No. 16/2022, reflecting ECB Guideline/Decision (EU) 2022/8 and repealing the TARGET2-PT Regulation (cf. Instruction No. 54/2012, of January 15, 2013), was recently published in the Official Journal of Banco de Portugal No. 10/2022, of October 17, in the context of the launch of the new TARGET services on March 20, 2023. In this framework, it is also necessary to revise the regulation of the Interbank Clearing System (SICOI), contained in Instruction No. 8/2018, of March 22, since SICOI is, in light of the TARGET-PT Regulation, a peripheral system, the rules of which must therefore be adapted in the context of the consolidation of TARGET services. Complementarily, the text of the Instruction was updated, namely with the aim of: i) introducing a new model for the approval and distribution of the operating manuals of the SICOI subsystems; ii) promoting specific changes to the conditions for direct and indirect participation in the System, with a view to its flexibility; and iii) reviewing the SICOI fee schedule. Thus, under the competence attributed to it by Article 14 of its Organic Law and by Article 92 of the General Regime of Credit Institutions and Financial Companies (RGICSF) regarding the regulation, supervision and promotion of the proper functioning of payment systems, Banco de Portugal amends the provisions of Instruction No. 8/2018 – Regulation of the Interbank Clearing System (SICOI) –, determining the following: Instruction No. 8/2018, of March 22, is amended as follows:

1. The expression “TARGET2” is replaced by the expression “TARGET”.
2. The expression “TARGET2-PT” is replaced by the expression “TARGET-PT”.
3. The expressions “peripheral system settlement procedure No. 5 (“simultaneous multilateral settlement”) described in the TARGET2-PT Regulation” and “peripheral system settlement procedure No. 5 of TARGET2 (“simultaneous multilateral settlement”)” are replaced by “peripheral system settlement procedure ‘A’ described in the TARGET2-PT Regulation”.
4. The expression “peripheral system settlement procedure No. 3 (“bilateral settlement”) described in the TARGET2-PT Regulation” is replaced by “peripheral system settlement procedure ‘E’ described in the TARGET2-PT Regulation”.
5. References to “account opened with Banco de Portugal” are replaced by references to “opening of a Main Cash Account (CNP) in TARGET-PT, used exclusively for the establishment of a value reserve”.
6. References to “own settlement account in any of the national systems component of TARGET2”, “settlement account” and “settlement account in TARGET2” are replaced by references to “Dedicated Cash Account for Real-Time Gross Settlement (CND LBTR)” or “CND LBTR”.
7. References to “account in TARGET Instant Payment Settlement (TIPS)” are replaced by references to “peripheral system technical account of the TARGET Instant Payment Settlement Service (TIPS) (technical account SP TIPS) in TARGET-PT for the settlement of instant transfers”.
8. References to “TIPS dedicated cash account” are replaced by references to “Dedicated Cash Account of the TARGET Instant Payment Settlement Service (CND TIPS) for the settlement of instant transfers”.
9. The expression “TIPS dedicated cash account” is replaced by the expression “CND TIPS”.
10. The expression “the rules of TIPS” is replaced by the expression “the TARGET-PT Regulation.”
11. Paragraph 1 of Instruction 8/2018, of March 22, shall have the following wording: "The addressees of this Instruction are participants in the Interbank Clearing System (SICOI) and the processing entity."
12. Paragraph 2.1 of Instruction 8/2018, of March 22, shall have the following wording: "2.1. Banco de Portugal carries out, through SICOI, the clearing and financial settlement of operations processed in the clearing subsystems of: a) Cheques; b) Commercial bills; c) Direct debits; d) Credit transfers; e) Card-based payment operations; f) Instant transfers."
13. Paragraph 2.9 of Instruction No. 8/2018, of March 22, shall have the following wording: "2.9. In the instant transfer clearing subsystem, payment orders expressed in euros, payable by any payment service provider participating in the subsystem, are presented, with immediate availability of funds to the beneficiary."
14. Paragraph 5.1 of Instruction No. 8/2018, of March 22, shall have the following wording: "5.1. For direct participation in any of the clearing subsystems, it is necessary for the participant to indicate a Dedicated Cash Account for Real-Time Gross Settlement (CND LBTR) in any of the national systems component of TARGET."
15. Paragraph 5.2 of Instruction No. 8/2018, of March 22, shall have the following wording: "5.2. Direct participation in any of the clearing and deferred settlement subsystems of SICOI requires: a) The opening of a Main Cash Account (CNP) in TARGET-PT, used exclusively for the establishment of a value reserve, in accordance with the provisions of paragraphs 30 to 33 of this Regulation; b) The establishment of a value reserve, which may be provided by depositing cash in the account referred to in the previous subparagraph, and/or through liquidity granted by Banco de Portugal secured by assets eligible for Eurosystem credit operations, in accordance with the provisions of paragraphs 30 to 33 of this Regulation."
16. Paragraph 5.4 of Instruction No. 8/2018, of March 22, shall have the following wording: "5.4. Banco de Portugal may, in duly justified exceptional circumstances, to ensure the regular functioning of the retail payments market and the SICOI subsystems and to safeguard possible prudential or systemic risks, exempt direct participants from the obligation referred to in paragraph 5.2."
17. Paragraph 6 of Instruction No. 8/2018, of March 22, shall have the following wording: "6. Conditions for indirect participation 6.1. For indirect participation in any of the clearing subsystems, it is necessary that the representation of the applicant be ensured by a direct participant in SICOI. 6.2. The introduction of payment operations in the various SICOI subsystems is, under the terms of paragraph 5 of Article 2-B of Decree-Law No. 221/2000, of September 9, the sole responsibility of the direct participants."
18. A new paragraph 7.1.4 is added to Instruction No. 8/2018, of March 22, with the following wording, renumbering the subsequent points and updating the references contained in paragraph 7: "7.1.4. The approval by Banco de Portugal of the participation request submitted under the terms of paragraph 7.1.1. is also subject to the applicant obtaining a Business Identifier Code (BIC) and an institution code to be provided by Banco de Portugal;"
19. Paragraph 11.1 is added to Instruction No. 8/2018, of March 22, with the following wording, renumbering the subsequent points: "11.1. SICOI is a peripheral system for the purposes of the definition contained in point 3) of Annex III to the TARGET-PT Regulation and fully complies with what is set out in Annex I, 'Part VI - Special Terms and Conditions for Peripheral Systems using Real-Time Gross Settlement Procedures for Peripheral Systems' and 'Part VII - Special Terms and Conditions of Peripheral Systems using the TARGET Instant Payment Settlement Service (TIPS) settlement procedure' of the TARGET-PT Regulation (TIPS)."
20. Paragraph 22.1 of Instruction No. 8/2018, of March 22, shall have the following wording: "22.1. The processing entity shall ensure the receipt and processing of SICOI operations indicated in paragraph 21.1 of this Regulation, under the terms defined in the contract concluded with Banco de Portugal within the framework of SICOI functioning and in compliance with the obligations applicable to SICOI as a peripheral system of TARGET-PT."
21. Paragraph 25.1 of Instruction No. 8/2018, of March 22, shall have the following wording: "25.1. The processing entity must comply with the minimum operational service levels defined for the processing of payment operations in each subsystem, agreed between Banco de Portugal and the processing entity."
22. Subparagraph d) of paragraph 28 of Instruction No. 8/2018, of March 22, shall have the following wording: "d) Periodically (at least annually) with Banco de Portugal, exercises that allow testing (i) the settlement of clearing balances and operations settled directly in TARGET on an individual basis, in case of failure in the connection to TARGET, (ii) the recalculation of clearing balances in all subsystems and (iii) the activation of the SICOI guarantee mechanism."
23. Paragraph 31.3 of Instruction No. 8/2018, of March 22, shall have the following wording: "31.3. Banco de Portugal reviews monthly, with reference to the last TARGET day of the previous month, the amount of the value reserve to be established by each direct participant under the terms of paragraph 31.1., according to the following procedures: a) By the first TARGET day of the month, Banco de Portugal informs each direct participant, via email sent to the previously indicated contacts, of the new amount of the value reserve to be established; b) In the event that it is necessary to increase the amount of the value reserve to be established, this increase must be made by the direct participant by the end of the second TARGET day of the month."
24. Paragraph 32.1 of Instruction No. 8/2018, of March 22, shall have the following wording: "32.1. The value reserve established by the direct participant in cash is registered in the Main Cash Account (CNP) in TARGET-PT, used exclusively for the establishment of a value reserve."
25. Paragraph 41.1 of Instruction No. 8/2018, of March 22, shall have the following wording: "41.1. The deadline for making funds available to the beneficiary is 10 seconds, counted from the exact moment when the ordering participant introduces the operation into the system, and in no case may it exceed the maximum time of 20 seconds."
26. Paragraph 42.1 of Instruction No. 8/2018, of March 22, shall have the following wording: "42.1. The fee schedule to be applied by Banco de Portugal to participants in SICOI is based on the recovery of costs incurred with the management of SICOI and the settlement of operations in TARGET-PT."
27. Paragraph 43 of Instruction No. 8/2018, of March 22, shall have the following wording: "43. Sanctions for non-compliance with the SICOI Regulation The penalties contained in points 2 and 3 of Annex IX do not prejudice the application of fines under the terms provided for in Title XI of the General Regime of Credit Institutions and Financial Companies."
28. Paragraph 46 of Instruction No. 8/2018, of March 22, shall have the following wording: "46. Operating Manuals and Annexes 46.1. The operating manuals of the various SICOI subsystems form an integral part of this Regulation and contain the general, functional and technical specifications relating to the processing of operations in these subsystems. 46.2. The operating manuals of the SICOI subsystems are made available to participants by Banco de Portugal in the Payment Systems Thematic Area of the BPnet portal (www.bportugal.net), up to two months before the date of entry into production of the changes, with email notification sent to the contacts designated for this purpose by each participant. 46.3. Changes to the operating manuals are classified as: i) Minor changes (revisions), when they result in specific changes with little significant impact on the subsystem in question, resulting, inter alia, from small adaptations, clarifications, explanations, correction of omissions or errors, or non-substantial changes to existing functionalities; ii) Major changes (versions), when they result in changes with significant impact on the subsystem in question, resulting, inter alia, from the inclusion of new functionalities, substantial changes to existing functionalities or tariff changes. 46.4. In addition to the operating manuals of the SICOI subsystems, the following annexes are an integral part of this Regulation: a) Annex I - SICOI Governance Model; b) Annex II - SICOI Monitoring Committee; c) Annex III - Calendar of clearing closures and deferred financial settlement and hours; d) Annex IV - Procedures relating to cheque clearing; e) Annex V - Reasons for cheque return; f) Annex VI - Determination of the amount of the value reserve to be established by the direct participant to guarantee its clearing balances in the subsystems with clearing and deferred settlement; g) Annex VII – Framework contract for the opening of credit with guarantee of financial instruments and credit rights in the form of bank loans within the framework of the guarantee fund account mechanism of the Interbank Clearing System in TARGET-PT; h) Annex VIII – Framework financial guarantee contract for operations in the instant transfer subsystem; i) Annex IX – Fee schedule and penalties."
29. Annex I “SICOI Governance Model” of Instruction No. 8/2018, of March 22, shall have the following wording:

"Annex I - SICOI Governance Model Level 1 Board of Directors of Banco de Portugal Level 2 Payment Systems Department of Banco de Portugal Level 3 Processing entity of SICOI operations Level 1 represents the final decision-making instance for all issues related to SICOI and is responsible for safeguarding its public function. Level 2 exercises all competencies that have been delegated to it by Level 1 within the framework of SICOI functioning, namely those relating to the current management of SICOI. Level 3 ensures the receipt and processing of operations submitted by participants and prepares proposals for changes to the functioning of SICOI, in coordination with Level 2 and with the Interbank Working Groups of the Interbank Commission for Payment Systems (CISP).

1. Cost calculation policy and price determination Decides on the structure and value of: − SICOI Fee Schedules; − Interbank Tariffs; − SICOI Fee Schedules charged by the processing entity. Evaluates and submits to the approval of Level 1, proposals for changes to: − SICOI Fee Schedules; − Interbank Tariffs; − SICOI Fee Schedules charged by the processing entity. Prepares proposals for changes to: − Interbank Tariffs; − SICOI Fee Schedules charged by the processing entity. Decides on the measures to be implemented to ensure the correct application of interbank tariffs and SICOI and processing entity fee schedules. Controls and evaluates the correct application of interbank tariffs and SICOI and processing entity fee schedules and, whenever necessary, proposes action measures that ensure their adequacy. Makes available the information necessary for the analysis of the application of interbank tariffs and SICOI fee schedules charged by the processing entity.
2. Service Level Decides on the minimum service levels to be offered by SICOI. Evaluates and submits to the approval of Level 1, proposals for changes to the minimum service levels to be offered by SICOI. Prepares proposals for changes to the minimum service levels to be offered by SICOI. Decides on the measures to be implemented to ensure compliance with the minimum service levels. Controls and evaluates the degree of compliance with the minimum service levels established by Level 1 and, whenever necessary, proposes action measures that ensure their observance. Makes available the information necessary for the analysis of compliance with the minimum service levels of SICOI, including incident reports that affect the operational performance of SICOI.
3. Risk Management Decides on the global risk mitigation mechanisms of SICOI. Evaluates and submits to the approval of Level 1, proposals for changes to the global risk mitigation mechanisms of SICOI. Maintains adequate internal risk mitigation mechanisms (from the perspective of the processing entity). Decides on the measures to be implemented to ensure adequate risk management of SICOI. Controls and evaluates the risks associated with SICOI and the adequacy of the respective implemented mitigation mechanisms and, whenever necessary, proposes action measures that ensure their adequacy. Makes available the information necessary for the analysis of SICOI risks, including information that allows monitoring the evolution of the risk mitigation mechanisms implemented by the processing entity. Be informed of the activation of the SICOI guarantee mechanism. Decides on the activation of the SICOI guarantee mechanism and communicates the activation of the SICOI guarantee mechanism to the processing entity. Ensures the operationalization of the activation of the SICOI guarantee mechanism. Decides on the activation of the clearing balance recalculation mechanism. Evaluates and submits to the approval of Level 1, proposals for the activation of the clearing balance recalculation mechanism. After said approval, communicates the activation of the recalculation mechanism to the participants of the respective subsystem and to the processing entity. Ensures the operationalization of the recalculation of clearing balances.
4. Development Decides on the evolutionary changes of SICOI. Evaluates and submits to the approval of Level 1, proposals for evolutionary changes to SICOI. Prepares proposals for evolutionary changes to SICOI, in coordination with the Interbank Working Groups of the Interbank Commission for Payment Systems (CISP). Decides, by itself or by delegation, on new versions of the operating manuals of the SICOI subsystems (major changes). Submits to the approval of Level 1 new versions of the operating manuals of the SICOI subsystems (major changes). After said approval, disseminates the manuals to participants of the SICOI subsystems. Evaluates and decides on revisions to the operating manuals of the SICOI subsystems (minor changes). Decides on the operating calendar and on the closing and settlement hours of the SICOI subsystems. Evaluates and submits to the approval of Level 1, proposals for changes to the calendar and closing and settlement hours of the subsystems. After said approval, disseminates the changes to participants of the SICOI subsystems. Prepares proposals for changes to the calendar and closing and settlement hours of the SICOI subsystems.
5. Operation Decides on participation requests, changes to the type of participation and cessation of participation. Evaluates and submits to the approval of Level 1, participation requests, changes to the type of participation and cessation of participation and proceeds to their communication to participants. Ensures the operationalization of participation requests, changes to the type of participation and cessation of participation. Decides on the suspension or exclusion of participants. Evaluates and submits to the approval of Level 1, proposals for suspension or exclusion of participants in any subsystem. After said approval, communicates the suspension or exclusion to participants of the respective subsystem. Ensures the operationalization of the suspension or exclusion of participants. Decides on the measures to be implemented to ensure the proper functioning of SICOI. Controls and evaluates the functioning of the system in accordance with the current operating manuals and, whenever necessary, proposes action measures that ensure their adequacy. Ensures technical and operational support to participants, including namely the test activities developed by participants."