Instruction No. 3/2022

Instruction No. 3/2022 BO No. 2/2022 Supplement • 2022/02/17 .................................................................................................................................................................................................. Topics Payment Systems :: Clearing Mod. 99999940/T – 01/14 Index Text of the Instruction Text of the Instruction Subject: Amendment of Instruction No. 8/2018 This Instruction aims to revise the regulation of the Interbank Compensation System (SICOI), contained in Instruction No. 8/2018 of March 22 (BO No. 3/2018, Supplement), in order to introduce the necessary changes to accommodate the accessibility measures of the TARGET Instant Payment Settlement (TIPS) established in Instruction No. 54/2012 of January 15, 2013. Indeed, it results from Instruction No. 54/2012 that, by February 25, 2022, the SICOI technical account that serves as collateral for the financial settlement of payment operations processed in the instant transfer subsystem, hitherto opened in TARGET2-PT, must migrate to TIPS, and participants in the SICOI instant transfer subsystem must indicate, instead of an account in TARGET2, a dedicated TIPS cash account. 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), which confer powers to regulate, supervise and promote the proper functioning of payment systems, the Bank of Portugal alters the articles of Instruction No. 8/2018 – Regulation of the Interbank Compensation System (SICOI), as well as some of its Annexes, determining the following:

1. Paragraphs 15.1, 16.1, 16.2, 16.3, 17.2, 25.1, 27.1 and 42.1 of Instruction No. 8/2018 of March 22 shall have the following wording: «15.1. The Bank of Portugal is the holder of an account in the TARGET Instant Payment Settlement (TIPS), hereinafter referred to as the “SICOI technical account”, which serves as collateral for the financial settlement of payment operations processed in the instant transfer subsystem.» «16.1. Each direct participant must indicate a dedicated TIPS cash account from which it carries out the provisioning of the SICOI technical account.»

Instruction No. 3/2022 BO No. 2/2022 Supplement • 2022/02/17 Topics Payment Systems :: Clearing .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 «16.2. Liquidity transfers between the SICOI technical account and the dedicated TIPS cash account indicated by the direct participant, in accordance with 16.1, are carried out by the Bank of Portugal, directly, or by the processing entity referred to in Title VI, on behalf of the direct participant, in accordance with TIPS rules.» «16.3. In accordance with paragraph 16.2, the direct participant grants the Bank of Portugal, directly, or to the processing entity referred to in Title VI, authorization to debit and credit the dedicated TIPS cash account indicated by it.» «17.2. The balance of the register account of each direct participant is affected in real time by the Bank of Portugal, directly, or by the processing entity referred to in Title VI: a) By liquidity transfers (credits and debits) carried out between the dedicated TIPS cash account indicated by it and the SICOI technical account; and b) By the debits and credits corresponding to the processing of instant transfers involving the direct participant or any of the indirect participants represented by it.» «25.1. The processing entity must comply with the minimum operational service levels defined for the processing of payment operations in each subsystem, as well as for the integration of files in TARGET2-PT and TIPS.» «27.1. Risk mitigation is ensured by the implementation of the following mechanisms/instruments: Risk Mechanisms / instruments Legal Risk SICOI Regulation Subsystem Operation Manuals Service provision contract with the SICOI processing entity Operational Risk Business continuity procedures in contingency situations Communication procedures between the Bank of Portugal (level 2) and the processing entity (level 3) Liquidity Risk SICOI guarantee fund account in TARGET2-PT for subsystems with deferred clearing and settlement Pre-funding of the SICOI technical account for the subsystem with real-time clearing and settlement

Instruction No. 3/2022 BO No. 2/2022 Supplement • 2022/02/17 Topics Payment Systems :: Clearing .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 Credit Risk Maximum limit per operation in subsystems with deferred clearing and settlement Recalculation of clearing balances in subsystems with deferred clearing and settlement Pre-funding of the SICOI technical account for the subsystem with real-time clearing and settlement » «42.1. The fee schedule applied by the Bank of Portugal to SICOI participants is based on the recovery of costs incurred with the management of SICOI and the settlement of operations in TARGET2 and TIPS.» 2. The heading of paragraph 36 of Instruction No. 8/2018 of March 22 shall have the following wording: «Pre-funding of the SICOI technical account for the subsystem with real-time clearing and settlement». 3. Paragraph 2 of “Annex III – Schedule of clearing closures and financial settlement in deferred mode and hours”, of Instruction No. 8/2018 of March 22, shall have the following wording: «2. The hours to which each closure of the clearing sessions and financial settlement of the subsystems with deferred clearing and settlement that make up SICOI must comply are described in the following table:» 4. “Annex VIII - Framework contract for financial guarantee for operations in the instant transfer subsystem”, of Instruction No. 8/2018 of March 22 shall have the following wording: «Annex VIII – Framework contract for financial guarantee for operations in the instant transfer subsystem The settlement of operations processed in the SICOI Instant Transfer Subsystem is based on a risk management model based on the pre-funding of a SICOI technical account, held by the Bank of Portugal and operated directly by the Bank of Portugal or by the processing entity designated by it, referred to in Title VI of the SICOI Regulation (hereinafter, processing entity). This provisioning must be ensured by the Direct Participant in the SICOI Instant Transfer Subsystem (hereinafter, Participant), through the transfer of the funds necessary to carry out operations in the SICOI Instant Transfer Subsystem to the SICOI technical account, thus serving the purpose of guaranteeing the financial settlement of payment operations processed in the SICOI Instant Transfer Subsystem.

Instruction No. 3/2022 BO No. 2/2022 Supplement • 2022/02/17 Topics Payment Systems :: Clearing .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 According to the defined technical operating model, a register account is assigned to each Participant, which details, at all times, the funds available in their favor in the SICOI technical account. The balance available in each Participant's register account is affected, by the Bank of Portugal, directly, or by the processing entity, in real time: i) by liquidity transfers (credits and debits) carried out between the dedicated TIPS cash account indicated by them and the SICOI technical account; and ii) by the debits and credits corresponding to the processing of instant transfers involving the Participant or any of the indirect participants represented by them. In this context, it is considered that the funds transferred to the SICOI technical account by the Participant, or in their favor, are susceptible of constituting financial collateral, in the form of fiduciary sale for security purposes, under the terms and for the purposes of the legal regime established by Decree-Law No. 105/2004 of May 8, in which the Bank of Portugal, as owner of SICOI, is the beneficiary of this guarantee, and the Direct Participant in the SICOI Instant Transfer Subsystem is the provider of the guarantee. The Bank of Portugal, as beneficiary, and the Participant, as provider, are eligible subjects for the application of Decree-Law No. 105/2004, in accordance with Article 3, paragraph 1, letters a), b) and c), sub-letter i), respectively. The funds transferred to the SICOI technical account constitute cash, under the terms and for the purposes of letter a) of Article 5, paragraph 1 of Decree-Law No. 105/20104, and are therefore susceptible of constituting financial collateral, under the terms and for the purposes of the aforementioned legal regime. From the regime applicable to fiduciary sale for security purposes, it follows that, once transferred from the dedicated TIPS cash account indicated by the Participant to the SICOI technical account, the funds may be considered effectively provided, under the terms and for the purposes of paragraph 1 and paragraph 2 of Article 6 of Decree-Law No. 105/2004. The transfer of funds to the SICOI technical account, held by the Bank of Portugal, carried out by the Participant, or in their favor, are registered electronically, and are therefore susceptible of proof by electronic record, under the terms and for the purposes of Article 7 of Decree-Law No. 105/2004. In accordance with Article 6, paragraph 1, letter a) of Decree-Law No. 221/2000, the guarantees constituted within the framework of SICOI in favor of the Bank of Portugal are not affected by the opening of an insolvency process against a Participant, and may be executed by their respective holders, with the remaining balance reverting to the insolvent estate, in accordance with Article 6, paragraph 2 of the same legal instrument. Thus, Participants in the SICOI Instant Transfer Subsystem are subject not only to the rules established in the Bank of Portugal Instruction that establishes the Regulation of SICOI and in the operation manual of the aforementioned subsystem (hereinafter, operation manual), which is an integral part of it, but also to the terms and conditions contained in the clauses of this framework financial guarantee contract in the form of fiduciary sale for security purposes, in accordance with the provisions of Decree-Law No. 105/2004 of May 8. First Clause (Object)

1. The funds credited to the SICOI technical account held by the Bank of Portugal by the Participant, or in their favor, within the scope of the SICOI Instant Transfer Subsystem, constitute the object of this framework financial guarantee contract in the form of fiduciary sale for security purposes, framed by the regime established by Decree-Law No. 105/2004 of May 8.
2. The fiduciary sale for security purposes constituted in accordance with this framework contract aims to guarantee the monetary obligations assumed by the Participant within the scope of its participation in the SICOI Instant Transfer Subsystem. Second Clause (Credit movement of the technical account)
3. The Participant accepts that the Bank of Portugal, or the processing entity, may debit the dedicated TIPS cash account indicated by them and credit the SICOI technical account, in accordance with the provisions of the SICOI Regulation and its operation manual, which is an integral part of it.
4. The ownership of the funds credited to the SICOI technical account by the Participant, or in their favor, transfers to the Bank of Portugal, as collateral, and these funds automatically become part of the object of this framework contract. Third Clause (Debit movement of the technical account)
5. The Participant accepts that the Bank of Portugal, or the processing entity, may debit the SICOI technical account and credit the dedicated TIPS cash account indicated by them, in accordance with the provisions of the SICOI Regulation and its operation manual, which is an integral part of it.
6. The ownership of the funds transferred from the SICOI technical account held by the Bank of Portugal to the dedicated TIPS cash account indicated by the Participant transfers to the Participant with the credit in that account, and at that moment these funds cease to be part of the object of this framework contract. Fourth Clause (Set-off) The Participant recognizes and accepts that the Bank of Portugal's obligation to return the funds alienated fiduciarily as collateral is fulfilled through automatic set-off with the obligations assumed by the Participant within the scope of its participation in the SICOI Instant Transfer Subsystem, which are reflected, at all times, in the Participant's register account, under the terms and conditions provided for in the SICOI Regulation and its operation manual, which is an integral part of it.

Instruction No. 3/2022 BO No. 2/2022 Supplement • 2022/02/17 Topics Payment Systems :: Clearing .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 Fifth Clause (Execution of the guarantee) The Participant recognizes and accepts that the cessation of their participation in the SICOI Instant Transfer Subsystem, as well as their suspension or exclusion from the aforementioned Subsystem, determine the early maturity of the Bank of Portugal's obligation to return the guarantee to the Participant and the fulfillment thereof by set-off in accordance with the previous Clause. Sixth Clause (Term and Termination)

1. This framework contract has an indefinite duration, producing effects as long as the Participant's direct participation in the SICOI Instant Transfer Subsystem lasts.
2. This framework contract may be terminated at any time, by notice of termination by registered letter with acknowledgment of receipt, with the notice producing effects thirty business days after its receipt.
3. The Participant recognizes and accepts that the termination of this framework contract determines their exclusion from the SICOI Instant Transfer Subsystem and the early maturity of the Bank of Portugal's obligation to return the guarantee to the Participant and the fulfillment thereof by set-off in accordance with the Fourth Clause. Seventh Clause (Jurisdiction and Applicable Law)
4. Operations carried out under this framework contract are subject to Portuguese law in general, and in particular to the provisions of the Bank of Portugal Instructions.
5. For any dispute, notably regarding the validity, interpretation and application of this framework contract, as well as for the resolution of any conflicts, a voluntary Arbitral Tribunal is competent, to be constituted in accordance with the applicable Law.
6. The Tribunal will operate in Lisbon and its object will be defined in the arbitration agreement, unless there is a restriction that the arbitrators shall decide at the request of any of the parties, and the decision will be rendered according to equity and without appeal.
7. Nothing limits the right of the Bank of Portugal, at its exclusive discretion, to bring any actions in any national or foreign jurisdiction.»
8. Paragraphs 1.1, 1.2 and 1.3 of “Annex IX - Fee schedules and penalties”, of Instruction No. 8/2018 of March 22, shall have the following wording: «1.1. The fee schedule applied to SICOI participants is based on the recovery of costs incurred by the Bank of Portugal with the management of SICOI and the settlement of operations in TARGET2 and TIPS and does not incorporate the costs of the processing entity and the costs of communication service providers.»

Instruction No. 3/2022 BO No. 2/2022 Supplement • 2022/02/17 Topics Payment Systems :: Clearing .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 «1.2. The SICOI fee schedule is applied monthly to direct participants in the system, with the payment of the monthly invoice and any adjustment relating to the previous year, referred to in point 1.4 of this Annex, being carried out directly by the Bank of Portugal via debit to the respective settlement account. Exceptionally, and if justified reasons are identified, the Bank of Portugal may agree on an alternative collection mechanism with the direct participant. SICOI Fee Schedule Prices (Euros) Monthly participation fee per subsystem or per subsystem aspect 1 per direct participation.............................................................................................. 44.00 per indirect participation .......................................................................................... 11.00 Fee per operation for each clearing balance settled in TARGET2 .......................................... 0.61 for each large-value operation settled in TARGET2 .............................. 0.61 for each operation settled in the instant transfer subsystem ............... 0.0005 1 The direct participant in a given clearing subsystem or subsystem aspect is charged for their own participation and for the participation of each of the indirect participants they represent in each subsystem or subsystem aspect.» «1.3. The part corresponding to the application of the fee per operation aims to recover the costs, incurred by the Bank of Portugal, with the settlement in TARGET2 of clearing balances and large-value operations and operations settled in the instant transfer subsystem.» 6. This amendment to Instruction No. 8/2018 of March 22 – Regulation of the Interbank Compensation System (SICOI) – enters into force on February 25, 2022.