BANQUE DE LA REPUBLIQUE DU BURUNDI

REGULATION No. 4/2022 OF APRIL 14, 2022 GOVERNING PARTICIPATION IN THE BURUNDI INTEGRATED PAYMENT AND SETTLEMENT SYSTEM (SIPREBU)

APRIL 2022

PRESENTATION NOTE ................................................................................................................... 3
LEGAL BASIS (VISAS) ................................................................................................................................................. 4
CHAPTER I: GENERAL PROVISIONS ................................................................................... 5
- ARTICLE 1 - OBJECT AND SCOPE OF APPLICATION .......................................................... 5
- ARTICLE 2 – PARTICIPANTS ................................................................................................... 5
- ARTICLE 3 – PARTICIPATION ............................................................................................... 5
- ARTICLE 4: CONDITIONS FOR ACCESS TO THE SYSTEM ................................................... 6
- ARTICLE 5 : SETTLEMENT ACCOUNTS ............................................................................. 6
CHAPTER II: OPERATIONS ACCEPTED IN THE SYSTEM ................................................. 7
- ARTICLE 6 – CATEGORIES OF OPERATIONS ....................................................................... 7
- ARTICLE 7 : NEW CATEGORIES OF OPERATIONS ......................................................... 7
- ARTICLE 8 - PRIORITY OF PAYMENT ORDERS .................................................................... 8
- ARTICLE 9 : THE TRADING DAY ...................................................................................... 8
- ARTICLE 10 : IRREVOCABILITY OF PAYMENT ORDERS AND MANAGEMENT OF ERRONEOUSLY EXECUTED ORDERS ................................................................................................................... 9
- ARTICLE 11 : QUEUE MANAGEMENT .............................................................................. 9
- ARTICLE 12 : OPTIMIZATION OF TRANSACTION FLOW ................................................... 9
- ARTICLE 13 : INTRA-DAY FACILITIES .............................................................................. 10
- ARTICLE 14 : SYSTEM MANAGEMENT ............................................................................. 10
- ARTICLE 15 : SECURITY, OVERSIGHT AND GOVERNANCE OF THE SYSTEM ................. 11
- ARTICLE 16 : ROLE OF A PARTICIPANT IN THE SYSTEM ................................................ 11
- ARTICLE 17 : COMPLIANCE WITH OPERATING AND SECURITY RULES ......................... 11
- ARTICLE 18 : LIABILITY .................................................................................................. 12
- ARTICLE 19 : RECIPROCITY OF TRANSACTIONS ............................................................. 12
- ARTICLE 20 : OBLIGATIONS OF PARTICIPANTS TOWARDS CLIENTS ......................... 12
- ARTICLE 21 : ALLOCATION OF FEES .............................................................................. 13
- ARTICLE 22 : CHARGING OF FEES .................................................................................. 13
- ARTICLE 23 : MONETARY SANCTIONS ........................................................................... 13
- ARTICLE 24 : SUSPENSION OF A PARTICIPANT ............................................................. 13
- ARTICLE 25 : EXCLUSION OF A PARTICIPANT .............................................................. 14
- ARTICLE 26 : REVISION OF THIS REGULATION AND/OR ITS ANNEXES ..................... 14
- ARTICLE 27 : ASSIGNMENT OF RIGHTS .............................................................................. 15
- ARTICLE 28 : EXEMPTION FROM LIABILITY ................................................................. 15
- ARTICLE 29 : CLAIMS AND DISPUTES .............................................................................. 16
- ARTICLE 30 : REPEALING PROVISIONS ................................................................. 16
- ARTICLE 31 : ENTRY INTO FORCE .................................................................................. 16
ANNEXES TO THE REGULATION ON PARTICIPATION IN THE PAYMENT AND SETTLEMENT SYSTEM (SIPREBU) ................................................................................................................... 17

The direct participant, possessing a platform, and the hosted indirect participant are individually responsible for their operations and settlements;

3) Sub-participation for an entity not eligible for the SIPREBU system and holding no account therein. It is represented by a direct participant who assumes technical and financial responsibility for its orders in the system. It submits to the Central Bank the participation application form shown in Annex 1 and the representation agreement form shown in Annex 2.

ARTICLE 4 : CONDITIONS FOR ACCESS TO THE SYSTEM

The conditions for access of participants to the system are as follows:

1) Compliance with the provisions of this Regulation, specifically those regarding access conditions set out in Annex 5;

2) Payment of the system participation fees fixed by the Central Bank;

3) For direct participants, technical approval by the Central Bank of their facilities enabling connection to the system is a prerequisite.

ARTICLE 5 : SETTLEMENT ACCOUNTS

Settlement accounts, referred to in Article 2 of this Regulation, are opened by participants in the books of the Central Bank for the management of their entire liquidity.

The settlement account consists of cash specially allocated in the form of central bank money and designated for the execution and guarantee of operations processed within the SIPREBU system. The balance of this account reflects that of the ordinary current account already opened in the accounting books of the Central Bank for any participant.

Operations admitted within the system are recorded irrevocably and unconditionally on settlement accounts after verification of the provision. These accounts, managed in an automated manner, are the sole gateways to the particular services of the system described in this Regulation.

The Central Bank is authorized to charge settlement accounts of participants for all operations admitted within the system and presented by them that comply with technical standards, as well as all amounts due to the Central Bank, in accordance with applicable legal and regulatory texts.

CHAPTER I: GENERAL PROVISIONS

ARTICLE 1 - OBJECT AND SCOPE OF APPLICATION

This Regulation aims to organize the operation and implementation of the payment and settlement system, named the Burundi Integrated Payment and Settlement System (SIPREBU). It applies to the ATS – Automated Transfer System, whose components are the automated clearing system (ACH - Automated Clearing House), including for the automated processing of dematerialized checks, and the real-time gross payment and settlement system (RTGS – Real Time Gross Settlement). It also applies to other payment instruments besides checks.

ARTICLE 2 – PARTICIPANTS

Participants in the system are:

1) The Banque de la République du Burundi;

2) Credit Institutions authorized by the Central Bank of Burundi;

3) The National Postal Service (Régie Nationale des Postes);

4) The national electronic money Switch;

5) Any other financial institution meeting the conditions for participation in the system.

Loss of the above status entails, without condition or prior notice, loss of Participant quality in SIPREBU, as well as the closure of accounts covered by this Regulation, specifically Article 5, followed by liquidation of their balances.

ARTICLE 3 – PARTICIPATION

The participants listed above are obliged to be present or represented in the SIPREBU system, under one of the following forms of participation:

1) Direct Participation for any institution holding a settlement account in the system currency. It is directly connected to it from a platform, and manages itself the issuance of its orders in the system and monitoring of its position. It must possess reliable telecommunications means enabling access to the system. It submits to the BRB the participation application form shown in Annex 1;

2) Indirect Participation for any institution holding a settlement account in the SIPREBU system currency, but accessing it technically via a direct participant or the office platform installed in the Central Bank premises. It submits to the Central Bank the participation application form shown in Annex 1 and the representation agreement form shown in Annex 2.

the other partners, as applicable, before implementing them according to an agreed roadmap. Likewise, participants may submit proposals that may be discussed/validated before implementation.

ARTICLE 8 - PRIORITY OF PAYMENT ORDERS

Each payment order transmitted to the real-time gross settlement module is accompanied by a priority determined by the issuing participant within the priority band allocated to its category.

The priority band of payment orders originating from the system and the Central Bank is higher than that allocated to other participants.

Small-amount payments to be cleared are not accompanied by high priority.

CHAPTER III: PROCESSING OF PAYMENT ORDERS

ARTICLE 9 : THE TRADING DAY

A trading day in the system consists of several periods with specific start and end times, dedicated to processing various types of operations, beginning with an initialization period and ending with a closing period, during which the system prepares and executes operations. These schedules apply to system business days.

The Central Bank registers several day profiles in the system, designated by a name. The standard reference profile is detailed in Annex 7 of this Regulation. During the initialization period, a message is broadcast to all participants informing them of the profile selected for the current day.

The Central Bank may, in exceptional situations, modify the start or end times of one or more periods during a trading day. All participants are then notified via a message transmitted by the system or any other written means, and must immediately take it into account.

CHAPTER II: OPERATIONS ACCEPTED IN THE SYSTEM

ARTICLE 6 – CATEGORIES OF OPERATIONS

The system is configured to execute the following categories of payments:

1) Cash payments, for the account of the ordering institution or on behalf of its clients, for which this institution desires real-time settlement. These payments include amounts above the ceiling from which an order cannot be part of small-amount payments, as well as payment operations with an urgent character;

2) Small-amount operations below or equal to the ceiling, grouped in a dedicated payment order for this category, which are settled as net balances. These operations are:

a) dematerialized check payments accompanied by their images;

b) transfer orders;

c) direct debit orders;

3) Settlement of net balances of the national electronic money Switch;

4) Settlement/delivery of securities exchanges managed in the Central Securities Depository (CSD) at the Central Bank, either for the banks' own account or on behalf of their clients;

5) Orders from participants in the SIPREBU system destined for non-eligible third parties, which are debited in the system and received by the BRB Participant, from where they are transmitted to the current account management system for charging;

6) Operations processed with the Central Bank that pass through the BRB Participant for settlement within the SIPREBU system;

7) Fiduciary withdrawals and deposits across all Central Bank Agencies, following the centralization of liquidity at the national level;

8) Settlement of clearing balances for the payment categories mentioned in point 3 above, and settlement of clearing balances for bank card operations, mobile phone payment operations, and all other authorized electronic payment transactions.

The Central Bank is the sole Participant authorized to issue debit orders for other participants' accounts within the SIPREBU system.

ARTICLE 7 : NEW CATEGORIES OF OPERATIONS

The Central Bank, as operator and ensuring technological oversight of the systems, may create new categories of operations admitted within the system and define their priority level. It consults beforehand the banking sector and

ARTICLE 10 : IRREVOCABILITY OF PAYMENT ORDERS AND MANAGEMENT OF ERRONEOUSLY EXECUTED ORDERS

Orders accepted and settled by the system are irrevocable and cannot be corrected or cancelled by a participant. Nevertheless, a direct participant is authorized to cancel a pending order that has not yet been settled.

In the case of an erroneously sent RTGS operation already settled within the system, the issuance of an MT999 or MT101 message on the same day as the operation's settlement by the issuing direct participant obliges the receiving direct participant to process a return of these erroneously sent funds. The receiving participant must comply as long as the balance of its final client's account permits it. In case of insufficient provision in the final client's account, the receiving participant remains obliged to cooperate in recovering funds unduly received by its client.

All participants are responsible for payment operations processed within the system. They must establish internal control, recovery, and sanction mechanisms against final beneficiaries who use funds unduly credited to their accounts, subject to sanctions that may be imposed by the Central Bank on the defaulting participant.

The Central Bank may decide, on its own initiative, to cancel orders held in the queue in case of an error causing systemic blockage. Orders remaining in the queue until the end of the trading day are rejected by the system. The concerned participants may reissue them later.

ARTICLE 11 : QUEUE MANAGEMENT

The system ensures processing of received payments in accordance with the "first in first out" rule and gives ordering participants the possibility to assign a priority level upon issuance within their reserved priority range. This priority is respected before the arrival order of payments in the system is applied.

A payment order is executed upon its arrival in the system if the settlement account position allows it and there are no payments of equal or higher priority already waiting for settlement. Otherwise, it is queued.

ARTICLE 12 : OPTIMIZATION OF TRANSACTION FLOW

In case of payment blockages in participants' queues, the Central Bank may initiate a systemic unblocking process which has the effect, according to

cases, of modifying priorities or the order of queued payments, or even cancelling some, while informing all participants.

ARTICLE 13 : INTRA-DAY FACILITIES

Generally, to promote transaction fluidity, the Central Bank acts as lender of last resort, solely in local currency. Nevertheless, it may grant intra-day refinancing based on a participant's liquidity needs during the trading day. It sets the conditions applicable to these operations.

A participant may repay facilities at any time during the trading day, as soon as its liquidity position permits it, in which case these facilities do not bear interest. In the absence of a repayment order, the system generates it automatically.

If the intra-day facility is not repaid by day-end, it is automatically converted into an overnight loan to which interest at rates fixed by the Central Bank applies. The latter reserves the right to limit the number of overnight loan renewals.

A participant's inability to repay its intra-day facilities, upon reaching the renewal limit fixed by the Central Bank, results in the definitive transfer to its favor of ownership of securities pledged as collateral up to the amount due.

CHAPTER IV: ROLE OF THE CENTRAL BANK

ARTICLE 14 : SYSTEM MANAGEMENT

The Central Bank ensures system management, notably by:

1) Monitoring the general proper functioning of the system, essentially in terms of transaction fluidity;

2) Monitoring compliance with the system regulation by participants;

3) Organizing the trading day;

4) Managing sensitive phases of this day and taking all preventive and corrective measures it deems necessary;

5) Monitoring systemic blockage cases and triggering resolution processes for blockages;

6) General oversight of system functioning and triggering backup procedures as needed;

7) Continuous adaptation of the system to new needs of the financial market.

ARTICLE 18 : LIABILITY

Participants are held responsible for total or partial non-fulfillment of their obligations arising from their orders, except in cases of force majeure or act of state.

ARTICLE 19 : RECIPROCITY OF TRANSACTIONS

The Participant in the system assumes responsibility for transaction reciprocity within the system. To this end:

1) It verifies, in real time and continuously, the position of its settlement account during the trading period. It must take adequate measures to establish necessary provisions for settling its pending orders, particularly during:

a) establishment of reserves required for settlement/delivery of securities;

b) establishment of reserves required for settlement of net clearing balances;

c) settlement of Central Bank operations.

It reacts within the time limits set and provided in Article 9 of this Regulation;

2) It routes its payment orders to the system within time conditions allowing transaction fluidity;

3) It commits to defining an emergency procedure for sensitive orders relative to the trading day schedule, for example, a loan order to a peer to cover its clearing balance when the distribution hour approaches, or a loan order to a peer to cover end-of-day balance;

4) It establishes the necessary organization, notably by ensuring dedicated system permanence;

5) It implements necessary IT tools for fast, efficient, and secure exchanges with the system;

6) It provides the Central Bank with any information regarding an event likely to impact the system or harm other participants.

ARTICLE 20 : OBLIGATIONS OF PARTICIPANTS TOWARDS CLIENTS

Any participant receiving funds on behalf of a client holding an account in its books, following the collection of a check or receipt of a transfer, commits to crediting its account within a maximum delay of three (3) hours from receipt of funds. The Participant is obliged to return received funds within one (1) business day in case of non-execution.

ARTICLE 15 : SECURITY, OVERSIGHT AND GOVERNANCE OF THE SYSTEM

In designing the system, the Central Bank has implemented advanced access security techniques, thereby preventing fraudulent accesses, regardless of the type of telecommunications network used for exchanges.

It ensures continuous oversight of system access, its performance, transaction fluidity, and liquidity in the system, taking necessary measures in case of blockage.

It monitors operations that may cause systemic risk, such as very large amount transfers and settlement of clearing balances.

It ensures system governance by ensuring compliance with its rules by itself and all participants.

ARTICLE 16 : ROLE OF A PARTICIPANT IN THE SYSTEM

The Central Bank is a Participant in the system. In this capacity, it ensures:

1) Management of monetary policy operations;

2) Management of public debt operations, including settlements on the primary market processed within the system;

3) Custody of public credit instruments, including settlement/delivery for secondary market operations processed within the system;

4) Maintenance of current accounts for the Public Treasury and public institutions. It ensures their representation as lead participant in the system;

5) Representation of all account holders opened in its books, not eligible for the system, pursuant to Article 2 regarding participants.

CHAPTER V: OBLIGATIONS OF THE PARTICIPANT

ARTICLE 17 : COMPLIANCE WITH OPERATING AND SECURITY RULES

The Participant commits to respecting security rules and standards, as well as technical operating rules of the system, as provided in the annexes to this Regulation.

ARTICLE 21 : ALLOCATION OF FEES

The BRB has covered most of the system implementation costs. Participants are obliged to bear, in equal shares, operating fees in the form of an annual charge.

Participants also bear current system operating expenses in the form of a variable portion proportional to the number of operations processed by the system on their behalf.

Service pricing is fixed by the BRB. It is shown in Annex 11 of this Regulation.

ARTICLE 22 : CHARGING OF FEES

The annual charge is levied directly on the Participant's settlement account at the beginning of the year, 10 business days after notification to the participant of the amount of this charge and its levying date.

The variable portion is levied by the BRB on the Participant's settlement account, according to the periodicity and amount fixed in Annex 11 of this Regulation.

CHAPTER VI: CONSERVATORY MEASURES AND SANCTIONS

ARTICLE 23 : MONETARY SANCTIONS

The BRB may impose monetary sanctions against any participant causing prejudice to the system, a direct participant, an indirect participant or a sub-participant;

Furthermore, the BRB, in the c

Regulation No. 4/2022 of April 14, 2022 Governing Participation in the Burundi Integrated Payment and Settlement System (SIPREBU)