28 June 2014
SATURDAY Official Gazette Issue : 29044

REGULATION

From the Central Bank of the Republic of Turkey:

REGULATION ON THE OVERSIGHT OF PAYMENT AND SECURITIES SETTLEMENT SYSTEMS

PART ONE

Purpose, Scope, Basis and Definitions

Purpose

ARTICLE 1 – (1) The purpose of this Regulation is to regulate the procedures and principles regarding the oversight of payment and securities settlement systems.

Scope

ARTICLE 2 – (1) This Regulation covers the procedures and principles regarding the oversight of payment and securities settlement systems; the information and documents to be requested in oversight activities, the oversight of information systems, self-assessment, independent audit, and other matters related to their oversight.

Basis

ARTICLE 3 – (1) This Regulation has been prepared based on the second paragraph of Article 43 of the Central Bank of the Republic of Turkey Law No. 1211 dated 14/1/1970 and the third paragraph of Article 8 and the third paragraph of Article 26 of the Law No. 6493 dated 20/6/2013 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions.

Definitions

ARTICLE 4 – (1) In this Regulation;

a) Bank: The Central Bank of the Republic of Turkey Joint Stock Company,

b) Fund: Banknote, coin, book money or electronic money,

c) Law: The Law No. 6493 dated 20/6/2013 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions,

ç) Participant: The legal entity that has the authority to directly issue transfer orders by participating in the system and is obliged to comply with the system rules,

d) Control: The direct or indirect possession of the majority of the capital of a legal entity, without seeking the condition of owning at least fifty-one percent, or, without owning this majority, the possession of privileged shares or, based on agreements made with other shareholders, the disposal of the majority of voting rights, or the possession of the authority to appoint or dismiss the majority of the members of the board of directors required for a decision, in any manner,

e) Securities settlement system: The structure that provides the necessary infrastructure for clearing and settlement transactions to ensure the realization of securities transfers arising from transfer orders between three or more participants and

that has common rules,

f) Central counterparty: The institution that undertakes the completion of transactions by assuming the role of buyer against the seller and seller against the buyer between the parties of financial contracts traded in one or more markets,

g) Settlement: The fulfillment of obligations arising from the transfer of funds or securities between two or more parties,

ğ) Settlement account: The account held at the Bank, a settlement institution or a central counterparty, used for the purpose of safekeeping funds or securities and ensuring the settlement of transactions between participants in the system,

h) Settlement institution: The institution that holds a settlement account with it and can extend credit to the participant for settlement purposes when necessary,

ı) Netting: The mutual offsetting of receivables and debts arising from transfer orders sent and received by a participant and their conversion into a single receivable or debt,

i) Payment system: The structure that provides the necessary infrastructure for clearing and settlement transactions to ensure the realization of fund transfers arising from transfer orders between three or more participants and has common rules,

j) Self-assessment: The work in which the system operator evaluates itself regarding its level of compliance with certain rules and standards,

k) System: Payment system and securities settlement system,

l) System operator: The legal entity responsible for the daily operation of the system and holding the operating license required for the operation of the system,

m) Clearing: The transactions of transferring transfer orders sent to the system, the mutual transmission of these orders, and intermediating the receipt of provision in cases where provision is received before settlement, and in some cases, the netting of these orders,

n) Transfer order:

1) The participant instruction regarding the transfer of a certain amount of funds between participants within the system,

2) The instruction in accordance with the system rules that results in the assumption or fulfillment of the payment obligation,

3) The participant instruction aimed at transferring rights on securities and other capital market instruments within the system in book-entry or other form,

means.

PART TWO

Oversight and Records, Information and Documents to be Requested During Oversight

System oversight and scope of oversight

ARTICLE 5 – (1) The Bank carries out oversight activities to ensure that systems operate uninterruptedly, securely, effectively and efficiently. The Bank is authorized to conduct on-site inspections within the scope of oversight activities.

(2) The activities to be carried out by the Bank within the scope of the first paragraph; cover all parties closely related to the operation of the system, such as the system operator, system participants, settlement institution, other linked systems and external service providers.

(3) The Bank is authorized to classify systems according to their importance level and to determine different standards and principles for systems in different categories within the scope of oversight activities.

(4) In the event that the Bank makes a classification pursuant to the third paragraph, it announces to the public which system is in which category and the principles and standards to be considered in oversight activities for each category.

(5) The objectives aimed to be achieved with oversight activities and the policies to be followed in oversight activities are determined by the Bank and announced to the public.

(6) In the oversight activities of the Bank, regarding the systems;

a) Not acting contrary to the Law and other relevant legislation,

b) The system operator not exceeding the scope of its operating license,

c) The absence of any activity that would endanger the security, soundness and stability of the system,

ç) The continuation of the system's operation not leading to a situation that would threaten the stability of the financial system,

d) The system operator having an effective risk management framework,

e) There being no untrue matter in the notifications made to the Bank,

f) Having sufficient collateral, credit and guarantee mechanisms,

g) The credit, liquidity, market and legal risks of the assets provided to the system by the participants in accordance with Article 23 of the Regulation on the Activities of Payment and Securities Settlement Systems being low,

ğ) Not acting contrary to the system rules,

h) The suitability and applicability of business continuity plans and the regular conduct of the necessary tests regarding implementation,

ı) The information systems and technological infrastructure being adequate and secure,

i) The maintenance of the soundness of the financial structure of the system operator,

pays particular attention to these matters.

(7) The Bank is authorized to also take into consideration other matters it deems necessary within the framework of its oversight activities.

Records, information and documents to be requested in oversight activities

ARTICLE 6 – (1) The Bank is authorized to request all kinds of records, information and documents from the relevant persons, institutions and organizations within the scope of the oversight activities it will carry out.

(2) The system operator is obliged to provide all kinds of information and documents requested by the Bank pursuant to Article 8 of the Law, including those relating to the persons listed in the second paragraph of Article 5 and the system operator's shareholders, subsidiaries, affiliates and jointly controlled partnerships. Sharing information and documents with the Bank pursuant to this paragraph does not constitute a violation of the obligation of confidentiality and secrecy rules contained in the Law and other laws.

(3) The means and frequency with which the information and documents to be requested within the scope of oversight activities will be transmitted to the Bank are determined by the Bank.

PART THREE

Oversight of Information Systems, Self-Assessment and Independent Audit

Oversight of information systems

ARTICLE 7 – (1) The oversight activities carried out regarding the information systems of the system operator constitute an integral part of the Bank's oversight activities.

(2) The Bank may, in cases it deems necessary, request, in addition to its own oversight work, that the information systems of the system operator be audited by independent audit institutions.

(3) The audit activity to be carried out regarding the information systems of the system operator pursuant to the second paragraph shall be performed by independent audit institutions included in the list of Independent Audit Institutions Authorized to Perform Information System Audits in Banks published by the Banking Regulation and Supervision Agency. The Bank is authorized to decide, if it deems necessary, that system operators shall not receive independent audit services from an independent audit institution included in this list pursuant to this article, or that an independent audit institution not included in this list may perform information systems audits at system operators.

(4) The independent audit institution shares the reports it will prepare as a result of the audit activities it carries out pursuant to the second paragraph with the Bank simultaneously with the system operator. The Bank may, if it deems necessary, request additional explanations from the independent audit institution or the system operator on matters relating to the independent audit activity.

(5) The Bank is authorized to issue communiqués, circulars and instructions to determine the principles, procedures and essentials regarding the independent audit activities to be carried out regarding information systems, if it deems necessary.

Self-assessment

ARTICLE 8 – (1) The system operator performs a self-assessment regarding the system at least once a year and shares the self-assessment report it will prepare with the Bank.

(2) The self-assessment work to be carried out pursuant to the first paragraph is carried out for the purpose of measuring the level of compliance with the policies, rules, principles, standards and similar essentials announced by the Bank regarding the systems.

(3) The self-assessment to be performed by the system operator constitutes input for the oversight activities to be carried out by the Bank, but it is not binding in terms of the Bank's assessments regarding the system.

(4) The Bank is authorized to determine the procedures and essentials regarding the self-assessment work to be carried out by the system operator pursuant to this article.

Independent audit

ARTICLE 9 – (1) The financial audit of the system operator shall be performed by independent audit institutions included in the list of Independent Audit Institutions Authorized to Perform Financial Audits in Banks published by the Banking Regulation and Supervision Agency and shall be reported at least once a year. The Bank is authorized to decide, if it deems necessary, that system operators shall not receive independent audit services from an independent audit institution included in this list pursuant to this article.

(2) The independent audit institution shares the reports it will prepare as a result of the audit work it carries out with the Bank simultaneously with the system operator. The Bank may, if it deems necessary, request additional explanations from the independent audit institution or the system operator on matters relating to the independent audit activity.

(3) A system operator that is subject to independent audit within the scope of the special legislation to which it is subject shall be deemed to have fulfilled its obligation regarding the independent audit within the scope of this article.

(4) In order for the obligation regarding independent audit to be deemed fulfilled within the scope of this Regulation pursuant to the third paragraph, the reports prepared as a result of the independent audit must be shared with the Bank simultaneously with the system operator and other relevant authorities.

(5) If the Bank decides that the independent audit activities carried out pursuant to the third paragraph are insufficient, it may request that additional independent audit activity be carried out on matters it deems necessary.

(6) Independent audit institutions and, if any, persons responsible for internal audit; if during their audits they detect matters that may jeopardize the existence of the system or that indicate that the managers have violated the provisions of the Law and this Regulation or the articles of association, they shall immediately notify the Bank of the situation.

(7) The provisions of this article shall not apply to the systems specified in the third and sixth paragraphs of Article 5 of the Law.

PART FOUR

Cooperation in Supervision Activities

Cooperation in supervision activities

ARTICLE 10 – (1) The relevant officers and personnel of the persons referred to in the second paragraph of Article 6 shall, within the scope of supervision activities, upon request, in order to contribute to supervision activities, including the assignment of employees, provide the necessary support to the Bank's officers, answer verbal and written questions within the prescribed periods and in the requested format, and cooperate.

(2) In the event that the Bank conducts an on-site examination within the scope of the supervision activities it carries out pursuant to Article 5, the institution subject to the on-site examination shall provide the Bank's authorized personnel with a suitable working environment.

Cases requiring precautionary measures and measures to be taken

ARTICLE 11 – (1) In the event that the Bank, as a result of supervision activities, identifies findings that may adversely affect the smooth functioning of the system, it is authorized to determine the measures that the system operator must take and to request the system operator to implement these measures within the period it determines. The Bank may extend this period upon the request of the system operator.

(2) In the event that the Bank, within the scope of supervision activities, identifies the matters in the first paragraph of Article 9 of the Law, it shall apply one or more of the measures set out in the second paragraph of Article 9 of the Law, depending on the severity of the violation.

(3) In the event that the Bank, within the scope of supervision activities, determines that the system operator has acted contrary to the matters set out in the Law, the regulations pertaining to the Law and the decisions taken, and for which no separate criminal sanction is provided in the Law, it shall apply the provisions of Article 27 of the Law in respect of the system operator.

PART FIVE

Miscellaneous and Final Provisions

Implementation principles

ARTICLE 12 – (1) The Bank is authorized to interpret the provisions of this Regulation, to decide on matters not included in this Regulation or on which there is no clarity, also taking into account the general provisions, and to issue communiqués, circulars and instructions in order to regulate and guide the practice relating to supervision activities.

Entry into force

ARTICLE 13 – (1) This Regulation shall enter into force on the date of its publication.

Execution

ARTICLE 14 – (1) The provisions of this Regulation shall be executed by the Governor of the Central Bank of the Republic of Türkiye.