Regulations on the Operation and Management of Payment and Settlement Systems

Enacted: December 27, 2001 (36th Monetary Policy Committee Meeting) Amended: July 18, 2002 (18th Monetary Policy Committee Meeting) Amended: December 24, 2003 (27th Monetary Policy Committee Meeting) Amended: June 24, 2004 (13th Monetary Policy Committee Meeting) Amended: September 9, 2004 (19th Monetary Policy Committee Meeting) Amended: June 22, 2006 (13th Monetary Policy Committee Meeting) Amended: August 24, 2006 (18th Monetary Policy Committee Meeting) Amended: May 22, 2008 (11th Monetary Policy Committee Meeting) Amended: January 22, 2009 (3rd Monetary Policy Committee Meeting) Amended: March 26, 2009 (8th Monetary Policy Committee Meeting) Amended: January 21, 2010 (3rd Monetary Policy Committee Meeting) Amended: February 24, 2011 (6th Monetary Policy Committee Meeting) Amended: December 27, 2012 (25th Monetary Policy Committee Meeting) Amended: November 26, 2015 (22nd Monetary Policy Committee Meeting) Amended: February 25, 2016 (4th Monetary Policy Committee Meeting) Amended: June 23, 2016 (12th Monetary Policy Committee Meeting) Amended: November 24, 2016 (23rd Monetary Policy Committee Meeting) Amended: December 7, 2017 (23rd Monetary Policy Committee Meeting) Amended: December 20, 2018 (24th Monetary Policy Committee Meeting) Amended: April 9, 2020 (8th Monetary Policy Committee Meeting) Amended: June 24, 2020 (14th Monetary Policy Committee Meeting) Amended: September 10, 2020 (20th Monetary Policy Committee Meeting) Amended: July 29, 2021 (15th Monetary Policy Committee Meeting) Amended: October 27, 2022 (20th Monetary Policy Committee Meeting) Amended: January 13, 2023 (1st Monetary Policy Committee Meeting) Amended: April 11, 2023 (7th Monetary Policy Committee Meeting) Amended: July 27, 2023 (14th Monetary Policy Committee Meeting) Amended: June 13, 2024 (11th Monetary Policy Committee Meeting) Amended: August 27, 2026 (16th Monetary Policy Committee Meeting)

Chapter 1 General Provisions

Article 1 (Purpose) These Regulations are intended to stipulate matters necessary for the operation and management of payment and settlement systems in accordance with Articles 28, 62, and 81 of the "Bank of Korea Act" (hereinafter referred to as the "Act").

Article 2 (Definitions) The terms used in these Regulations are defined as follows:

1. "Payment Instrument": All instruments or electronic means other than cash that can be used by the holder or user to transfer or withdraw funds.
2. "Payment and Settlement System": A institutional device that enables the transfer of funds or settlement of financial investment products, consisting of payment instruments, participating institutions, operating organizations, business processing regulations and procedures, and computer systems.
3. "Payment and Settlement System Operating Institution": An institution that mediates the transmission and receipt of payment instrument exchanges or transfer instructions to enable the operation of a payment and settlement system, and performs clearing or settlement of transactions accordingly.
4. "Financial Institution": A financial institution defined in Article 11 of the Act.
5. "Non-resident": A non-resident as defined in Article 3, Paragraph 1, Item 15 of the "Foreign Exchange Transaction Act".

Article 3 (Operation and Management of Payment and Settlement Systems) ① The Bank of Korea aims to ensure the safety and efficiency of payment and settlement systems in performing operation and management tasks.
② The Bank of Korea shall perform surveillance tasks on payment and settlement systems to achieve the goal of Paragraph 1.
③ The Bank of Korea directly operates a large-value payment system that processes fund transfers between participating institutions in real-time to achieve the goal of Paragraph 1, and may establish and operate other payment and settlement systems if necessary. ④ The Bank of Korea shall notify and publish relevant institutions when it establishes or changes major policies related to payment and settlement systems. ⑤ The Bank of Korea shall cooperate with relevant domestic and international institutions and foreign central banks if necessary to achieve the goal of Paragraph 1. ⑥ Payment and settlement system operating institutions shall strive to ensure that the payment and settlement systems they operate are safe and efficient.

Chapter 2 Operation of Payment and Settlement Systems

Article 4 (Establishment and Operation of Payment and Settlement Systems) ① The Bank of Korea establishes and operates the Bank of Korea Financial Network (hereinafter referred to as "KFN") to process fund transfers between participating institutions in real-time through current deposit accounts (for foreign currency fund transfers, foreign currency payable accounts; hereinafter the same) opened by institutions (hereinafter referred to as "KFN Participating Institutions") that have joined the KFN with the Bank of Korea. ② The Bank of Korea establishes and operates the Bank of Korea International Network (hereinafter referred to "KIN") separately from the KFN to support Korean Won settlements for non-residents (excluding natural person non-residents) by processing fund transfers between participating institutions in real-time through current deposit accounts opened by institutions (hereinafter referred to as "KIN Participating Institutions") that have joined the KIN with the Bank of Korea.

Article 5 (Handling of Business)
① The Bank of Korea handles the following business through the KFN or KIN (for Korean Won funds only):

1. Real-time gross settlement of Korean Won and foreign currency funds between KFN participating institutions, between KIN participating institutions, or between deposit accounts opened by the same participating institution with the Bank of Korea.
2. Net settlement of Korean Won and foreign currency funds between participating institutions at specified times.
3. Settlement of Korean Won and foreign currency funds between the Bank of Korea and participating institutions.
   ② The Bank of Korea may, if necessary, use the KFN to handle business other than that specified in Paragraph 1, such as the issuance and redemption of Bank of Korea Stabilization Bonds (hereinafter referred to as "Stabilization Bonds"), trading of government and corporate bonds, issuance and redemption of government bonds, transmission of Bank of Korea loan-related data, and transmission of call transaction mediation-related data.

Article 5-2 (Classification of Target Transactions by Current Deposit Account) When handling business under Article 5, Paragraph 1, the Bank of Korea may classify and process target transactions by current deposit account separately as determined by the Governor of the Bank of Korea (hereinafter referred to as "Governor").

Article 5-3 (Simultaneous Processing for Settlement Fund Savings) When performing real-time gross settlement of Korean Won funds under Article 5, Paragraph 1, Item 1, the Bank of Korea may collect and simultaneously process fund transfer application messages from participating institutions as determined by the Governor.

Article 6 (Qualification for Joining and Conclusion of Agreement) ① Institutions wishing to join the KFN or KIN must have sufficient payment risk management capabilities to meet the Bank of Korea's goal of ensuring the safety and efficiency of payment and settlement systems. ② Institutions wishing to join the KFN or KIN must meet the joining criteria determined by the Governor as target institutions for current deposit transactions with the Bank of Korea. However, institutions wishing to join the KIN must be financial institutions under Article 11 of the Act and must be KFN participating institutions. ③ Institutions wishing to join the KFN or KIN must submit a joining application as determined by the Governor and conclude a KFN or KIN joining agreement with the Bank of Korea. ④ Institutions among those specified in Paragraph 3 wishing to participate in net settlement under Article 5, Paragraph 1, Item 2 must meet all of the following conditions:

1. Have a legal basis to perform fund transfer business under relevant laws and regulations.
2. Be financial institutions under Article 11 of the Act eligible for loans from the Bank of Korea under Article 64 of the Act.
3. Be institutions subject to data submission requests by the Bank of Korea under Articles 87 and 88 of the Act and subject to joint inspections by the Financial Supervisory Service and the Bank of Korea.
4. Meet other criteria determined by the Governor.
   ⑤ Institutions wishing to participate in net settlement must submit a net settlement participation application as determined by the Governor and conclude an agreement on net settlement with the Bank of Korea.

Article 7 (Use of KFN by Payment and Settlement Systems) ① When a payment and settlement system operating institution applies to use the KFN for settlements between KFN participating institutions, the Governor evaluates the safety and efficiency of the payment and settlement system and decides whether to permit it. ② Payment and settlement system operating institutions (hereinafter referred to as "Using Institutions") permitted to use the KFN under Paragraph 1 must conclude a KFN usage agreement with the Bank of Korea as determined by the Governor.

Article 8 (Application and Processing of Net Settlement) ① Using Institutions that have concluded a KFN usage agreement with the Bank of Korea under Article 7, Paragraph 2 may apply to the Bank of Korea for net settlement (including fund adjustment accordingly) between participating institutions of the payment and settlement systems they operate. ② Upon receiving a net settlement application under Paragraph 1, the Bank of Korea processes it at times separately determined by the Governor for each net settlement target transaction. However, this does not apply if the participating institution's current deposit balance is insufficient at the net settlement time.

Article 8-2 (Application and Processing of Linked Settlement) Using Institutions that have concluded a KFN usage agreement with the Bank of Korea under Article 7, Paragraph 2 may apply to the Bank of Korea for real-time gross settlement (hereinafter referred to as "Linked Settlement") between participating institutions of the payment and settlement systems they operate.

Article 8-3 (Effect of Net Settlement and Linked Settlement Data) Net settlement and linked settlement applications by Using Institutions under Articles 8 and 8-2 are deemed to be applications by the respective participating institutions.

Article 9 (Cost Burden) Participating Institutions and Using Institutions bear usage fees for the KFN and KIN and other incidental costs as determined by the Governor.

Article 10 (Transmission and Receipt of Messages) ① Messages transmitted and received between the Bank of Korea, KFN participating institutions, and Using Institutions using the KFN, and messages transmitted and received between the Bank of Korea and KIN participating institutions using the KIN, are deemed received when recorded in the receiving institution's computer self-recording device or displayed on the receiving institution's terminal device. ② Fund transfer, stabilization bond issuance/redemption, government/corporate bond trading, and government bond issuance/redemption application messages transmitted by KFN participating institutions and Using Institutions through the KFN, and fund transfer application messages transmitted by KIN participating institutions through the KIN, are deemed accepted when received by the Bank of Korea. ③ Fund transfer, stabilization bond issuance/redemption, government/corporate bond trading, and government bond issuance/redemption application messages transmitted by KFN participating institutions and Using Institutions through the KFN, and fund transfer application messages transmitted by KIN participating institutions through the KIN, cannot be cancelled once properly received by the Bank of Korea. However, this does not apply to fund transfer application messages transmitted by KFN participating institutions through the KFN that are queued according to the fund transfer processing procedure for deposit accounts determined by the Governor. ④ If the Bank of Korea finds flaws after confirming the validity of received messages, it may refuse processing or take other necessary measures. ⑤ various messages and electronically recorded data transmitted and received between the Bank of Korea, participating institutions, and Using Institutions have the same effect as documents stipulated in all regulations of the Bank of Korea.

Article 11 (Processing Time of Messages)
① The Bank of Korea immediately processes application messages for fund transfers, stabilization bond issuance/redemption, government/corporate bond trading, and government bond issuance/redemption received through the KFN, or fund transfer application messages received through the KIN. However, if the fund transfer processing procedure for deposit accounts of the KFN determined by the Governor applies, it may be queued without immediate processing. ② Despite Paragraph 1, the Governor may separately determine the processing time or method for the following:

1. Application messages that need to be processed collectively, such as call fund transfers through the KFN and treasury fund collection fund settlements.
2. Fund transfer application messages through the KIN.

Article 11-2 (Settlement Finality) When application messages are processed under Article 11 and fund transfers are made, the settlement is final and cannot be cancelled by the Bank of Korea, participating institutions, and Using Institutions.

Article 12 (Standardization) The Bank of Korea may set standards for equipment, communication methods, transmission/receipt messages, and business processing procedures used by participating institutions and Using Institutions to safely and efficiently perform KFN and KIN business.

Article 13 (Obligations of Participating Institutions and Using Institutions) ① Participating Institutions must check transaction results through the KFN or KIN periodically and maintain deposit balances necessary for settlement. ② KFN participating institutions and Using Institutions must reduce credit risk associated with net settlement by converting transactions deemed suitable for gross settlement under Article 5, Paragraph 1, Item 1 into gross settlement methods among fund transfer transactions settled via net settlement under Article 5, Paragraph 1, Item 2. ③ Participating Institutions and Using Institutions must maintain and manage equipment and software necessary for using the KFN or KIN to prevent malfunctions, and prepare measures to ensure business continuity in case of emergencies such as computer system failures, disasters, strikes, terrorism, or business suspension. ④ Participating Institutions and Using Institutions must not disclose information obtained through the KFN or KFN to the outside world, except in cases specifically prescribed by other laws. ⑤ Participating Institutions must respond when the Bank of Korea requests submission of necessary data under Article 81, Paragraph 4 of the Act. ⑥ Participating Institutions must promptly notify the Bank of Korea if there is an application for or decision on rehabilitation procedures under the "Debtor Rehabilitation and Bankruptcy Act," or if there is a bankruptcy application or bankruptcy declaration. ⑦ Using Institutions must consult with the Bank of Korea in advance if changes in regulations, business processing procedures, participating institutions, computer systems, etc., of the payment and settlement systems they operate are deemed to affect the operation of the KFN.

Article 14 (Ensuring Business Continuity)
① The Governor must establish and implement measures to prevent the suspension of KFN and KIN business even in emergencies such as computer system failures, disasters, strikes, or terrorism, and to quickly restore operations if suspended. ② The Governor must guide Participating Institutions and Using Institutions to establish and implement measures to ensure the continuity of payment and settlement business they perform.

Article 15 (Exemption from Liability)
① The Bank of Korea is not liable for damages caused by message transmission failures, business processing delays, or transmission of false or erroneous messages by participating institutions or Using Institutions, unless there is intent or gross negligence. ② The Bank of Korea is not liable for damages caused by violations of these Regulations, detailed rules for implementation, or other relevant regulations or instructions of the Bank of Korea by participating institutions or Using Institutions.

Article 16 (Linkage with Domestic and International Payment and Settlement Systems) ① The Governor may link the KFN with other domestic and international payment and settlement systems.
② When taking measures under Paragraph 1, the Governor shall handle them in accordance with Article 7.
③ Payment and settlement system operating institutions linked to the KFN under Paragraph 1 are deemed Using Institutions under Article 7, Paragraph 2.

Article 16-2 (Linkage with Call Transaction Mediation System) ① The Governor may link the KFN with a system responsible for call transaction mediation (hereinafter referred to as "Call Transaction Mediation System") for the transmission and receipt of call transaction mediation-related data. ② Institutions wishing to link the Call Transaction Mediation System with the KFN under Paragraph 1 must ensure that the linkage does not affect the stable operation of the KFN. ③ Institutions wishing to link the Call Transaction Mediation System with the KFN must conclude a KFN linkage agreement with the Bank of Korea as determined by the Governor.

Article 17 (Operating Hours and Holidays)
① The operating hours of the KFN and KIN are separately determined by the Governor, considering the business hours of the Bank of Korea and participating institutions.
② The KFN and KIN do not operate on the following days. However, the KIN may operate as separately determined by the Governor if the previous day is a business day:

1. Public holidays as defined in the "Regulations on Public Holidays of Government Offices".
2. Saturdays.

Chapter 3 Management of Settlement Risk

Article 18 (Establishment of Settlement Risk Management Measures) To ensure the safety of payment and settlement systems, the Bank of Korea may establish settlement risk management measures for payment and settlement systems as follows:

1. Payment and settlement systems where net settlement is achieved through fund transfers between the KFN, KIN, and current deposit accounts opened with the Bank of Korea: The Bank of Korea establishes and operates appropriate settlement risk management systems in consultation with the payment and settlement system operating institutions and participating institutions.
2. Payment and settlement systems not falling under Item 1: The Bank of Korea recommends that the payment and settlement system operating institutions establish and operate appropriate settlement risk management measures.

Article 19 (Setting of Net Payment Limits) ① Institutions participating in payment and settlement systems where net settlement is achieved through fund transfers between current deposit accounts opened with the Bank of Korea (hereinafter referred to as "Net Settlement Participating Institutions") must set an upper limit for the net unsettled payment amount (hereinafter referred to as "Net Payment Limit") for transactions determined by the Governor among net settlement target transactions where payment instructions (including payment approvals) are transmitted and received in real-time. ② The net unsettled payment amount under Paragraph 1 is the amount obtained by subtracting the cumulative amount of payment instructions received from other net settlement participating institutions from the cumulative amount of payment instructions sent by the respective net settlement participating institutions to other net settlement participating institutions, with the calculation period determined by the Governor.

Article 20 (Request for Adjustment of Net Payment Limit) If the Governor determines that the net payment limit set under Article 19 is too small or too large compared to the institution's past net payment amount scale, etc., the Governor may request the institution to adjust the net payment limit.

Article 21 (Provision of Collateral Securities) ① Net Settlement Participating Institutions must provide securities falling under any of the following items to the Bank of Korea as collateral for settlement execution. However, securities issued by the institution itself among Items 4 through 13 cannot be provided as collateral for net settlement execution.
1. Bonds issued by the government or guaranteed for principal and interest repayment by the government.
2. Bank of Korea Stabilization Bonds.
3. Housing mortgage securities issued by the Korea Housing Finance Corporation.
4. Industrial finance bonds issued by the Korea Industrial Bank.
5. Small and medium enterprise finance bonds issued by the Korea Small and Medium Business Bank.
6. Export-import finance bonds issued by the Korea Export-Import Bank.
7. Special bonds issued by the following corporations:
a. Korea National Railroad Corporation b. Deposit Insurance Corporation
c. Small and Medium Business Innovation Corporation
d. Korea Gas Corporation e. Korea Expressway Corporation f. Korea Water Resources Corporation g. Korea Electric Power Corporation h. Korea Railroad Corporation
i. Korea Land and Housing Corporation
8. Bonds falling under the following items:
a. Agricultural finance bonds under Article 153 of the "Agricultural Cooperative Act" b. Fishery finance bonds under Article 156 of the "Fisheries Cooperative Act"
c. Finance bonds under Article 33, Paragraph 1, Item 1 of the "Banking Act"
9. Local bonds issued under Article 11 of the "Local Finance Act".
10. Bonds issued by public institutions under Article 4 of the "Act on the Operation of Public Institutions" and local public enterprises under the "Local Public Enterprise Act" (excluding bonds under Items 4, 5, 6, 7, and bonds guaranteed for principal and interest repayment by the government).
11. Dual repayment claim bonds under the "Act on the Issuance of Dual Repayment Claim Bonds".
12. Corporate bonds issued under Article 469 of the "Commercial Act".
13. Securities temporarily determined by the Governor in emergencies.
② For Items 3 through 8, 10, 11, and 12 of Paragraph 1, securities are limited to those that have obtained a credit rating of AA- or higher from at least one credit rating agency under the "Capital Markets and Financial Investment Services Act" (if credit ratings are obtained from two or more agencies, the securities with the lowest rating among them must be AA- or higher). ③ The amount of collateral securities to be provided under Paragraph 1 is as follows. However, until July 31, 2025, the amount of collateral securities according to the ratio in the <Appendix Table> is provided.
1. 100% of the limit for net payment limit target transactions.
2. 100% of the average exchange net payment amount at each net settlement time during the period determined by the Governor for net settlement target transactions not subject to net payment limits.
④ To adequately respond to net settlement risk, the Bank of Korea manages collateral securities under Item 1 and Item 2 of Paragraph 1 as Group 1, and collateral securities under Items 3 through 13 of Paragraph 1 as Group 2. However, bonds guaranteed for principal and interest repayment by the government among collateral securities under Items 3 through 13 of Paragraph 1 are managed as Group 1. ⑤ Despite Paragraph 3, bill exchange (transactions excluding those where payment instructions are transmitted and received in real-time) among net settlement target transactions is excluded from the collateral securities provision target, and the Governor may temporarily defer the provision of collateral securities by the institution for a certain period if unavoidable, such as new participation in net settlement. ⑥ The Governor may determine detailed matters such as the collateral acceptance amount for securities under each item of Paragraph 1, and may adjust the amount of collateral securities provided by each net settlement participating institution calculated under Paragraph 3 within a range of 20% up or down, considering the utilization rate of the institution's net payment limit, etc.

Article 22 (Use and Disposal of Collateral Securities for Loans) ① If a net settlement participating institution fails to execute settlement for net settlement target transactions for which collateral was provided under Article 21, the Governor may use or dispose of collateral securities belonging to Group 1 and Group 2 under Article 21, Paragraph 4 received from the institution as collateral for loans to the institution, for the execution of settlement of transactions with the same net settlement time. ② The disposal of collateral securities under Paragraph 1 shall be at market price, with the disposal method and timing determined by the Governor considering financial market conditions.

Article 23 (Joint Sharing of Settlement Shortfall Funds) ① Even if measures under Article 22 are taken, if the settlement fund shortfall is not resolved, other net settlement participating institutions jointly share the shortfall. However, bill exchange (transactions excluding those where payment instructions are transmitted and received in real-time) among net settlement target transactions is excluded from the joint sharing target. ② The share of settlement shortfall funds by net settlement participating institutions under Paragraph 1 is calculated based on the ratio of the amount of collateral securities to be provided under Article 21 for the execution of settlement of transactions with the same net settlement time. ③ Article 22 applies mutatis mutandis to net settlement participating institutions that cannot pay the share under Paragraph 1. ④ Even if measures under Paragraph 3 are taken, if there is an unpaid share, the remaining net settlement participating institutions re-share the unpaid share based on the ratio under Paragraph 2.

Article 24 (Repayment of Shares) Net settlement participating institutions that failed to execute net settlement must repay other net settlement participating institutions that paid shares under Article 23, adding interest calculated by applying the highest interest rate among the Bank of Korea's financial institution lending business rates to the share amount.

Article 25 (Agency for Net Settlement)
① Net settlement participating institutions may, as determined by the Bank of Korea, act as an agent for net settlement for other KFN participating institutions through their Bank of Korea current deposit accounts.
② Net settlement participating institutions acting as agents for net settlement under Paragraph 1 (hereinafter referred to as "Net Settlement Agency Banks") must execute net settlement according to these Regulations by combining the net settlement funds of the KFN participating institutions (hereinafter referred to as "Net Settlement Entrusted Institutions") that entrusted net settlement to them. ③ Institutions wishing to become Net Settlement Entrusted Institutions under Paragraph 2 must meet all of the following conditions:

1. Have a legal basis to perform fund transfer business under relevant laws and regulations.
2. Be institutions subject to data submission requests by the Bank of Korea under relevant laws and regulations and subject to joint inspections by the Financial Supervisory Service and the Bank of Korea.
3. Be KFN participating institutions meeting the KFN joining criteria.
4. Meet other criteria determined by the Governor.

Article 26 (Application for Agency for Net Settlement) ① Net settlement participating institutions wishing to act as agents for net settlement under Article 25 must apply for agency for net settlement as determined by the Governor and conclude an agreement on agency for net settlement with the Bank of Korea. ② The Governor may determine approval criteria for applications under Paragraph 1 to ensure the safety and efficiency of payment and settlement systems.

Article 27 (Management of Net Payment Limit for Net Settlement Entrusted Institutions) Article 19 and Article 20 apply mutatis mutandis to the management of net payment limits for Net Settlement Entrusted Institutions.

Article 28 (Management of Collateral Securities Related to Agency for Net Settlement) ① If Net Settlement Agency Banks provide collateral securities under Article 21 to the Bank of Korea, they must include the portion for Net Settlement Entrusted Institutions. In this case, the calculation of the amount of collateral securities to be provided for the Net Settlement Entrusted Institutions portion follows Article 21. ② Net Settlement Entrusted Institutions must provide collateral securities to Net Settlement Agency Banks as collateral for settlement execution in an amount specified in the net settlement agency contract concluded with the Net Settlement Agency Banks, exceeding the net settlement agency limit.

Article 29 (Joint Sharing by Net Settlement Agency Banks, etc.) ① If Net Settlement Agency Banks jointly share settlement shortfall funds under Article 23, their share is calculated based on the amount of collateral securities provided calculated under Article 28, Paragraph 1. ② Article 24 applies mutatis mutandis when Net Settlement Agency Banks receive repayment for shares provided under Paragraph 1.

Article 30 (Notification by Net Settlement Agency Banks) If a situation determined by the Governor occurs regarding the payment risk management of Net Settlement Entrusted Institutions, Net Settlement Agency Banks must promptly notify the Bank of Korea.

Article 31 (Ensuring Safety of Agency for Net Settlement Business) The Bank of Korea may request Net Settlement Agency Banks and Net Settlement Entrusted Institutions to take measures to reduce payment risk if deemed necessary to ensure the safety of agency for net settlement business.

Article 32 (Permission for Direct Participation in Net Settlement by Net Settlement Entrusted Institutions) ① The Governor may, despite Article 6, Paragraph 4, temporarily permit relevant Net Settlement Entrusted Institutions to conclude agreements on net settlement under Article 6, Paragraph 5 with the Bank of Korea and directly participate in net settlement through their Bank of Korea current deposit accounts if there are or are likely to be reasons making it difficult for Net Settlement Agency Banks to act as agents for net settlement. ② In the case of Paragraph 1, the respective Net Settlement Entrusted Institutions are deemed Net Settlement Participating Institutions. However, the respective institutions must provide collateral securities under Article 21, Paragraph 1 main text to the Bank of Korea as collateral for settlement execution in an amount specified in Article 28, Paragraph 2, and Articles 23 and 24 do not apply to the respective institutions.

Chapter 4 Surveillance of Payment and Settlement Systems

Article 33 (Content of Surveillance Tasks) Surveillance tasks by the Bank of Korea under Article 3, Paragraph 2 are as follows:

1. Selection and classification of surveillance target payment and settlement systems.
2. Collection and analysis of payment and settlement-related data.
3. Evaluation of safety and efficiency of surveillance target payment and settlement systems.
4. Requests for improvement of surveillance target payment and settlement systems.
5. Measures in emergencies, etc.

Article 34 (Surveillance Target Payment and Settlement Systems) Surveillance targets by the Bank of Korea under Article 3, Paragraph 2 are payment and settlement systems operated by the Bank of Korea and entities other than the Bank of Korea.

Article 35 (Classification of Surveillance Target Payment and Settlement Systems) ① The Bank of Korea classifies payment and settlement systems under Article 34 into important payment and settlement systems and other payment and settlement systems based on settlement scale, nature of settlement, etc. ② Important payment and settlement systems under Paragraph 1 are systems whose failure to operate normally may widely spread shocks to domestic and international financial systems or cause the collapse of financial systems. Payment and settlement systems corresponding to this are as follows:

1. KFN
2. Payment and settlement systems operated by the Korea Financial Data Center, including bill exchange systems, interbank transfer common networks, and electronic finance common networks.
3. Payment systems for institutional investors and conditional inter-institutional sales systems operated by the Korea Depository & Clearing.
4. Payment systems for the stock market and KOSDAQ market operated by the Korea Exchange and Korea Depository & Clearing.
5. Derivatives market payment systems operated by the Korea Exchange.
6. Payment and settlement systems operated by CLS Bank International (hereinafter referred to as "CLS System").
   ③ Other payment and settlement systems under Paragraph 1 are payment and settlement systems under Article 34 that do not fall under important payment and settlement systems under Paragraph 2.

Article 36 (Request for Submission of Data) ① The Bank of Korea may request payment and settlement system operating institutions other than the KFN and KIN to submit the following data under Article 28, Item 11 and Article 81, Paragraph 3 of the Act:

1. Regulations and business processing procedures related to payment and settlement system operation.
2. Data for evaluating payment and settlement systems and compiling statistics.
3. Other payment and settlement-related data deemed necessary by the Governor.
   ② Institutions requested to submit data specified in Paragraph 1 must respond.

Article 37 (Evaluation Criteria)
① The Bank of Korea uses the "Principles for Financial Market Infrastructures" jointly determined by the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO) as evaluation criteria, but must evaluate safety and efficiency considering the characteristics of payment and settlement systems. ② For payment and settlement systems under Article 35, Paragraph 2, Items 3 through 5, the "Recommendations for Securities Settlement Systems" jointly determined by the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO) may be applied as evaluation criteria along with the criteria under Paragraph 1. ③ The Governor may exclude some matters from the criteria under Paragraph 1 and 2 or add other matters deemed necessary for evaluation.

Article 38 (Evaluation Timing)
① The evaluation timing for surveillance target payment and settlement systems is as follows:

1. Important payment and settlement systems: Evaluated regularly. However, if important changes affecting safety and efficiency occur or the Governor deems it necessary, evaluated periodically.
2. Other payment and settlement systems: Evaluated if important changes affecting safety and efficiency occur or if the Governor deems it necessary.
   ② The cycle of regular evaluation for important payment and settlement systems under Paragraph 1, Item 1 is determined by the Governor.

Article 39 (Requests for Improvement)
① If the results of evaluating payment and settlement systems under Articles 37 and 38 do not meet the level determined by the Governor or if the Governor deems it necessary, the Bank of Korea may request the operating institutions or supervisory institutions to improve payment and settlement system operation standards under Article 81, Paragraph 2 of the Act. ② Requests for improvement under Paragraph 1 must go through the deliberation of the Monetary Policy Committee. However, if the content is technical or minor, a report may substitute for deliberation. ③ Payment and settlement system operating institutions requested to improve under Paragraph 1 by the Bank of Korea must take necessary measures and notify the Bank of Korea of the results.

Article 40 (Notification Matters by Payment and Settlement System Operating Institutions) Operating institutions of important payment and settlement systems must promptly notify the Bank of Korea if any of the following occur:

1. Changes in regulations, business processing procedures, participating institutions, computer systems, etc., of the payment and settlement systems they operate are deemed to affect the safety or efficiency of the payment and settlement systems.
2. Emergencies such as computer system failures, disasters, strikes, terrorism, or business suspension of the payment and settlement systems they operate or their participating institutions make it impossible to operate the payment and settlement systems normally.

Article 41 (Measures in Emergencies)
① If the Bank of Korea receives a notification under Article 40, Item 2 or determines that an emergency situation exists, it may recommend that the payment and settlement system operating institution take measures such as temporary changes to business processing procedures or operating hours, or temporary suspension of participation by relevant participating institutions. ② The Governor may, if deemed necessary to smoothly perform the tasks under Paragraph 1, dispatch its staff to payment and settlement system operating institutions and participating institutions to conduct on-site inspections and interviews with relevant persons.

Article 42 (Detailed Surveillance Methods) Specific matters regarding evaluation and surveillance of surveillance target payment and settlement systems are separately determined by the Governor.

Chapter 5 Supplementary Provisions

Article 43 (Sanctions, etc.) The Governor may take measures such as warnings, requests for correction, restriction or suspension of use of the KFN or KIN, or termination of relevant agreements if participating institutions or Using Institutions fall under any of the following:

1. Violations of these Regulations, detailed rules for implementation, or other relevant regulations or instructions of the Bank of Korea.
2. Cases where normal performance of payment and settlement-related business is deemed difficult or impossible due to business suspension, cancellation of permits, dissolution, bankruptcy, or closure.

Article 44 (Report to the Monetary Policy Committee) ① The Governor must submit an annual report on the operation and management status of payment and settlement systems to the Monetary Policy Committee.
② The Governor must promptly report to the Monetary Policy Committee if any of the following occur:

1. Emergencies such as serious computer system failures, disasters, strikes, or terrorism occur, and KFN or KIN business under Article 5, Paragraph 1 is not operated normally.
2. Permission to use the KFN for payment and settlement systems is granted under Article 7, Paragraph 1.
3. The KFN is linked with domestic and international payment and settlement systems under Article 16, Paragraph 1.
4. Collateral securities provided by net settlement participating institutions are used or disposed of as loan collateral under Article 22, Paragraph 1.
5. Net settlement participating institutions are required to jointly share settlement shortfall funds under Article 23, Paragraph 1.
6. Measures in emergencies are recommended under Article 41, Paragraph 1.
7. Restriction or suspension of use of the KFN or KIN or termination of relevant agreements is taken under Article 43, Item 1.

Article 45 (Exceptions to Application of Certain Regulations to CLS System) ① Despite Articles 6, 7, 10, 11, and 13 through 15, the Governor may separately determine matters regarding the joining and use of the KFN by CLS Bank.
② Despite Articles 18, 33, and 36 through 41, the Governor may separately determine matters regarding surveillance tasks for the CLS System, considering principles agreed upon between central banks of relevant countries.

Article 46 (Delegation) Detailed matters necessary for the implementation of these Regulations are determined by the Governor.

Supplementary Provisions <2001. 12. 27.>

Article 1 (Effective Date) These Regulations take effect from February 1, 2002.

Article 2 (Repeal of Regulations) Simultaneously with the implementation of these Regulations, the "Bank of Korea Financial Network Operation Regulations" (enacted by the 16th Monetary Policy Committee on July 21, 1994) is repealed.

Article 3 (Transitional Measures)
① Business handled under the "Bank of Korea Financial Network Operation Regulations" and related agreements before the implementation date of these Regulations is deemed handled under these Regulations.
② Payment and settlement system operating institutions that have used the KFN and payment and settlement system operating institutions linked to the KFN before the implementation date of these Regulations are deemed permitted to use the KFN under these Regulations.

Supplementary Provisions <2002. 7. 18.>

Article 1 (Effective Date) These Regulations take effect from August 1, 2002.

Article 2 (Transitional Measures) Despite Article 19, Paragraph 1, Item 2, proviso, 55% is applied from August 1, 2002, to January 31, 2003.

Supplementary Provisions <2003. 12. 24.>

These Regulations take effect from January 1, 2004.

Supplementary Provisions <2004. 6. 24.>

These Regulations take effect from July 1, 2004.

Supplementary Provisions <2004. 9. 9.>

These Regulations take effect from October 1, 2004.

Supplementary Provisions <2006. 6. 22.>

These Regulations take effect from June 22, 2006.

Supplementary Provisions <2006. 8. 24.>

These Regulations take effect from August 24, 2006.

Supplementary Provisions <2008. 5. 22.>

These Regulations take effect from July 30, 2008.

Supplementary Provisions <2009. 1. 22.>

Article 1 (Effective Date) These Regulations take effect from February 4, 2009.

Article 2 (Transitional Measures)
① Agreements on net settlement of the KFN concluded between net settlement participating institutions acting as agents for net settlement and the Bank of Korea before the implementation date of these Regulations are deemed valid. However, applications for agency for net settlement under these Regulations must be made within 6 months from the implementation date of these Regulations. ② Articles 25 through 32 do not apply to net settlement participating institutions acting as agents for net settlement under Paragraph 1 and institutions entrusting net settlement to them until approval for applications under the proviso of Paragraph 1 is granted.

Supplementary Provisions <2009. 3. 26.>

These Regulations take effect from a date determined by the Governor within 2 months from the date of deliberation.
<(Implemented from April 27, 2009, by Payment Policy Team-425 (Governor Approval, April 20, 2009))>

Supplementary Provisions <2010. 1. 21.>

These Regulations take effect from February 1, 2010.

Supplementary Provisions <2011. 2. 24.>

These Regulations take effect from August 1, 2011.

Supplementary Provisions <2012. 12. 27.>

① (Effective Date) These Regulations take effect from December 27, 2012.
② (Relationship with Other Regulations) When "New Bank of Korea Financial Network" is cited in other regulations at the time of implementation of these Regulations, it is deemed cited as "Bank of Korea Financial Network" under these Regulations.

Supplementary Provisions <2015. 11. 26.>

Article 1 (Effective Date) These Regulations take effect from January 1, 2016.

Article 2 (Repeal)

Supplementary Provisions <2016. 2. 25.>

These Regulations take effect from February 26, 2016.

Supplementary Provisions <2016. 6. 23.>

These Regulations take effect from August 1, 2016.

Supplementary Provisions <2016. 11. 24.>

These Regulations take effect from November 24, 2016.

Supplementary Provisions <2017. 12. 7.>

These Regulations take effect from December 7, 2017.

Supplementary Provisions <2018. 12. 20.>

These Regulations take effect from August 1, 2019. However, with the repeal of Article 2 (Validity Period) of Supplementary Provisions <2015. 11. 26>, the continuous allowance of housing mortgage securities issued by the Korea Housing Finance Corporation as eligible collateral for net settlement execution takes effect from December 20, 2018.

Supplementary Provisions <2020. 4. 9.>

Article 1 (Effective Date) These Regulations take effect from April 10, 2020. However, the amended provisions of Article 21, Paragraph 1 and Paragraph 3 take effect from a date determined by the Governor within 2 months from the date of deliberation. <(Article 21, Paragraph 1 and Paragraph 3 implemented from May 25, 2020, by Payment Policy Team-267 (Governor Approval, May 6, 2020))>

Article 2 (Validity Period) The provisions of Article 21, Paragraph 1, Items 7 and 8 remain valid until March 31, 2021.

Supplementary Provisions <2020. 6. 24.>

Article 1 (Effective Date) These Regulations take effect from June 24, 2020.

Article 2 (Transitional Measures) The amended provision of Article 25, Paragraph 3, Item 2 applies from Net Settlement Entrusted Institutions that first conclude net settlement agency contracts after the implementation of these Regulations.

Supplementary Provisions <2020. 9. 10.>

These Regulations take effect from a date determined by the Governor within 4 months from the date of deliberation.
<(Implemented from October 12, 2020, by Payment Policy Team-667 (Governor Approval, October 5, 2020))>

Supplementary Provisions <2021. 7. 29.>

These Regulations take effect from August 1, 2021.

Supplementary Provisions <2022. 10. 27.>

Article 1 (Effective Date) These Regulations take effect from November 1, 2022.

Article 2 (Validity Period) Repeal

Supplementary Provisions <2023. 1. 13.>

These Regulations take effect from January 31, 2023.

Supplementary Provisions <2023. 4. 11.>

These Regulations take effect from April 30, 2023.

Supplementary Provisions <2023. 7. 27.>

These Regulations take effect from July 31, 2023. However, the amended provisions of Article 21, Paragraph 1, Items 9 through 11 take effect from August 31, 2023.

Supplementary Provisions <2024. 6. 13.>

These Regulations take effect from September 2, 2024.

Supplementary Provisions <2026. 8. 27.>

These Regulations take effect from a date determined by the Governor within 4 months from the date of deliberation.
<(Implemented from September 21, 2026, by Payment Settlement Innovation Team-218 (Governor Approval, September 17, 2026))>

<Appendix Table> Ratio of Collateral Securities Provision by Period

Application Period	Ratio of Collateral Securities Provision
From February 1, 2022, to July 31, 2023	70%
From August 1, 2023, to July 31, 2024	80%
From August 1, 2024, to July 31, 2025	90%