Resolution 070/2001 Approving the High-Value Payment System (SIPAV) Regulation

RESOLUCION DE DIRECTORIO Nº 070/2001
SUBJECT: MONETARY OPERATIONS MANAGEMENT -
APPROVES REGULATION OF THE HIGH-VALUE PAYMENT SYSTEM

HAVING SEEN:
Law 1670 of October 31, 1995.

Law 1864 of June 15, 1998.

The Report from the Monetary Operations Management SIPE No. 005/2001 of June 6, 2001.
The Report from the Legal Affairs Management SANO No. 113/2001 of June 1, 2001.

CONSIDERING:
That Law 1864 modifies Article 3 of Law 1670, empowering the Central Bank of Bolivia (BCB) to formulate general application policies in monetary, exchange, and payment system matters, for the fulfillment of its object.

That subsections a), b), and o) of Article 54 of Law 1670 empower the Board of Directors of the BCB to issue the norms necessary for the fulfillment of its functions, competencies, and powers assigned by law, as responsible for the administration of payment systems among authorized financial entities, with the authority to approve, modify, and interpret the BCB Regulations.

That according to what is established in Report SIPE No. 005/2001 from the Monetary Operations Management, it is necessary to have a normative basis for the implementation of an electronic real-time gross settlement payment system.

That through Report SANO No. 113/2001, the Legal Affairs Management states that it corresponds to the Board of Directors of the Central Bank of Bolivia to consider the approval of the Draft Regulation of the High-Value Payment System (SIPAV).

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

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Article 1.- Create the High-Value Payment System (SIPAV) of the Central Bank of Bolivia whose functioning and operability shall be regulated by its specific Regulation.

Article 2.- Approve the Regulation of the High-Value Payment System (SIPAV) in its 7 chapters and 54 articles, which shall enter into force from the date hereof.

Article 3.- Authorize the General Management to approve and, when appropriate, update the SIPAV User Manual, as well as all operational aspects of this System.

Article 4.- Order the adaptation of the BCB Regulations that contemplate operations related to the SIPAV, whose modifications, insofar as relevant, must be presented for consideration by the Board of Directors by September 30, 2001.

Article 5.- Non-bank financial intermediation entities that as of the date of approval of this Regulation have reserve accounts at the BCB and meet the conditions established in the Legal Reserve Regulation, may be direct participants of the SIPAV. These entities, to adapt and request their entry, will have a period of six months from the start of the System's functioning.

Article 6.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, July 24, 2001

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Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G.

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Juan Medinaceli V. Armando Méndez M.

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ANNEX
REGULATION OF THE HIGH-VALUE PAYMENT SYSTEM (SIPAV)

CHAPTER I
GENERAL PROVISIONS

Article 1 (Object).
This Regulation aims to regulate the functioning and operability of the High-Value Payment System (SIPAV) of the Central Bank of Bolivia (BCB), as well as to establish the rights, obligations, and responsibilities of its administrator and direct participants.

Article 2 (High-Value Payment System).
The High-Value Payment System (SIPAV) is an electronic real-time gross settlement (RTGS) system of the Central Bank of Bolivia, which allows direct participants to send and receive electronic messages, settling the instructed operations one by one and immediately, through the charge to their operating accounts.

Article 3 (Scope of Application).
The norms contained in this Regulation shall apply to the BCB and the direct participants of the SIPAV.

Article 4 (Definitions).
For the purposes of interpretation of this Regulation, the following principles and definitions are established:

1. Principles
   a) Authenticity. Principle that guarantees the correct identification of the origin of an electronic message, ensuring that the identity is true. b) Confidentiality. Principle that ensures that information is accessible only to the authorized person(s) to receive it. c) Integrity. Principle that guarantees that information can only be modified by authorized persons.

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2. Definitions
   a) Digital certificate. Electronic document that certifies that a digital signature belongs to a specific person. b) Collateral. Guarantee for intraday and overnight credits. c) Intraday credit. Credit line that the BCB grants to financial intermediation entities that are direct participants of the SIPAV, which must be paid during the SIPAV operating hours and on the same day it is granted. d) Overnight credit. Credit that the BCB grants to financial intermediation entities that are direct participants of the SIPAV, solely and exclusively for the cancellation of a matured intraday credit. e) Operating accounts. Accounts that direct participants maintain at the BCB to carry out operations through the SIPAV. f) BCB Debits. Debit operations that the BCB exclusively performs on the accounts of financial intermediation entities that are direct participants of the SIPAV. g) Certifying entity. Legal person that issues and administers digital certificates and public keys for message encryption. h) Digital signature. String of characters generated for the validation of messages through a cryptographic method that authenticates both the content of an electronic message and the person sending it. i) Real-Time Gross Settlement (RTGS). Individual settlement of payment orders immediately and in the order in which they are received. j) Private key. An alphanumeric key created through mathematical algorithms that serves to decrypt a series of data that have been created by the public key associated with the private key.

k) Public key. An alphanumeric key created through mathematical algorithms that serves to encrypt a series of data. It is usually created together with a private key.

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l) SIPAV User Manual. Document that describes the processes and procedures to operate in the SIPAV, the minimum computer requirements for a direct participant to be enabled, and the computer security guidelines and procedures of the system. m) Structured communication message. Structured message under a specific format, whose object is the exchange of information between the BCB and direct participants using the SIPAV security system. n) Free communication message. Free-use message without any determined structure, whose object is the exchange of information between the BCB and direct participants using the SIPAV security system. o) Electronic message. Payment and transfer orders and structured communication messages, referring to operations between direct participants, generated, sent, processed, received, stored, or visualized by electronic means. It also includes free communication messages between the BCB and direct participants of the SIPAV. These electronic messages must always be accompanied by a digital signature. p) Special operations. Operations subject to particular conditions of schedule and/or processing. q) Payment order. Electronic message sent through the SIPAV, through which the transfer of funds from the account of one direct participant to the account of another direct participant is instructed. r) Transfer order. Electronic message sent through the SIPAV through which the movement of funds between accounts of the same direct participant is instructed. s) Direct participant. Financial entity that is connected and enabled by the SIPAV Administrator, to carry out operations on its own behalf and on behalf of third parties in the SIPAV. t) Indirect participant. Natural or legal person that carries out operations in the SIPAV through a direct participant.

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u) Originating participant. Direct participant that orders a transfer or fund movement. v) Receiving participant. Direct participant designated as the recipient of an electronic message or a transfer or fund movement. w) Repudiation. Refusal to recognize participation in an operation or communication already carried out. x) Computer security. The protection of information and resources of computer systems, through the establishment and compliance with norms and procedures, and the implementation of necessary software and hardware. y) Fund transfer. Movement of funds generated by a payment order from an operating account of one direct participant to an operating account of another direct participant of the SIPAV. z) Fund movement. Movement of funds generated by a transfer order between two operating accounts belonging to the same direct participant of the SIPAV.

CHAPTER II
ADMINISTRATION OF THE SIPAV

Article 5 (Obligations of the Administrator).
The BCB is the Administrator of the SIPAV with the following obligations:

1. Ensure the availability and operability of the SIPAV during its operating hours.
2. Register the operations carried out through the SIPAV.
3. Process the operations carried out through the SIPAV.

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4. Have contingency procedures defined.
5. Apply computer security procedures, which reasonably ensure the confidentiality, authenticity, and integrity of the information sent and received through the SIPAV.
6. Draft and keep updated the SIPAV User Manual.
7. Make available to each direct participant the information corresponding to all operations they have carried out during the day.
8. Establish adequate internal control systems.

Article 6 (Responsibility of the BCB).
The BCB shall not assume any responsibility for the legality of the origin or final destination of payments made through the SIPAV.

Article 7 (Hours).
The service provision and special operations processing hours, as well as any permanent or temporary modification thereof, shall be timely communicated by the General Management of the BCB to the direct participants of the SIPAV. The official time shall be that of the SIPAV server.

Article 8 (Tariffs and Commissions).

1. The BCB shall establish a tariff schedule for the SIPAV services. The tariffs shall be approved annually by its Board of Directors and incorporated into the "Table of Commissions and Other Income of the BCB".
2. The BCB shall charge a commission for every debit of matured obligations that it performs on the accounts of direct participants. The collection of these commissions shall be made at the time of performing the debit. This amount shall also be incorporated into the "Table of Commissions and Other Income of the BCB".
3. The BCB shall periodically provide each direct participant with the detail of the amounts owed for tariffs, which shall be automatically debited by the BCB.

Article 9 (Certifying Entity).
For the purposes of the SIPAV, the BCB is the certifying entity of the digital signatures of the direct participants.

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CHAPTER III
DIRECT PARTICIPANTS

Article 10 (Direct participants).
In addition to the BCB, banking entities and other entities expressly authorized for this effect by the Board of Directors of the BCB may be direct participants of the SIPAV.

Article 11 (Participation requirements).
Entities holding accounts at the BCB, that meet the requirements to be direct participants of the SIPAV and wish to be enabled as such, must present a written request to the General Management of the BCB in which they declare, under their responsibility, the following aspects:

1. That they know the Regulation and the SIPAV User Manual and commit to its compliance.
2. That they meet the minimum technological requirements to operate in the SIPAV and are in a position to apply the computer security guidelines described in the SIPAV User Manual.
3. That the required technological infrastructure was installed in a technically adequate manner and complying with the current legal regulations.

Article 12 (Tests).
Once the requirements established in the preceding article are met, the BCB shall communicate to the requesting entity the date from which the system operation tests will be carried out.

Article 13 (Enabling).
Once the participation requirements are met and the system operation tests have been satisfactorily completed, the requesting entity shall be enabled through the signing of a participation contract by which it adheres to this Regulation, and accrediting the officials who will be in charge of handling the SIPAV terminal(s) in their institution.

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While participation in the SIPAV is not requested or the participation requirements are not met and the tests are not satisfactory, non-enabled entities must carry out their operations through a direct participant.

Article 14 (Start of operations).
Once the requesting entity has signed the participation contract, the BCB shall communicate the date from which it may start operations in the SIPAV.

Article 15 (Obligations).
The following are the obligations of the direct participants of the SIPAV:

1. Comply with the provisions contained in this Regulation.
2. Know and apply the SIPAV User Manual.
3. Pay the obligations contracted with the BCB for operations carried out, within the established deadlines and hours for this effect.
4. Timely communicate to the BCB the additions and removals of authorized officials to operate in the SIPAV and changes in the assignment of their responsibilities.
5. Timely send to the BCB the information that it requires regarding payment systems.
6. Draft and maintain a record of payment orders and electronic messages sent and received through the SIPAV, for the last 10 years.
7. Immediately inform the SIPAV Administrator of any failure or vulnerability detected in the system.

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8. Have an adequate internal control system that avoids the improper use of the computer infrastructure and access to it by unauthorized persons.
9. Comply with the computer security guidelines established in the SIPAV User Manual.

Article 16 (Responsibility for economic losses).
Direct participants of the SIPAV shall be responsible for economic losses arising from the transgression of the norms contained in this Regulation and in the SIPAV User Manual.

Article 17 (Dispute resolution).
Disputes arising between the BCB and a direct participant of the SIPAV shall be resolved by the instance determined contractually.

Article 18 (Voluntary withdrawal).
Direct participants may request their voluntary withdrawal from the SIPAV through written communication addressed to the BCB at least 30 business days in advance. This fact shall be communicated by the BCB to the other direct participants. If an authorized financial entity for being a direct participant of the SIPAV decides to withdraw voluntarily, it must carry out its operations through a direct participant.

Article 19 (Exclusion).
Direct participants who improperly use the system, carry out or attempt to carry out unauthorized operations, and expose other participants or the BCB to unnecessary risks, may be temporarily suspended by the General Management of the BCB or permanently excluded by its Board of Directors.

CHAPTER IV
OPERATIONS

Article 20 (Operating accounts in the SIPAV).
The operating accounts in the SIPAV shall be the following:

1. "Current and reserve account in national currency"
2. "Current and reserve account in foreign currency"
3. "Current and reserve account in national currency with value maintenance"
4. "Provision accounts"

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The Board of Directors of the BCB shall determine the use of other operating accounts in the SIPAV.

Article 21 (Types of operations).
Through the SIPAV, the following three types of operations may be carried out:

1. Fund transfers
2. Fund movements
3. BCB Debits

Except for the BCB, direct participants of the SIPAV may only carry out transfers and movements from their own operating accounts. Payment and transfer orders shall not be processed if they are instructed against an account that does not have sufficient funds.

Article 22 (Types of BCB Debits).
The BCB, through its accounting system and affecting online balances in the SIPAV, may carry out the following debits:

1. For matured obligations of participants with the BCB. These debits shall be carried out during the hours that the BCB communicates according to Article 7 of this Regulation.
2. For operations expressly authorized by direct participants and accepted by the BCB. These debits may be carried out at any time during the day.

Article 23 (Currency of operations).
Fund transfers and movements may be carried out in national currency or in United States dollars. The BCB may automatically buy United States dollars at the prevailing buying exchange rate on the day of the operation. Operations involving the automatic sale of United States dollars by the BCB may not be carried out.

Article 24 (Account charge).
Debits on the operating accounts of a direct participant may be carried out only by its holder under the RTGS modality or by the BCB through its accounting system.

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Article 25 (Types of messages).
The following types of messages shall be sent through the SIPAV:

1. Payment orders.
2. Transfer orders.
3. Structured communication messages.
4. Free communication messages.

Article 26 (Use of funds).
The use of funds in operating accounts shall be as follows:

1. Only from current and reserve accounts in national and foreign currency may transfers be carried out and received.
2. Movement operations between the accounts of each entity may be carried out with the following limitations:
   a) Movement operations to the current and reserve account in foreign currency may not be carried out. b) Movement operations between current and reserve accounts and provision accounts may be carried out in the same currency of the origin and destination accounts or with automatic purchase of United States dollars by the BCB. c) Movement operations from provision accounts to current and reserve accounts may only be carried out during authorized hours.

Article 27 (Generation of notices).
Upon receipt of a payment or transfer order, the SIPAV shall generate a notice to the originating participant communicating the completion of the operation or the rejection of the order.

Article 28 (Query of movements and balances).
During the operating hours of the SIPAV, every direct participant may know the day's movement and the balance of their operating accounts through their SIPAV terminal.

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Article 29 (Cash withdrawals).
Cash fund withdrawals that direct participants need to carry out from their "current and reserve account in national currency" and their "current and reserve account in foreign currency", must be requested to the BCB through the SIPAV, through the office enabled to operate the System.

National currency cash withdrawals that direct participants need to carry out at banks that provide the delegated administration service to the BCB, must be previously notified to the BCB, following the procedures established in the SIPAV User Manual.

The BCB will attend foreign currency cash withdrawals only in the city of La Paz.

Article 30 (Cash deposits).
Deposits made at BCB counters shall be credited immediately to the direct participant's accounts.

Deposits made at banks that provide the delegated administration service to the BCB, must be notified to the BCB by the offices of these banks connected to the SIPAV, within a maximum period of one hour after their receipt for immediate crediting, following the procedures established in the SIPAV User Manual.

The BCB will receive foreign currency cash deposits only in the city of La Paz.

Article 31 (Delegated Administrators of the BCB).
Banks that provide the delegated administration service to the BCB will operate in the SIPAV only through the access point authorized by the BCB to connect with the SIPAV.

Article 32 (Digital signature).
All electronic messages sent through the SIPAV will include the digital signature of the persons responsible for their content and transmission.

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Article 33 (Repudiation).
Direct participants may not repudiate operations carried out of sending and receiving electronic messages, nor the transfer and movement of funds to their operating accounts, nor the BCB debit to the same.

Article 34 (Probative value and legal effects).
The electronic records that the BCB maintains, of all operations initiated and processed through the SIPAV, shall have full probative value and the same legal effects as written files and records.

Article 35 (Completion of the operation).
Once the funds enter the account of the receiving participant, the operation shall be considered definitive and concluded, both from the operational and legal point of view.

Article 36 (Irrevocability).
Payment and transfer orders that give rise to finalized or concluded operations according to the preceding article, as well as structured or free communication messages sent through the SIPAV, may not be revoked. Therefore, the BCB will not accept any request for reversal or cancellation of orders and messages.

Article 37 (Messaging).
The BCB will provide direct participants of the SIPAV with a system of

transmission of messages between the BCB and the direct participants. These messages shall have the same probative value and legal effects as written documents.

Direct participants may not send any type of message to each other via the SIPAV.

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CHAPTER V
INTRADAY CREDIT

Article 38 (Objective).

Intraday credit aims to facilitate payments through the SIPAV without cost to the requesting entity.

Article 39 (Currency of credit).

Intraday credit shall be granted in the currency in which the operations are carried out. Intraday credit shall not be granted when transfers are made from and to the current and reserve account in national currency with value maintenance.

Article 40 (Credit subjects).

Intraday credit may be granted only to financial intermediation entities that are direct participants of the SIPAV and that have the required collateral.

Article 41 (Collateral).

1. The collateral for intraday credit shall consist of a fraction of the first tranche of the entity's RAL Fund, which is a direct participant of the SIPAV, up to the limit determined by the BCB. The BCB's Monetary and Exchange Policy Committee (CPMYC) shall establish the limit for the granting of these intraday credits.

2. To expand the limits of their intraday credit, financial intermediation entities may constitute additional collateral with securities issued by the TGN and the BCB, endorsed in property and deposited at the BCB. The value of this collateral, as well as the maximum amount for the expansion of the intraday credit limit, shall be determined by the BCB's Open Market Operations Committee (COMA).

3. The collateral formed by the legal reserve resources in securities and the additional securities must be constituted in the same currency as the requested intraday credit. For the purpose of determining the maximum intraday credit amount, the interest corresponding to a possible overnight credit shall be deducted from the value of the collateral.

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Article 42 (Request).

Financial intermediation entities that are direct participants of the SIPAV and that do not have sufficient funds in their accounts may request intraday credit at the time of issuing the respective order. Intraday credit shall not be granted for BCB debits.

Article 43 (Rejection).

An intraday credit shall be rejected for the following reasons:

1. When the requested amount exceeds the collateral constituted in accordance with Article 41 of this Regulation.

2. When the direct participant maintains an outstanding overnight credit to be paid.

3. When there are sufficient funds in the current and reserve account of the direct participant to make a payment.

Article 44 (Disbursement).

The disbursement of the intraday credit, required to provide liquidity to an operation, shall be automatically made in the corresponding currency and for the amount required to process the operation, by crediting the current and reserve account of the requesting entity.

Article 45 (Debit).

Intraday credit shall be paid on the same day it is granted, within the established schedule according to Article 7 of this Regulation.

Intraday credit not paid within the period established in the previous paragraph shall result in the partial or total debit by the BCB of the matured obligation and, if applicable, the granting of an overnight credit for the uncovered balance.

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CHAPTER VI
OVERNIGHT CREDIT

Article 46 (Objective).

Overnight credit aims to pay a matured intraday credit and is granted without the need for an express request from the debtor. An entity that maintains a matured intraday credit may not reject the granting of an overnight credit.

Article 47 (Amount and currency).

The amount of the overnight credit shall be equal to the amount of the matured intraday credit and shall be granted in the same currency.

Article 48 (Collateral).

The collateral for overnight credits shall consist of the collateral for the matured intraday credit.

Article 49 (Interest rate).

The interest rate applicable to overnight credit shall be equal to the interest rate applicable to liquidity credits granted with the guarantee of the resources of the second tranche of the RAL Fund plus 200 basis points, as established by the current Legal Reserve Regulation.

If, from the granting of an overnight credit, an entity incurs another overnight credit in less than 30 calendar days, it shall be charged an interest rate equal to the interest rate applicable to liquidity credits granted with the guarantee of the resources of the second tranche of the RAL Fund plus 400 basis points.

Article 50 (Disbursement).

The disbursement of overnight credit shall be carried out once the SIPAV service provision schedule has concluded, by crediting the current and reserve account in the corresponding currency. Simultaneously, said account shall be debited by the BCB for the cancellation of the matured intraday credit.

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Article 51 (Payment).

1. Overnight credits must be paid by 10:00 a.m. on the next business day following the day of their disbursement. If there are weekends or holidays between the disbursement date and the first business day, interest shall be applied to all calendar days.

2. If the financial intermediation entity does not pay the overnight credit within the period fixed in the previous paragraph, the BCB shall debit the matured amount owed from its accounts and, in case of insufficiency, liquidate the collateral.

CHAPTER VII
INFORMATION SECURITY AND CONTINGENCY GUIDELINES

Article 52 (Information Security).

The information security guidelines for the SIPAV operations processing system shall be established by the BCB, ensuring that the principles of confidentiality, integrity, and authenticity are reasonably met.

Article 53 (Contingency system).

If the SIPAV system or access to it is interrupted, the BCB shall notify SIPAV direct participants that operations will be carried out through the alternative contingency system, in accordance with the procedures established in the SIPAV User Manual.

Once the SIPAV computer system is reactivated and the information completely updated, the BCB shall issue a notice to direct participants to resume operations through the SIPAV.

Article 54 (Contingency Equipment).

All direct participants must have the necessary equipment to use alternative processes in contingency cases, in accordance with the requirements determined in the SIPAV User Manual.

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