CENTRAL BANK OF BOSNIA AND HERZEGOVINA

Operational Rules
of the Gyro Clearing System

Pursuant to Article 18(1) and (3) of the Law on the Central Bank of Bosnia and Herzegovina (BiH Official Gazette Nos. 1/97, 29/02, 8/03, 13/03 and 14/03), the Governor of the Central Bank of Bosnia and Herzegovina issues the following:

1 General Provisions
1.1 Scope of the rules and procedures
1.1.1 The Operational Rules of the Gyro Clearing system (hereinafter the "Operational Rules of GC") elaborate upon the rights, obligations and responsibilities of the Central Bank of Bosnia and Herzegovina (hereinafter the "Central Bank") in relation to the operation of the Gyro Clearing System (hereinafter the "GC"), the terms and conditions for the participation in the GC, the rights, obligations and responsibilities of the GC participants, the activities and procedures concerning clearing and settlement, and the procedures taken in case a GC participant is unable to meet its obligations.
The Operational Rules of GC shall be adopted by the Central Bank. The Central Bank shall provide the rules and procedures to the GC participants. The participants shall make their procedures and bylaws compliant with these Operational Rules of GC.
1.2 GC and Participants
1.2.1 The GC enables the execution of payment orders up to a value determined under a separate decision of the Governing Board of the Central Bank.
1.2.2 GC participants are the Central Bank and commercial banks authorized for payment transactions by the relevant Banking Agency and having an open transaction account with the Central Bank.
1.3 Rights and Responsibilities of the Central Bank
1.3.1 The Central Bank operates the GC and provides to its participants the clearing services arising from the transmitted payment orders in accordance with the principle of multilateral clearing.
The Central Bank ensures that the settlement of claims and obligations as they arise from clearing is carried out in accordance with a separate bylaw of the Central Bank concerning the Real-Time Gross Settlement system.
1.3.2 The Central Bank shall carry out supervision and examination of the procedures of the GC participants and their compliance with the Operational Rules of GC.
The Central Bank shall be responsible for supervision and examination of records and notes maintained by the participants in accordance with the Operational Rules of GC.
The Central Bank may authorize an audit company to carry out the supervision and examination of the participants' compliance referred to under Paragraph 1 of this Point.
1.3.3 All bylaws of the Central Bank relating to the operation of the GC, adopted by the Governing Board, the Governor or authorized officers of the Central Bank, shall be binding for all GC participants.
1.3.4 All knowledge and information obtained by any officers of the Central Bank in the course of their everyday duties relating to the GC shall be treated as business secret. All such information and data shall be considered and treated as confidential, except in the following cases:
a. in case information and data need to be forwarded to legally authorized institutions,
b. in case a Central Bank officer, who has access to such information, is authorized to present it to Central Bank bodies,
c. in cases of regular monthly reporting by commercial banks on the number and value of transactions.
1.3.5 The Central Bank shall provide a remote reserve GC system in Banja Luka, which shall enable uninterrupted and safe operation in case of contingencies.
1.3.6 The Central Bank may restrict settlement of payment orders between participants or it may close down the Gyro Clearing system for either a short or an extended period, if this is unavoidable to safeguard the interests of the Central Bank or participants. The execution of payment orders shall be restricted or halted under such circumstances and the Central Bank shall not be held liable for such halting or restriction.
1.3.7 In case of difficulties with the GC system and settlement of payment orders in the Real-Time Gross Settlement system (hereinafter the "RTGS"), the Central Bank shall have the right to change the GC working hours in order to achieve a safe and successful completion of the clearing and settlement procedures.
1.3.8 The Central Bank shall not be held liable for halted or troubled execution of payment order being a result of network-related difficulties.
1.3.9 The Central Bank shall not be held liable for a failure to execute or for faulty execution of payment orders or for any delay caused by an act of the participants or any third party or an event it could not have expected and could not have prevented.
1.4 Responsibilities of Participants
1.4.1 Each participant shall be responsible for its own computer programs and their compliant interface with the GC system, as well as their operational reliability, so as to ensure that the GC system is not jeopardized.
1.4.2 Each participant shall be responsible for appropriate filling-out and transmission of payment orders and for the authenticity of all payment orders transmitted to the GC system.
1.4.3 Each participant shall be responsible for correct and appropriate acceptance of an authorized payment order received from another GC participant during working hours.
1.4.4 Each participant is required to pay the costs of GC participation services to the Central Bank in accordance with the Central Bank decision of tariff, by debiting its reserve account with the appropriate branch.
1.4.5 Each participant is required to use the GC equipment, owned by the Central Bank, in an appropriate and purposeful manner, serving the needs of participation in payment transactions system related to the GC.
1.4.6 Each participant is required to pay maintenance costs for the equipment and computer programs, referred to under Point 1.4.5, leased by the Central Bank.

2 Participation in the GC
2.1 Technical Requirements for Joining the GC
2.1.1 To join the GC, a participant shall have appropriate technical equipment and programs, on primary and reserve locations. The Central Bank shall determine a minimal configuration, provide programs, test the equipment and programs and include the participant in the GC system.
2.1.2 Each participant shall provide an appropriate space for GC equipment in compliance with all technical and safety requirements.
2.1.3 The Central Bank shall have the right to examine the state of the equipment and programs and the storage conditions of any participant at any time during the GC working hours.
2.2 Authorized Officers
2.2.1 Each participant shall provide an adequate number of employees trained and authorized to carry out payment transactions in the GC system.
2.3 Termination of Participation in the GC at Participant's Convenience
2.3.1 A participant may withdraw from the GC system by filing a request with the Central Bank in writing.
2.4 Exclusion from the GC
2.4.1 The Central Bank may exclude any participant from the system on a temporary or permanent basis if such participant does not meet the rules and conditions of GC participation, or if such participant is in breach of the rules and the Central Bank deems its further participation in the system could affect the operation of the entire GC system.
2.4.2 A participant shall be immediately excluded from the GC system if the authorized agency or a supervisory body has taken measures against it preventing it from further provision of payment transaction services, or in such other cases when such participant is unable to provide payment transaction services.

3 Clearing and Settlement Practices and Procedures
3.1 Payment Order
3.1.1 Payment order transmitted to the GC system shall be denominated in BAM.
3.1.2 Payment orders transmitted to the GC system shall be in the electronic form, in appropriate files, password-protected, filled-in in accordance with the S.W.I.F.T. standards and applicable provisions on domestic payment transactions. The types of payment messages are the following: MT103, MT202 and MT205.
3.2 Acceptance of Orders
3.2.1 Payment orders accepted in the GC system are irrevocable. An order has been accepted in the GC system when the participant receives a confirmation of its acceptance.
3.2.2 A payment order shall be executed on the same day when it was received in the GC system, in the settlement cycle for which it was transmitted.
3.3 Clearing
3.3.1 Clearing of payment orders of all GC participants shall be effected through participants' Gyro account positions.
3.3.2 At each settlement cut-off, the Central Bank shall net all claims in money of individual participants against all obligations in money to other participants, as arise from clearing on the Gyro account positions.
3.4 Settlement
3.4.1 Settlement of net obligations and claims of the GC participants shall be carried out through the RTGS system, in accordance with GC working hours and the Operative Rules of the RTGS system.
3.4.2 Settlement shall be deemed complete when the funds have been transferred to the net creditor settlement account in the RTGS system.
3.5 Repayment of Misrouted Funds
3.5.1 In response to the notification of the Central Bank or a GC participant who has misrouted a payment order, the participant who has received the funds based on the misrouted payment order shall repay the remitted funds:
- prior to the last collection and processing of payment orders on the same day or the first collection on the following day, if the funds have not been recorded on the account of the customer-end beneficiary, or
-immediately upon receipt of funds repaid by the customer on whose account the misrouted funds have already been recorded.
3.6 Business Hours
3.6.1 The GC system is open for participants every working Monday through Friday.
3.6.2 GC holidays are Saturdays and Sundays, January 1 and 2, and May 1, and any other day, as the case may be, as reasonably determined by the Governor in accordance with rules.
3.6.3 Transmission and settlement of payment orders shall be carried out in stages, within periods defined under a separate decision.

4 GC Operation in Case of Breakdown of Regular Network Communication
4.1 In case of a breakdown of regular network communication, the GC will be performed by e-mail.
4.1.1 Only password-protected e-mail communication shall be used.
4.1.2 E-mail operation shall be performed only in the center of the GC system.
4.1.3 In case of a breakdown of regular network communication, any trapped data from GC branches shall be forwarded to participant by e-mail.
4.1.4 E-mail operation shall be performed at a participant's request.
4.1.5 A participant shall request e-mail operation on an agreed fax or telephone number or e-mail address of the Central Bank.
4.1.6 E-mail operation may be established only after the request has been received and confirmed by the Central Bank, by e-mail, telephone or fax.
4.1.7 E-mail operation shall be performed via agreed e-mail addresses between GC participants and the Central Bank.
4.1.8 Following each transmission of payment orders by e-mail, the GC participant shall notify thereof the GC Center by telephone. The Central Bank shall confirm receipt of information by e-mail, telephone or fax. In the event the GC participant does not receive such confirmation within 15 minutes, it must contact the relevant officers in the GC Center.
4.1.9 The GC participant shall receive settlement results by e-mail. The GC participant shall confirm receipt of information by e-mail.
4.1.10 The GC participant shall send a request to discontinue information exchange by e-mail on the agreed fax or phone number or the agreed e-mail address.
4.1.11 Once the GC working day is completed, each information exchange by e-mail established earlier shall be considered completed.
4.1.12 E-mail operation shall be discontinued after normal network communication has been established.

5 Contingency Procedures
5.1 Contingency Measures
5.1.1 In case of contingencies, the Central Bank may take any action necessary to modify, maintain or introduce such measures as will ensure reliable, correct and legal operation of the GC system.
5.2 Meeting of Conditions for Operation on a Reserve Location
5.2.1 The Central Bank and the GC participants shall ensure that the plans for critical circumstances referred to under Point 5.3.1 may be realized, if necessary, on a reserve location.
5.3 Plans for Critical Circumstances
5.3.1 The Central Bank and the GC participants shall prepare plans for critical circumstances, including actions and measures for reliable, correct and legal operation of the GC under critical circumstances.
5.4 Violation of Operational Rules
5.4.1 Failure to ensure operation in a reserve location or failure to prepare plans for critical circumstances, as well as, failure to observe the contingency rules and procedures of the Central Bank, shall be considered a violation of the Operational Rules of GC.

6 Data, notifications and information
6.1 Data, notifications and information provided through the GC system
6.1.1 The GC participants are required to provide to the Central Bank, through the GC network, any data, notifications or information requested by the Central Bank or any data, notifications or information whose provision was made mandatory under a separate bylaw of the Central Bank.

7 Transitional and Final Provisions
7.1 Transitional Provisions
7.1.1 On the day these Operational Rules of GC become applicable, the Rule Book on the Operational Rules Defining of  Bosnia and Herzegovina Gyro Clearing Centers number 01-15/01 dated January 08, 2001 and 01-958/01 dated October 12, 2001 shall cease to have effect.
7.1.2 To acquire the status of a GC participant, in addition to payment transaction authorization, the Operational Rules of GC shall have to be accepted, which the participants shall confirm by signing an acceptance statement on the form number 2 attached hereto and constituting an integral part hereof.
7.1.3 The GC participants who acquired their status under the provisions of the Rule Book on Operational Rules Defining of Bosnia and Herzegovina Gyro Clearing Centers number 01-15/01 dated January 08, 2001, are required to make their bylaws compliant with these Operational Rules of GC and to make the statement referred to under Point 7.1.2 by December 31, 2004; in the event they fail to do so within the specified period, they shall lose their status of a GC participant.
7.2 Final Provisions
7.2.1 These Operational Rules of GC shall enter into force on the day they are issued and shall apply as of January 01, 2005.