Decision on Operational Rules for Gyro Clearing THE CENTRAL BANK OF BOSNIA AND HERZEGOVINA No: UV-122-01-1-23/16 SD Sarajevo, 31 March 2016 Pursuant to Articles 2 par. (3) point c) and 7 par. (1) point b) of the Law on the Central Bank of Bosnia and Herzegovina (“Official Gazette of BH” No: 1/97, 29/02, 13/03, 14/03, 9/05, 76/06 and 32/07) and Article 49 par. (2) of the By-law of the Central Bank of Bosnia and Herzegovina, No: UV-104-01-1-116/15 dated 28 December 2015, the Governing Board of the Central Bank of Bosnia and Herzegovina at its fourth meeting dated 31 March 2016, has passed: DECISION ON DEFINING OPERATIONAL RULES FOR GYRO CLEARING PART ONE- GENERAL PROVISIONS Article 1 (Subject of the Rules and Procedures) (1) The Decision on Defining Operational Rules for the Gyro Clearing (hereinafter: the Rules of GC) applies to 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 (hereinafter: 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 in case a GC participant is unable to meet its obligations. (2) The rules and procedures for GC shall be adopted by the Central Bank. The participants shall make their procedures and legal enactments compliant with the Rules of GC.(3) The Central Bank shall be responsible for the public announcement of Rules of GC and also all of their amendments or supplements. Article 2 (GC and Participants) (1) The GC enables the execution of payment orders up to the value determined by the Governing Board of the Central Bank. (2) GC participants are the Central Bank and commercial banks authorized to perform payment transactions by the relevant Banking Agency and having an open reserve account with the Central Bank. Article 3(Rights and Responsibilities of the Central Bank) (1) The Central Bank manages the GC and provides to the participants the services of payment order settlement in accordance with the principle of multilateral clearing. The Central Bank is responsible for ensuring that the settlements of claims and debts as they arise from clearing should be carried out in accordance with the Decision on the Operational Rules for the RTGS of the Central Bank, which regulates gross settlement in real time. (2) The Central Bank shall carry out control and supervision of the actions of GC participants and their compliance with the rules and procedures of GC. The Central Bank may authorize an audit company to carry out the supervision and control of the participants actions referred to in par. 1 of this Article. (3) All the regulations and enactments of the Central Bank related to the operation of the GC, adopted by the Central Bank, shall be binding for all GC participants. (4) All knowledge and information obtained by any employees of the Central Bank in the course of the performance of their everyday duties relating to the GC shall be treated as business secret, except in the following cases:a) in case it is necessary to forward information and data to the institutions according to the legally defined obligation,b) in case a Central Bank employee, who has data available, is authorized to submit the data to the Central Bank bodies,c) in cases of regular monthly reporting of commercial banks on the number and value of transactions. (5) The Central Bank shall provide a remote back-up GC system in the Main Bank of Republika Srpska of the Central Bank of BH in Banja Luka, which shall enable uninterrupted and safe recovery of operation of GC in case of contingencies. (6) The Central Bank may restrict the settlement of payment orders from GC between participants and it may suspend the operation of the GC for either a short or an extended period, if this is necessary to safeguard the interests of the Central Bank or the participants. The execution of payment orders in such case shall be stopped or restricted and the Central Bank shall not be held liable for such discontinuation or restriction. (7) In case of difficulties with the GC and the 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. (8) The Central Bank shall not be held liable and shall note bear the consequences of and take over any possible damages for suspended or troubled execution of payment orders being a result of network-related difficulties. (9) The Central Bank shall not be held liable for a failure to execute, faulty execution or late execution of payment orders caused by any of the participants, a third party or an event which could not have been anticipated or avoided. Article 4(Responsibility of Participants) (1) Every participant is responsible for its computer applications and their compliance and connection with GC, and also reliability so that GC should not be endangered. (2) The participant is responsible for proper filling and direction of payment orders and the authenticity of all the payment orders directed to GC. (3) The participant is responsible for correct and proper acceptance of the authorized payment order received from another GC participant during the working hours. (4) Every participant is obliged to settle the costs of the Central Bank services for the participation in GC, according to the regulation of the Central Bank on defining fee tariffs. The costs for maintaining the GC application on the servers with participants will be settled in proportion to the number of the participants, according to the financial liabilities of the Central Bank, according to the sent invoice of the application supplier, for the current year. The costs regulated in this paragraph will be settled by debiting reserve accounts of the participants with the appropriate Main Unit of the Central Bank. The participant shall use the equipment for the GC, which is the property of the Central Bank, properly and for the specified purpose, according to the needs of the participation in the payment system related to GC. (5) The participant shall bear the costs of the maintenance of the equipment and computer programs from par. (4) of this Article, made available for use by the Central Bank. PART TWO – PARTICIPATION IN GC Article 5 (Technical Requirements for Joining the GC) (1) To join the GC, the participant shall have appropriate technical equipment and programs, on primary and back-up sites. The Central Bank shall determine the minimal configuration of the equipment, provide programs, test the equipment and programs and include the participant in the GC. (2) The participant shall provide an appropriate space for GC equipment with all the needed technical and safety requirements. (3) The Central Bank shall have the right to control the state of the equipment, programs and the storage conditions of the participant at any time during the working hours. Article 6 (Authorized Persons) Each participant shall provide an adequate number of the employees trained and authorized to carry out payment transactions in the GC. Article 7 (Withdrawal from the GC) The participant may withdraw from the GC by submitting a request to the Central Bank in writing. Article 8 (Exclusion from the GC) (1) The Central Bank may exclude any participant from the GC, on a temporary or permanent basis, if such participant does not meet the rules and conditions of GC participation, if such participant breaches the defined rules or if its further participation could affect the operation of the entire GC. (2) The participant shall be immediately excluded from the GC if, according to the measures of the authorized agency or a supervisory body taken against it, the participant is unable to perform payment transaction services, or in other cases when such participant is unable to perform the payment transaction services. PART THREE – THE WAY AND PROCEDURE OF CLEARING AND SETTLEMENT Article 9 (Payment Order) (1) Payment orders directed to the GC shall be denominated in BAM. (2) Payment orders directed to the GC shall be in the electronic form, in defined files, password protected, filled-in in accordance with the S.W.I.F.T. standards and applicable provisions of the regulations on domestic payment transactions. The types of payment messages are the following: MT103, MT202 and MT205. Article 10 (Acceptance of Payment Orders) A payment order shall be executed on the same day when it is received in the GC system, in the settlement cycle for which it was transmitted. Article 11 (Clearing) (1) The clearing of payment orders of all GC participants shall be effected by stating mutual liabilities of the participants. (2) At the settlement cut-off, the Central Bank presents the net position of each GC participant individually, as a result of the calculation of all the claims and debts, previously stated through the mutual obligations. Article 12 (Settlement) (1) The settlement of net debts and claims of the GC participants shall be carried out through the RTGS system, in accordance with GC working hours and the Decision on the Operational Rules of the RTGS system. (2) Settlement shall be deemed final and irrevocable when the funds of the net creditor have been transferred to the settlement account in the RTGS. Article 13 (Return of Misrouted Funds) At the request 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 return the remitted funds: a) until the last collection and processing of payment orders on the same day or the first collection on the following day as latest, if the funds have not been recorded in the account of the customer-end beneficiary, or b) immediately upon the receipt of the funds returned by the customer in whose account the misrouted funds were recorded. Article 14 (Procedure in Case of Non-performance of the Settlement due to the Lack of Funds in RTGS Account) (1) In case net debts and claims of GC participants cannot be effected due to the lack of the funds in the RTGS account of some of the participants, the orders of other participants in that settlement cut-off shall not be carried out either. (2) In such case, GC participants shall be informed that their orders for that cut-off will not be carried out, and that they should send orders again for extraordinary or regular collection and settlement. (3) The GC participant, which the settlement has not been carried out for, due to the lack of the funds in that participant’s RTGS account, cannot send orders to GC until further notice. Other GC participants may send orders to its benefit. (4) GC participant, which the settlement has not been carried out for, due to the lack of funds in that participant’s RTGS account, may send orders again to GC only after providing sufficient funds in the RTGS account and the Decision of the Central Bank Governor. Article 15 (GC Business Hours) (1) The GC working days during the year are all working days from Monday through Friday. (2) The GC non-working days are Saturdays and Sundays, 1 and 2 January, and 1 and 2 May, and any other day, as determined by the Governor of the Central Bank according to the regulations and justified reasons. (3) Collection and settlement of payment orders shall be carried out in stages, within certain time periods, at 10:00, 13:00 and 15:00 hours. As necessary, the Central Bank may introduce the collection and settlement of payment orders also in other time periods, which it shall notify the GC participants about. Article 16 (GC Operation in Case of Discontinuation of Regular Network Communication) (1) In case of a discontinuation of regular network communication, the GC will be performed by e-mail. Only protected e-mail operation shall be used. E-mail operation shall be performed only in the GC centre. (2) In case of a discontinuation of regular network communication, any trapped data from GC of Main Units of the Central Bank shall be forwarded to the participant by e-mail. (3) E-mail operation shall be performed at a participant's request. A participant shall send a request for the e-mail operation to the earlier agreed fax number, telephone number or e-mail address of the Central Bank. The e-mail operation may be established only after the request has been accepted and confirmed by the Central Bank, by e-mail, telephone or fax. (4) E-mail operation shall be performed via the earlier agreed e-mail addresses between the GC participants and the Central Bank. Following each transmission of payment orders by e-mail, the GC participant shall notify the GC Centre about it by telephone. The Central Bank shall confirm the receipt of data by e-mail, telephone or fax. In the event that the GC participant does not receive such confirmation within 15 minutes, it must contact the relevant officers in the GC Centre. (5) The GC participant shall receive settlement results by e-mail. The GC participant shall confirm the receipt of the information by e-mail. (6) The GC participant shall send a request to discontinue data exchange by e-mail to the earlier agreed fax number, phone number or e-mail address. (7) Once the GC working day ends, each data exchange by e-mail established earlier shall be considered completed. (8) E-mail operation shall be discontinued after regular network communication has been established. PART FOUR – OPERATION RECOVERY IN CONTINGENCIES Article 17 (Contingency Plans) The Central Bank and the participants shall have prepared plans for contingencies with defined procedures and measures for the continuation of reliable, correct and legal operation of the GC system. Article 18 (Taking Measures in Contingencies) In contingencies, the Central Bank shall undertake all the necessary measures to ensure the continuation of reliable, correct and legal operation, within two hours after contingency takes place as latest. Article 19 (Providing Conditions for Operation on a Back-up Site) The Central Bank and the participants shall provide the conditions so that the plans for contingencies referred to in Article 17 can be realized, if necessary, on a back-up site. Article 20 (Violation of Rules and Procedures for Contingencies) Failure to ensure conditions for operation in a back-up site and failure to adopt plans for contingencies, as well as, failure to observe the Central Bank measures for procedures in contingencies shall be considered a violation of the rules and procedures of GC. PART FIVE – DATA, NOTIFICATIONS AND INFORMATION SENT VIA GC Article 21 (Data, Notifications and Information) The GC participants are obliged to provide to the Central Bank, through the GC network, any data, notifications or information which are requested or defined by a separate enactment by the Central Bank. PART SIX – TRANSITIONAL AND FINAL PROVISIONS Article 22 (Transitional Provisions) (1) On the day when these Rules of GC take effect, the By-law on Defining the Operational Rules for Gyro Clearing Centre of Bosnia and Herzegovina, No: 01-765/04 dated 19 November 2004 and Decision No: 01-1404/08 dated 09 October 2008 cease to have effect. (2) To acquire the status of a GC participant, in addition to the payment transaction performance authorization, the Rules of GC shall have to be accepted, which the participants shall confirm by a written statement. (3) The GC participants which have acquired their status according to the Operational Rules for GC, No: 01-765/04 dated 19 November 2004, are required to make their enactments compliant with the provisions of these Operational Rules and to make a written statement referred to in par. (2) of this Article by 30 June 2016; in the event they fail to do so, they shall lose their status of a GC participant. Article 23 (Entry into Force) These Operational Rules shall take effect 15 days from the day of their publishing in “Official Gazette of BH” and they shall also be published in “Official Gazette of Republika Srpska”, “Official Gazette of the Federation of BH” and “Official Gazette of Brčko District BH”. Chairman of the Governing Board of the Central Bank of Bosnia and Herzegovina GOVERNOR Senad Softić, Ph.D.