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Committee on Payment

and Settlement Systems

Payment, clearing and

settlement systems in the CPSS countries

Volume 2

November 2012

This publication is available on the BIS website (www.bis.org). © Bank for International Settlements 2012. All rights reserved. Brief excerpts may be reproduced or translated provided the source is cited.

ISBN 92-9131-158-8 (print)

ISBN 92-9197-158-8 (online)

CPSS - Red Book - 2012 iii

Foreword

The Committee on Payment and Settlement Systems (CPSS) publishes - under the aegis of the Bank for International Settlements (BIS) - reference works on payment systems and the other financial market infrastructures in various countries, both CPSS member and non- member countries. These publications are widely known as Red Books. Following the enlargement of the CPSS in 2009, this edition of the Red Book for the CPSS countries is in two volumes. The first volume, which covers 10 CPSS countries (Australia, Brazil, Canada, India, Korea, Mexico, Russia, Singapore, Sweden and Switzerland), was published in September 2011. This second volume covers the remaining 13 CPSS countries (Belgium, China, France, Germany, Hong Kong SAR, Italy, Japan, the Netherlan ds, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States) and the euro area and includes a chapter on international arrangements. Financial market infrastructure that is resilient and effective enhances the stability of the financial system. It also reduces transaction costs in the economy, promotes the efficient use of financial resources, improves financial market liquidity and facilitates the conduct of monetary policy. I hope this new edition of the CPSS Red Book will contribute to the general understanding and awareness of these issues by providing information about arrangements in the CPSS countries. I should like to thank all of those who contributed to the preparation of this Red Book.

Paul Tucker

Chairman

Committee on

Paymen

t and Settlement Systems

CPSS - Red Book - 2012 v

Central bank officials involved in the preparation of this volume of the Red Book

National Bank of Belgium Nikolai Boeckx

Kris Bollen

Patrick Ottoy

Sven Siedlecki

The People's Bank of China Li Yue

Pan Song

European Central Bank Tom Kokkola

Bank of France Chantal Guédé

Eric Michaux

Deutsche Bundesbank Christin Knauft

Beatrice Roth

enburger

Hong Kong Monetary Authority Osbert K Y Lam

Vincent W S Lam

Bank of Italy Luca Arciero

Bank of Japan Yutaka Soejima

Fusako Watanabe

Netherlands Bank Annemarie Hondius

Judith Looman

Saudi Arabian Monetary Agency Ali Alhomidan

Abdulmohsen Al-Mutairi

Abdullah Humaid

South African Reserve Bank Bashnee Rahman

Mike Stocks

Central Bank of the Republic of Turkey Erhan Akkaya

Bank of England Rachel Bracken

Andrew Butcher

Mubin Haroon

vi CPSS - Red Book - 2012

Board of Governors of the Federal Reserve

System

Mark Haley

Matthew Hayward

David Mills

Can Bülent Okay

Contributions to the euro area chapter by numerous colleagues from the European Central Bank, National Bank of Belgium, Bank of France, Deutsche Bundesbank, Central Bank of Luxembourg and Netherlands Bank are gratefully acknowledged.

CPSS - Red Book - 2012 vii

Contents

Foreword

............................................................................................................................... iii

Central bank officials involved in the preparation of this edition of the Red Book ................... v

Payment, clearing and settlement systems in

Belgium.................................................................................................................................. 1

China ................................................................................................................................... 23

Euro area ............................................................................................................................. 59

France ............................................................................................................................... 137

Germany ............................................................................................................................ 159

Hong Kong

SAR ................................................................................................................ 199

Italy .................................................................................................................................... 233

Japan

................................................................................................................................. 263

Netherlands ....................................................................................................................... 313

Saudi Arabia

...................................................................................................................... 345

South Africa ....................................................................................................................... 373

Turkey ............................................................................................................................... 395

United Kingdom ................................................................................................................. 437

United States ..................................................................................................................... 471

International arrangements ................................................................................................ 509

CPSS - Red Book - 2012 1

Payment, clearing and

settlement systems in

Belgium

Belgium

CPSS - Red Book - 2012 3

Contents

List of abbreviations ............................................................................................................... 5

Introduction ............................................................................................................................ 7

1. Institutional aspects ...................................................................................................... 8

1.1 The general institutional framework ..................................................................... 8

Oversight / regulatory / supervisory bodies in the field of payment, clearing

and settlement ............................................................................................ 8

Legal framework of payment and settlement infrastructures ................................ 8

1.2 The role of the central bank ............................................................................... 10

1.2.1 Provision of payment and settlement services .......................................... 10

1.2.2 Oversight .................................................................................................. 10

1.2.3 Supervision ............................................................................................... 10

1.3 The role of other private and public sector bodies .............................................. 10

2. Payment media used by non-banks ............................................................................ 11

2.1 Cash payments .................................................................................................. 11

2.2 Non-cash payments ........................................................................................... 11

2.2.1 Non-cash payment instruments ................................................................ 11

2.2.2 Non-cash payment terminals .................................................................... 14

2.3 Recent developments ........................................................................................ 15

2.3.1 Internet ..................................................................................................... 15

2.3.2 Standardisation of payment instruments ................................................... 15

2.3.3 Security of e-payments ............................................................................. 15

2.3.4 Development of e-invoicing ...................................................................... 16

2.3.5 e-SEPA .................................................................................................... 16

2.3.6 Mobile phones as payment devices .......................................................... 16

3. Interbank exchange and settlements systems ............................................................ 16

3.1 General overview ............................................................................................... 16

3.2 The RTGS system: TARGET2-BE (see the descriptive Red Book chapter

on the euro area) ............................................................................................... 17

3.2.1 Belgian migration to TARGET2 ................................................................. 17

3.2.2 Participation in the system ........................................................................ 17

3.2.3 Ancillary systems settling through TARGET2-BE ...................................... 17

3.3 The retail payment system: CEC ....................................................................... 17

3.3.1 Operating rules ......................................................................................... 17

3.3.2 Participation in the system ........................................................................ 17

3.3.3 Types of transaction handled .................................................................... 17

3.3.4 Daily operation of the system.................................................................... 18

Belgium

4 CPSS - Red Book - 2012

3.3.5 Settlement procedures .............................................................................. 18

3.3.6 Pricing ...................................................................................................... 19

4. Systems for post-trade processing, clearing and securities settlement ....................... 19

4.1 General overview ............................................................................................... 19

4.2 Central counterparties and clearing systems ..................................................... 19

4.3 Securities settlement systems ............................................................................ 19

General legal framework .................................................................................... 19

4.3.1 NBB-SSS .................................................................................................. 20

4.3.2 Euroclear Belgium .................................................................................... 22

4.4 Use of securities infrastructure by the central bank ............................................ 22

Belgium

CPSS - Red Book - 2012 5

List of abbreviations

ACH Automated Clearing House

BCC Bank Card Company

CBFA Banking, Finance and Insurance Commission - Commission bancaire, financière et des Assurances (CBFA) / Commissie voor het Bank, Financie - en Assurantiewezen (CBFA) CEC Centre for Exchange and Clearing - Centre d'Echange et de Compensation (CEC) / Uitwisselingscentrum en Verrekening (UCV) CVH - TCE - CPCB Centralised processing of commercial bills - Centrale Verwerking Handelspapier / Traitement Centralisé d'Effets de Commerce FSMA Financial Services and Markets Authority - formerly CBFA

ICSD International Central Securities Depository

NBB National Bank of Belgium - Banque Nationale de Belgique (BNB) /

Nationale Bank van België (NBB)

POS Point of sale

PPS Protected payment system

SCT SEPA Credit Transfer

SDD SEPA Direct Debit

SEPA Single Euro Payments Area

TARGET2-BE The TARGET2 component system of the National Bank of Belgium

Belgium

CPSS - Red Book - 2012 7

Introduction

A number of payment and securities settlement systems are located in Belgium. The National Bank of Belgium (NBB) is involved in the provision of payment and settlement services; ie it manages the interbank settlement systems Centre for Exchange and Clearing (CEC) and TARGET2-BE (the national RTGS system for large-value payments (formerly

ELLIPS).

1 The NBB also operates the NBB-SSS for dematerialised government and corporate bonds. The NBB oversees, or takes part in, international coop erative oversight arrangements for the following systems:

· SWIFT;

· the securities settlement systems Euroclear Bank, Euroclear SA/NV, Euroclear

Belgium, and NBB-SSS;

· the central counterparty LCH.Clearnet;

· the card payment schemes Atos Worldline and Mastercard Europe; and

· the payment systems CEC, TARGET2, and CLS.

Since 1 April 2011, the NBB has been responsible for the prudential supervision of Euroclear Bank, Euroclear SA/NV, and payment institutions (including providers of mobile payments and Atos Wordline). Payment and securities settlement systems, payment service providers or payment instruments are governed mainly by specific legislation or regulations, most of which implement EU directives. Following on from the widespread use of credit transfers, direct debits and card payments, internet banking and mobile payments are becoming increasingly popular, as are new electronic payments methods, such as electronic bill presentation and payment. E-invoicing, or the electronic exchange of invoices between businesses and their customers, is also helping to drive the development of electronic payments.

Belgian bank customers have been able to use the

Single Euro Payments Area (SEPA)

Direct Debit instrument since November 2009, and the y also have access to the SEPA Cards Framework. The SEPA instruments allow customers to use standardised payment instruments for payments throughout the SEPA area, making international payments as efficient and easy as domestic ones. Three different securities settlement systems are established in Belgium: NBB-SSS (for government and corporate bonds), Euroclear Belgium (formerly CIK, see the descriptive Red Book chapter on the euro area) and the ICSD Euroclear Bank (see the descriptive Red Book chapter on the euro area). Euroclear Bank a nd Euroclear Belgium are part of the Euroclear Group that also includes the CSDs of France (Euroclear France), the Netherlands (Euroclear Nederland), the UK (Euroclear UK & Ireland), Sweden (Euroclear Sweden) and Finland (Euroclear Finland). Following the restructuring of the Euroclear Group in 2005, Euroclear SA/NV, a financial holding company established in Belgium, has become the parent company of the Euroclear Group (I)CSDs providing common services to the group entities. In

2009, the ESES platform was

launched integrating the settlement activity of the securities settlement systems of Euroclear Belgium, Euroclear France and Euroclear Nederland (see the descriptive Red Book chapter on the euro area). 1 ELLIPS was replaced by the Belgian component of TARGET2 in February 2008.

Belgium

8 CPSS - Red Book - 2012

1

Institutional aspects

1.1 The general institutional framework

Oversight / regulatory / supervisory bodies in the field of payment, clearing and settlement The NBB is responsible for the oversight of payment and securities settlement systems pursuant to Article 8 of the Organic Law of 1998 that established the NBB as a member of the ESCB

Since 1 April 2011, the NBB

has also been the prudential supervisor of electronic money institutions, settlement institutions (organismes de liquidation / vereffeningsinstellingen), clearing institutions (organismes de compensation / verrekeningsinstellingen) and of payment institutions pursuant to the new Articles 12 bis and 36 Section 2 of the NBB Organic Law. The FSMA is the market authority for settlement and clearing institutions and is responsible for monitoring and approving their operating rules. Legal framework of payment and settlement infrastructures Payment and securities settlement systems, payment service providers or payment instruments are governed mainly by specific legislation or regulations, which are often implementations of EU directives. The following legislation is generally applicable to payment and settlement infrastructures and payment service providers: · The Law on the legal status and supervision of credit institutions (22 March 1993), which aims to protect the savings of the public and to safeguard the smooth functioning of the credit system by laying down rules for the establishment and the operation of the credit institutions as well as for the supervision of the latter.

Furthermore, the Law on the

legal status and supervision of credit institutions contains a chapter on netting between most financial institutions. The law seeks to guarantee the legal certainty of offsetting agreements for debts between two or more credit institutions, where one of these institutions is involved in bankruptcy or in any other case involving concurrent claims governed by Belgian law. · Explicit recognition is given, through Article 157 of the Law on the legal status and supervision of credit institutions, to the legal validity of bilateral or multilateral offsetting agreements for claims between credit institutions themselves and between credit institutions and a clearing house, as well as to "close-out" agreements (express termination clauses in the event of bankruptcy or other default situations). These agreements are legally binding and enforceable against third parties (including a liquidator), subject to the conditions defined in this provision. In particular, it is clear that the claims to be offset no longer need to be related. · The Law on the legal status and supervision of credit institutions (22 March 1993) also contains provisions related to electronic money and the prudential supervision of electronic money institutions. These provisions will remain in force until the new

Electronic Money Directive 2009/110/CE

is transposed into Belgian law in the course of 2011. The provisions of this new directive will be inserted into a new chapter in Belgian law that regulates the prudential supervision of payment institutions. · The law relating to the supervision of payment institutions, to the access to thequotesdbs_dbs30.pdfusesText_36

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