Robust Financial Infrastructure Systems are essential to monetary and financial stability, the smooth and efficient operation of the financial system, and the effectiveness of international financial centers. Against this backdrop, the policy objective of the Central Bank is to promote and ensure the safety and efficiency of Financial Infrastructure Systems in the UAE. For the purpose of this Regulation, the regulatory focus is on Large-value Payment Systems (LVPS) which are Financial Infrastructure Systems that support the financial and wholesale activities in the State.

The Regulation covers the licensing requirements in relation to LVPS as well as the obligations and ongoing requirements in relation to a designated LVPS.

The Central Bank Law expressly sets out the powers of the Central Bank in relation to the licensing, designation, oversight and enforcement of Financial Infrastructure Systems that are systemically important, including LVPS.

The Central Bank Law also considers finality of payment and settlement to all transactions conducted through Financial Infrastructure Systems, that meet one of the designation conditions provided for in Article (126) (2) of the Central Bank Law.

The objective of this Regulation is to ensure safety and efficiency of Financial Infrastructure Systems in the UAE and promote efficient and smooth operations thereof.

This Regulation applies to LVPS that are operated in the State, or accept the clearing or settlement of Transfer Orders denominated in the Currency both in the State or outside the State, in compliance with the provisions of the Central Bank Law, including Article 28 thereof. With respect to designated LVPS, this Regulation also requires compliance with the relevant provisions of the PFMI relating to the obligations of central banks, market regulators and relevant authorities for financial market infrastructures to cooperate with each other, domestically and internationally, as appropriate, in order to promote the safety and efficiency of financial market infrastructures.

The provisions of this Regulation shall not apply to Financial Free Zones and to LVPS operating therein unless when expressly provided hereunder

1. Central Bank: means the Central Bank of the United Arab Emirates.
    
2. Central Bank Law: means Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities and its amendments from time to time.
    
3. Clearing: means the process of transmitting, reconciling and, in some cases, confirming transactions prior to settlement, potentially including the Netting of transactions and the establishment of final positions for settlement.
    
4. Clearing and Settlement System: means a system established for (a) the clearing or settlement of payment obligations; or (b) the clearing or settlement of obligations for the transfer of book-entry securities, or the transfer of such securities.
    
5. Currency: means the State’s official national currency notes and coins, which unit is referred to as the “Dirham”.
    
6. Default Arrangements: in respect of a Financial Infrastructure System, means the arrangements in place within the system for limiting systemic and other types of risk in the event of a Participant Person appearing to be, or likely to become, unable to meet his obligations in respect of a Transfer Order; and would include any arrangements that have been enforced by the System Operator or Settlement Institution for the following: (1) the Netting of obligations owed to or by a Participant Person; (2) the closing out of open financial position of a Participant Person; or (3) the realization of collateral securities to secure payment of obligations owed by the Participant Person.
    
7. Designated System: means any Financial Infrastructure System designated by the Central Bank as systemically important, in accordance with the provisions of the Central Bank Law and this Regulation.
    
8. Financial Free Zones (FFZ): means free zones subject to the provisions of Federal Law No 8 of 2004, regarding Financial Free Zones, and amending laws.
    
9. Financial Infrastructure System: means either (1) a Clearing and Settlement System or (2) a Retail Payment System, established, operated, licensed, or overseen by any of the Regulatory Authorities in the State.
    
10. Grievances & Appeals Committee: means the Committee referred to in Article (136) of the Central Bank Law.
     
11. Large-value Payment System (LVPS): means a Clearing and Settlement System that is designed primarily to process large-value and/or wholesale payments typically among financial market participants (so-called wholesale payments) or involving money market, foreign exchange or many commercial transactions, excluding bilateral clearing and settlement arrangements and relationships which do not constitute a “system”.
     
12. License: means a License issued by the Central Bank to an SO and/or SI to operate an LVPS in the State. The License shall be valid for a period of five years, unless it is suspended or revoked by the Central Bank.
     
13. Netting: in respect of a Clearing and Settlement System, means the conversion of the various obligations owed to or by a Participant Person towards all the other Participant Persons in the system, into one net obligation owed to or by the Participant Person.
     
14. Operating Rules: means rules set up by the System Operator to cover the operation of a Financial Infrastructure System including, but not limited to, Participant Person account opening and maintenance, contractual relationships with and among Participant Persons, Default Arrangements, payment and settlement processing, Netting and collateral arrangements, authorization and post-transaction processes.
     
15. Participant Person: in respect of a Financial Infrastructure System, means a Person who is party to or participant of the arrangements for which the system has been established.
     
16. Person: means a natural or juridical person, as the case may be.
     
17. Principles of Financial Market Infrastructures (PFMI): means the international standards for financial market infrastructures (i.e. payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories) issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). The PFMI are part of a set of 12 key standards that the international community considers essential to strengthening and preserving financial stability.
     
18. Regulation: means the Large-value Payment Systems Regulation.
     
19. Regulatory Authorities: means the Central Bank and the Securities & Commodities Authority.
     
20. Retail Payment System: means any fund transfer system and related instruments, mechanism, and arrangements that typically handles a large volume of relatively low-value payments in such forms as cheques, credit transfers, direct debit, or card payment transactions.
     
21. Settlement Institution (SI): means an institution that provides settlement services to a Financial Infrastructure System, settlement accounts in one currency or multi-currency in the Financial Infrastructure System and in certain cases, grants access to intraday liquidity to Participant Persons.
     
22. State: means the United Arab Emirates.
     
23. System Operator (SO): means a Person responsible for the operation of a Financial Infrastructure System including the comprehensive management of all risks in the Financial Infrastructure System, and ensuring that the operation of the system is in accordance with this Regulation and other relevant regulations issued by the Central Bank.
     
24. Systemically Important Financial Infrastructure System: a Financial Infrastructure System which has the potential to trigger or transmit systemic disruptions to the State’s monetary and financial stability; this includes, among other things, systems that are the sole Financial Infrastructure System in a jurisdiction or the principal system in terms of the aggregate value of payments, and systems that mainly handle time-critical, high-value payments or settle payments used to effect settlement in other Financial Infrastructure Systems.
     
25. Transfer Order: in respect of a Financial Infrastructure System, means any of the following instructions: (1) instructions by a Participant Person to make funds available to another Participant Person to be transferred, on a book-entry basis, in the accounts of the SI for a Clearing and Settlement System; or (2) instructions for discharge from obligation to pay, for the purposes of the Operating Rules of a Clearing and Settlement Systems; or (3) instructions by a Participant Person to either settle an obligation by transferring a book-entry security, or transferring those securities; or (4) instructions by a Participant Person that result in liability or discharge of retail operations payment obligation.

1. As stipulated in Article (129) (1) (a) of the Central Bank Law, operating an LVPS in the State requires a prior License from the Central Bank.
    
2. The SO and/or SI of the LVPS must apply and submit the required information and documents set out in Annex A of this Regulation to the Central Bank to obtain a License if the LVPS is in operation in the State.

1. As stipulated in Article (126) (2) of the Central Bank Law, if a licensed LVPS falls within the eligibility for designation as set out in the aforementioned Article, the Central Bank may designate such LVPS as systemically important.
    
2. In forming an opinion as to whether an LVPS satisfies the designation criteria, the Central Bank may consider one or more of the following factors in order to determine whether or not the LVPS is a Systemically Important Financial Infrastructure System: -
    
   1. 2.1. The estimated aggregate value of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day. This refers to the total value of individual instructions transferred, cleared or settled in the LVPS. It also represents the sum of total debits (or credits) to all accounts maintained by the system prior to or in the absence of any Netting of transactions in a normal business day. For established systems during the transition period, the estimated value can be worked out with reference to historical data and business plan.
       
   2. 2.2. The estimated average value of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day. This refers to the aggregate value of instructions transferred, cleared or settled through the system in a normal business day, divided by the number of instructions processed.
       
   3. 2.3. The estimated number of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day.
       
   4. 2.4. The estimated number and the type of Participant Persons of the LVPS.
       
   5. 2.5. Whether the LVPS is linked to any Designated Systems that are licensed or regulated by other Regulatory Authorities in the State.
       
3. The above factors are intended to identify an LVPS whose proper functioning is material to the monetary or financial stability of the State or that should be designated, having regard to matters of significant public interest or public order. During the designation process, should the need arise, the Central Bank will discuss with the SO and/or SI of the relevant LVPS so as to understand the design and features of the system and assess whether it fulfills the criteria of a Systemically Important Financial Infrastructure System.

1. The Central Bank will initiate the designation process under the designation framework as stipulated in Article (126) (3) of the Central Bank Law, if it considers an LVPS is meeting or is likely to meet the criteria for designation.
    
2. For the Central Bank to determine whether an LVPS is eligible to be designated and whether it satisfies the designation criteria for the purposes of this Regulation, the Central Bank will request information or documents regarding the LVPS from any Person who is holding, or whom the Central Bank reasonably believes holds such information or documents, or from the SO or SI of the LVPS. This power to request for information or documents applies to LVPS, individuals or corporations established, located or incorporated in the State and/or outside the State. The Central Bank will coordinate with any competent Regulatory Authority or other competent authorities in other jurisdictions for the purpose of requesting and securing such information and documents.
    
3. The nature of information or documents that the Central Bank may require might vary from LVPS to LVPS. Generally speaking, the Central Bank will seek to request information or documents as set out in the Annexes of this Regulation and may, where necessary, seek additional information as is required in order to assist the Central Bank in making such determination.
    
4. During the designation process, the Central Bank may discuss with the SO and/or SI of such system where necessary to understand the features and the design of the system and determine the LVPS’s eligibility for designation.
    
5. The time for the designation process may vary depending on the particular circumstances of each case, including the nature and complexity of the prospective designated LVPS and the completeness of the information and documents submitted to the Central Bank.
    
6. The SO and/or SI of a Designated System licensed by the Central Bank may submit a grievance against the designation decision, issued by the Central Bank in accordance with Article (126) (3) of the Central Bank Law, by applying to the Grievances & Appeals Committee as set out in Article (11) of this Regulation.
    
7. If the Central Bank intends to designate any of the LVPS licensed by any Regulatory Authority in the State or the competent regulatory authorities in other jurisdictions as systemically important, the Central Bank shall implement the process for designation as provided for under Article (126) (6) of the Central Bank Law.

LVPS deemed to have been licensed and designated

8. As stipulated in Article (126) (5) of the Central Bank Law, the LVPS established, developed, and/or operated by the Central Bank are deemed to have been licensed and designated.
    
9. The LVPS that are deemed to have been designated are required to observe all the obligations and oversight requirements imposed on designated LVPS under this Regulation in the same manner as other designated LVPS.

1. As part of the designation process for LVPS established and/or licensed by another Regulatory Authority in the State or by relevant regulatory authorities in other jurisdictions, the Central Bank may agree with the relevant regulatory authority which parts of this Regulation, where relevant, may not apply to concerned designated LVPS to avoid additional regulatory burden on the SO and SI of the LVPS.
    
2. The Central Bank will rely on co-operative oversight with the relevant regulatory authority of a designated LVPS operating in the State or in other jurisdictions, in accordance with articles (28) and (127) (2) of the Central Bank Law and the cooperative framework set out in the PFMI.

Grounds for revocation

1. As stipulated in Article (128) of the Central Bank Law, the Central Bank may revoke the License it has given to an LVPS if the LVPS is unable to carry out its operations in compliance with the provisions of the Central Bank Law or this Regulation.
    
2. As stipulated in Article (126) (7) of the Central Bank Law, the Central Bank may revoke the designation of an LVPS it licenses if the LVPS has ceased or is likely to cease being a Systemically Important Financial Infrastructure System or an LVPS whose proper functioning is material to the monetary or financial stability of the State.

Revocation process

3. The Central Bank will prepare a review report on whether a licensed and/or designated LVPS satisfies the ground of revocation under this Regulation. If the Central Bank intends to revoke the License and/or designation of an LVPS, the Central Bank will notify in writing the SO and/or the SI of the LVPS or the regulatory authority where the LVPS is licensed so that such authority can notify the SO and/or SI of the system the intention of the Central Bank to revoke the License and/or designation. The notice will state the grounds on which the revocation is to be made and specify in the notice a period of not less than twenty (20) working days from the date of notification, during which the SO and/or SI of the system may be heard, or may make written justifications, as to why the grounds for revocation stated in the notice are not valid.
    
4. If any SO and/or SI of the licensed and/or designated LVPS wish to be heard or to make written justifications, it should make such a request to the Central Bank in writing before the revocation takes effect, giving reasons as to why the grounds for revocation specified in the notice have not been established. After reviewing the reasons given by the SO and/or SI, the Central Bank will determine whether the License and/or designation should be revoked. In the course of reviewing the matter, the Central Bank may meet with the SO and/or SI of the licensed and/or designated LVPS should such need arise.
    
5. If the Central Bank decides to proceed to revoke the License and/or designation of the LVPS, the Central Bank will notify the SO and/or SI of the LVPS of the Central Bank’s decision in writing.
    
6. The SO and/or SI may object to the Central Bank’s decision to revoke the License and/or designation of the LVPS and provide justifications for such objection by applying to the Grievances & Appeals Committee as provided by the Central Bank Law.
    
7. If the Central Bank considers that any designated LVPS licensed by another Regulatory Authority in the State or the concerned regulatory authorities in other jurisdictions is no longer meeting the designation criteria, the Central Bank may request the concerned regulatory authority, via an official notice, to revoke the designation of the LVPS.
    
8. In all cases, the revocation of the License and/or designation of the LVPS shall not affect any transaction cleared and settled in the concerned LVPS prior to the effective date of revocation.

1. In accordance with Article (131) of the Central Bank Law settlement finality is “the discharge of an obligation by a transfer of funds that has become irrevocable and unconditional”. Specifically, “settlement finality” refers to the abrogation of all rights otherwise existing at law that would allow the reversal of a Transfer Order effected through, or proceedings within, an LVPS.
    
2. Article (131) (1) of the Central Bank Law grants finality to all transactions conducted through a Financial Infrastructure System, therefore rendering the same final, irrevocable and irreversible, in any of the cases provided for thereunder. Besides finality in respect of Transfer Orders, the Central Bank Law also provides legal certainty on the Netting arrangements in a designated LVPS.
    
3. If Netting has been effected in an LVPS that meets any of the designation conditions refers to in Article (126) (2) of the Central Bank Law, the SO and/or SI needs to take into consideration the Netting of obligations of insolvent or bankrupt parties to all obligations owed to or by a participant person in the system, as per Article (133) of the Central Bank Law.
    
4. In addition, this Regulation shall not limit, restrict or otherwise effect, the preservation of rights in underlying transactions and obligation of Participant Person to notify of insolvency are set out in Article (134) and Article (135) of the Central Bank Law respectively.

Principal Requirements

1. The SO and/or SI of a designated LVPS, are required to ensure compliance with the following:
    
   1. 1.1. LVPS must comply with any instructions issued by the Central Bank and any relevant international standards (e.g. PFMI), and ensure proper and continued functioning of the designated LVPS; and
       
   2. 1.2. LVPS must provide the information required by the Central Bank and where it deems appropriate for achievement of its objectives.
       
2. The Central Bank may exempt the SO, SI or a Participant Person of a designated LVPS in a general or specific manner, from the provisions of this Regulation, instructions, rules, directives, rules, and controls issued by it.
    
3. The Central Bank may appoint experts and advisors specialised in Financial Infrastructure Systems to assist the Central Bank in performing its duties and functions in accordance with this Regulation.

Detailed requirements

4. Upon designation, an LVPS must comply with the oversight requirements imposed under this Regulation and the relevant provisions of PFMI (see Article (9) for detail). Failure to comply with any of those requirements may expose the concerned party to possible sanctions as provided for under the Central Bank Law. The principal requirements, in addition to the relevant provisions of the PFMI, include: -
    
   1. 4.1. Submission of particulars – the Central Bank requires any SO and/or SI of a newly designated LVPS to inform the Central Bank in writing of the designation particulars within fourteen (14) working days after the notification of designation, including the name, place of business, postal address and electronic mail address, as well as the aspects of the management or operations of the system. For any SO and/or SI which are a corporation, the names and personal particulars of the directors, chief executive (if any) and shareholders of the corporation are similarly required to be submitted to the Central Bank. Details of any subsequent change in any of those particulars are to be notified to the Central Bank in writing within fourteen (14) days of the change taking effect.
       
   2. 4.2. Compliance with safety and efficiency requirements – the general requirements include safe and efficient operation of the LVPS, the establishment of appropriate Operating Rules, the existence of adequate compliance arrangements, and the availability of appropriate financial resources. Any major change to a designated LVPS’s Operating Rules requires prior approval of the Central Bank.
       
   3. 4.3. Submission of information or documents - the Central Bank may request information or documents relating to a designated LVPS from the SO and/or SI of, or the Participant Person in, the LVPS when performing the oversight functions under this Regulation. The SO and/or SI of, or the Participant Person in, the designated LVPS to whom a request is made is required to submit the information or documents within the period specified in the request.
       
   4. 4.4. The Central Bank may, at any time, with a short prior notice to the concerned SO and/or SI, examine any books, accounts or transactions of the SO and/or SI of a designated LVPS when performing its functions.
       
   5. 4.5. The Central Bank may require the SO and/or SI of, or the Participant Person in, a designated LVPS to submit to the Central Bank a report prepared by one or more auditors on matters that the Central Bank requires for discharging or exercising its duties and powers under this Regulation. The SO and/or SI of, or the Participant Person in, a designated LVPS may only appoint an auditor approved by the Central Bank or an auditor amongst auditors approved by the Central Bank for preparing a report required by the Central Bank.
       
   6. 4.6. The Central Bank may direct the SO and/or SI of a designated LVPS to take any action necessary to bring the LVPS into compliance with any of the requirements of this Regulation. Such a direction will specify the Central Bank’s concerns and the action(s) to be taken, include a statement of the respect in which the Central Bank considers the designated LVPS not to be in compliance with a requirement of this Regulation and specify the period within which the direction is to be complied with.
       
   7. 4.7. The SO and/or SI of the designated LVPS must have proper Operating Rules to enable its Participant Persons to obtain sufficient information regarding their respective rights and obligations associated with their participation in the LVPS, especially the Default Arrangements and the related procedures. Such rights and obligations must be clearly defined and disclosed to the Participant Persons.
       
   8. 4.8. The SI must establish rules and procedures as part of the Operating Rules to enable final settlement to take place no later than the end of the intended settlement time and date. The related rules and procedures must also ensure certainty in terms of circumstances under which Transfer Orders effected through the LVPS are to be regarded as final as well as settled for the purposes of the LVPS.
       
   9. 4.9. Where action has been taken under Default Arrangements of a designated LVPS by the SO and/or SI in respect of a Participant Person in the LVPS, the Central Bank may direct the SO and/or SI of a designated LVPS to give information relating to the default to any official nominated by the Central Bank. The nominated official is responsible for assessing and examining any matter arising out of or connected with the default of the Participant Person in that LVPS. The liabilities of Participant Persons for any loss arising from the default of the Participant Person and the arrangements to handle any disputes over Participant Persons’ liability with respect to default transactions should be clearly set out in the rules and procedures.

1. The Committee on Payment and Market Infrastructures (CPMI) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) have set forth a set of PFMI (details of PFMI are available in the two websites: www.bis.org and www.iosco.org).
    
2. PFMI aims to assist central banks, market regulators, and other relevant authorities in enhancing safety and efficiency in payment, clearing, settlement, and recording arrangements, and more broadly, limiting systemic risk and fostering transparency and financial stability.
    
3. Another objective of PFMI is to harmonize and, where appropriate, strengthen the existing international standards and risk management practice for Financial Infrastructure Systems such as LVPS that are systemically important. In general, these standards are expressed as broad principles in recognition of the differing organizations, functions, and designs of the SO and/or SI, and the different ways to achieve a particular result. The principles have also incorporated a range of specific minimum requirements (such as in the credit, liquidity, the general business risk principles) to ensure a common base level of risk management across Systemically Important Financial Infrastructure Systems and jurisdictions.
    
4. The SI and SO must robustly manage the risks of their systemically important LVPS to ensure their safety and promote financial stability. In addition, a systemically important LVPS should not only be safe, but also efficient. Efficiency refers generally to the use of resources by SO, SI and their Participant Persons in performing their functions. Safe and efficient systemically important LVPS contributes to well-functioning financial markets.
    
5. PFMI, as global standards, are broadly designed to apply to all Systemically Important Financial Infrastructure Systems across jurisdictions. The Central Bank therefore requires any designated LVPS to observe and comply with the relevant principles in PFMI, in addition to the compliance with the oversight requirements set out in Article (8) of this Regulation. Moreover, the Central Bank may impose higher requirements than PFMI for the LVPS either on the basis of specific risks posed by a LVPS or as a general policy.
    
6. The requirements set out in the following paragraphs are applicable to the systemically important LVPS operated by the Central Bank, a related entity/subsidiary of the Central Bank and those operated by the private sector. The SO and/or SI should apply these requirements on an ongoing basis in the operation of their LVPS and business, including when reviewing their own performance, assessing or proposing new services, or proposing changes to risk controls.
    
7. In aligning this regulation with leading international practice, LVPS must comply with the relevant principles set out in the following paragraphs.
    
8. Principle 1: Legal basis – a systemically important LVPS must have a well-founded, clear, transparent, with a high degree of legal certainty and an enforceable legal framework for each material aspect of its activities.
    
9. Principle 2: Governance – a systemically important LVPS must have governance arrangements that are clear and transparent, promote the safety and efficiency of the LVPS, and support the stability of the broader financial system, other relevant public interest considerations, and the objectives of relevant stakeholders.
    
10. Principle 3: Framework for the comprehensive management of risks – a systemically important LVPS must have a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, and other risks.
     
11. Principle 4: Credit risk – a systemically important LVPS must effectively measure, monitor, and manage its credit exposures to Participant Person and those arising from its payment, clearing and settlement processes. The systemically important LVPS must maintain sufficient financial resources to cover its credit exposures to each Participant Person fully with a high degree of confidence.
     
12. Principle 5: Collateral – a systemically important LVPS that requires collateral to manage its or its participants’ credit exposure must accept collateral with low credit, liquidity, and market risks. A systemically important LVPS must also set and enforce appropriately conservative haircuts and concentration limits.
     
13. Principle 6: Liquidity risk – a systemically important LVPS must effectively measure, monitor, and manage its liquidity risk. A systemically important LVPS must maintain sufficient liquid resources in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would generate the largest aggregate liquidity obligation for the systemically important LVPS in extreme but plausible market conditions.
     
14. Principle 7: Settlement finality – a systemically important LVPS must provide clear and certain final settlement, at a minimum by the end of the value date. Where necessary or preferable, a systemically important LVPS should provide final settlement intraday or in real-time.
     
15. Principle 8: Money settlement – a systemically important LVPS must conduct its money settlements in central bank money where practical and available. If central bank money is not used, a systemically important LVPS should minimize and strictly control the credit and liquidity risk arising from the use of commercial bank money.
     
16. Principle 9: Exchange-of-value settlement systems – if a systemically important LVPS settles transactions that involve the settlement of two linked obligations such as securities or foreign exchange transactions, it must eliminate principle risk by conditioning the final settlement of one obligation upon the final settlement of the other.
     
17. Principle 10: Participant-default rules and procedures – a systemically important LVPS must have effective and clearly defined rules and procedures to manage a Participant Person default. These rules and procedures should be designed to ensure that the systemically important LVPS can take timely action to contain losses and liquidity pressures and continue to meet its obligations.
     
18. Principle 11: General business risk – a systemically important LVPS must identify, monitor, and manage its general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialize. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services.
     
19. Principle 12: Custody and investment risks – a systemically important LVPS must safeguard its own and its Participant Persons’ assets and minimize the risk of loss on and delay in access to these assets. A systemically important LVPS’s investments should be in instruments with minimal credit, market, and liquidity risks.
     
20. Principle 13: Operational risk – a systemically important LVPS must identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. LVPS should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfilment of the systemically important LVPS’s obligations, including in the event of a wide-scale or major disruption.
     
21. Principle 14: Access and participation requirements – a systemically important LVPS must have objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access.
     
22. Principle 15 – Tiered participation arrangements – a systemically important LVPS must identify, monitor, and manage the material risks to the systemically important LVPS arising from tiered participation arrangements.
     
23. Principle 16: Financial market infrastructure links – a systemically important LVPS that establishes a link with one or more FMIs must identify, monitor, and manage link-related risks.
     
24. Principle 17: Efficiency and effectiveness – a systemically important LVPS must be efficient and effective in meeting the requirements of its Participant Persons and the markets it serves.
     
25. Principle 18: Communication procedures and standards – a systemically important LVPS must use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, settlement, and recording.
     
26. Principle 19: Disclosure of rules, key procedures, and market data – a systemically important LVPS must have clear and comprehensive rules and procedures and should provide sufficient information to enable Participant Persons to have an accurate understanding of the risks, fees, and other material costs they incur by participating in the systemically important LVPS. All relevant rules and key procedures should be adequately disclosed.
     
27. In addition, CPMI issued a strategy, “Reducing the risk of wholesale payments fraud related to endpoint security”, on 8^th May 2018, to encourage industry efforts to reduce the risk of wholesale payments fraud and help market participants stay focused. The strategy is designed to help SO, SI and Participant Persons of Financial Infrastructure Systems and messaging networks as well as their respective supervisors, regulators and overseers. The strategy sets out seven elements, which cover all areas relevant to preventing, detecting, responding to and communicating about fraud and will work holistically.
     
28. The Central Bank requires the SO and/or SI of the designated LVPS to take into account this CPMI strategy and any amendments thereto, when implementing the security measures over the LVPS.

Violation of any provision of this Regulation or committing any of the violations provided for under the Central Bank Law may subject SI and/or SO to administrative and financial sanctions and penalties as deemed appropriate by the Central Bank.

1. For the purposes of this Regulation, the relevant Central Bank’s decisions that may be subject to appeal before the Grievances & Appeals Committee include: -
    
   1. 1.1. licensing and designation of LVPS;
       
   2. 1.2. revocation or cancellation or suspension of a License and designation of LVPS; and
       
   3. 1.3. any Central Bank’s actions undertaken against a violating Person.
       
2. Under the Regulation, any Person aggrieved by any of the decisions set out in paragraph 1 of this Article may refer the decision to the Grievances & Appeals Committee in writing for review.
    
3. Any Person who intends to refer any of the relevant decisions of the Central Bank to the Grievances & Appeals Committee is required to do so in writing to the Central Bank stating the grounds on which the review is sought, as per the committee charter.

1. A one-year transitional period will commence on the date the Regulation comes into force. System Operators and Settlement Institutions of existing LVPS operating in the State may continue operating throughout the transitional period without being regarded as contravening this Regulation. Nevertheless, they are required to obtain a license from the Central Bank to operate their LVPS before the expiration of the transition period.
    
2. If the Central Bank considers that a Financial Infrastructure System fulfills the criteria for designation as provided for under the Central Bank Law, the Central Bank shall have the power to require any such system to obtain a license within a reasonable period to be determined by the Central Bank prior to the expiration of the transition period.

1. The Regulatory Development Division of the Central Bank shall be the reference for interpretation of the provisions of this Regulation.

1. This Regulation shall be published in the Official Gazette in both Arabic and English and shall come into effect one month from the date of publication. In case of any discrepancy between the Arabic and the English, the Arabic version will prevail.

Information or documents that may be requested under this Regulation

1. A copy of the Operating Rules of the LVPS.
    
2. Details of the type of services offered by the LVPS.
    
3. Details of the constitution, structure, nature of business, ownership and management of the LVPS, the SO and the SI.
    
4. Details of the design and function and external system interfaces of the LVPS, including details specifying the point at which a Transfer Order takes effect as having been entered into the LVPS and of the point after which a Transfer Order may not be revoked by a Participant Person or any other party.
    
5. A copy of the last three annual reports, if any, and the financial statements (with any auditor’s reports) for the current financial year of the LVPS, the SO and the SI.
    
6. The basis for membership of or participation in the LVPS (i.e. admission criteria) and a list of the current members of or Participant Persons in the LVPS.
    
7. Tariff information and schedule.
    
8. Names of the SO and/or SI, if any, of the LVPS and whether the SO and/or SI are also Participant Persons in the LVPS under the Operating Rules of the system. Legal contracts or documents between the SO and the SI in relation to the LVPS.
    
9. Details of the types, volume and values of Transfer Orders processed by the LVPS.
    
10. Detailed business contingency plan.
     
11. Name and contact details of the Person to whom questions relating to the designation of the LVPS should be directed.

For overseas systems, the following additional information may be required: -

1. Name of each of the relevant regulators where the LVPS is regulated by one or more regulatory authorities not within the State jurisdiction.
    
2. An outline of any laws and other regulatory requirements relating to the operations of the LVPS, if regulated by a regulatory authority not within the State jurisdiction.
    
3. Evidence of the LVPS’ compliance with any applicable laws and regulatory requirements of a jurisdiction outside State, which may include comments from home supervisory authority on the LVPS’ compliance with any applicable laws and regulatory requirements of a jurisdiction outside State.

Information on System Operator (SO) / Settlement Institution (SI)

1. Name of clearing and settlement system to which the designated LVPS relates.
    
2. Name of SO / SI.
    
3. Legal form (body corporate, partnership, etc.).
    
4. Country of incorporation or formation.
    
5. Date of incorporation or formation.
    
6. Registered office.
    
7. Principal place of business.
    
8. Contact details (names, physical and email addresses).
    
9. Aspects of the management or operations of the system for which the entity is responsible.
    
10. Organization chart of your company.

LVPS Turnover Information

1. Aggregate value of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day (in billions of the original currency transferred, cleared or settled).
    
2. Average value of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day (in thousands of the original currency transferred, cleared or settled).
    
3. Number of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day.

Information to be collected from SO/SI by the Central Bank

To be submitted before the end of the first year of designation

1. Liquidity commitment or other financial commitment by SI for daily operation of LVPS.
    
2. Current credit rating(s) of SI.
    
3. Throughput guidelines (if changed) from SO/SI.
    
4. Results of stress testing, if any (once the results are available) from SO.
    
5. Fees and cost from SO, including: -
    
   1. Joining cost (breakdown into (i) entry/admission fee, (ii) basic system set-up costs (limit to those costs known to SO) and membership fee).
       
   2. Calculation basis of (i) admission fee and (ii) membership fee.
       
   3. Transaction tariff (breakdown by types) and how the tariff is determined (e.g. whether determined on a cost-recovery basis).
       
   4. Other fees of participating in the LVPS, if any.
       
6. Outsourcing plan (if any) (for any outsourcing plan not yet implemented) from SO.
    
7. Internal and/or external auditor’s report on various risk areas (if any) from SO and/or SI.

To be submitted if and when available by SO and/or SI

1. Development plan and business forecast for the designated LVPS for the coming year, if available.
    
2. Budgetary plan highlighting the resources devoted to system maintenance and development for the coming year, if available.

To be submitted within two weeks when available by SO and/or SI

1. Audited financial statements and accounts of SO and/or SI, such as balance sheet, cash flow statement, profit and loss account for the latest financial year.
    
2. Results of stress testing, if any (once the results are available).
    
3. Internal and/or external auditor’s report on various risk areas (if any) if initiated by SO/SI.

To be submitted within two weeks when changes are made, highlighting the changes

1. Current credit rating(s) by SI.
    
2. Throughput guidelines (if changed) by SI.
    
3. Fees and Cost by SO.
    
4. Outsourcing plan (if any) (when new plan is available) by SO.
    
5. Business continuity plan (if any, during the year).
    
6. Organization chart and structure (if changed) Throughput guidelines (if changed) by SO and/or SI.
    
7. Business continuity plan (if any, during the year) by SO and/or SI.
    
8. LVPS specifications by SO and/or SI.

To be submitted as and when required by the Central Bank

1. Internal and/or external auditor’s report on various risk areas as and when required by the Central Bank.

To be submitted on a yearly basis

1. Liquidity commitment or other financial commitment by SI for daily operation of LVPS.
    
2. Development plan and business forecast for the designated LVPS for the coming year, if available by SO and/or SI.
    
3. Budgetary plan highlighting the resources devoted to system maintenance and development for the coming year, if available by SO and/or SI.