The conditions and procedure for oversight of payment and settlement systems
Passed 11.12.2023 No. 7
This decree is established on the basis of §23(3) of the Payment and Settlement Systems Act.
Chapter 1 General Provisions
§ 1. Scope of the Decree
This Decree sets the conditions and procedure for oversight of the payment and settlement systems defined in §2 of this Decree and the collection of information on them.
§ 2. Application of the Decree
(1) This Decree applies to payment systems defined under §2(1)1) of the Payment and Settlement Systems Act and settlement systems defined under §2(1)2) of that Act.
(2) Chapter 2 of this Decree does not apply to the following systems:
1) securities settlement systems defined under §3(2) of the Payment and Settlement Systems Act;
2) systems where Eesti Pank operates the provision of services.
§ 3. The work of Eesti Pank as overseer
(1) Eesti Pank works together with the party or parties providing the system services (the system operator), collects information on the system, assesses it, and gives guidelines and recommendations for how to organise the work of the system better.
(2) Eesti Pank bases its oversight on the legislation and standards of Estonia and the European Union and internationally accepted practice as far as they are applicable to the system that is subject to oversight.
§ 4. Organisation of oversight under a cooperation agreement
(1) Eesti Pank may propose to the system operator to sign a cooperation agreement for the organisation of oversight. A cooperation agreement is particularly appropriate if Eesti Pank considers that the system has a significant effect on the functioning and risks of the Estonian payments environment.
(2) The measures set in the cooperation agreement must be proportionate to the objectives of oversight and the effect of the system on the Estonian payment environment.
(3) The cooperation agreement may set:
1) the conditions for exchanging additional information that is important for assessing the design, operation and risks of the system concerned;
2) the procedure for consultations on changes being made to the system;
3) the conditions for on-site oversight operations;
4) the conditions for applying oversight standards and practices to the system;
5) other conditions that facilitate oversight of the system and that require the agreement of Eesti Pank and the system operator for their application.
(4) Eesti Pank may also propose a cooperation agreement that regulates one or more of the issues in subsection (3) of this section to the operator of a payment system that does not have its head office or management board or the body substituting in Estonia if Eesti Pank considers that that payment system has a significant impact on the Estonian payment environment and signing a cooperation agreement would help reduce the risks associated with the operation of the system.
(5) Eesti Pank submits the proposed cooperation agreement described in subsections 1 and 4 of this section for signing to the operator of the system together with the draft agreement, and considers the opinion of the system operator. Signing a cooperation agreement requires both parties to be in agreement about it.
Chapter 2 Collection of information
§ 5. Information collected by Eesti Pank for the oversight of systems
(1) The system operator must send to Eesti Pank the rules and principles of the system and all changes made to them immediately after those rules and principles have been established or changed.
(2) Where it is justified to do so, Eesti Pank may ask the system operator for additional information or documents about the structure and operation of the system and circumstances that affect the operation of the system.
(3) System operators listed in §6(2) of this Decree must:
1) notify Eesti Pank immediately of the occurrence of any malfunction, its possible causes and effects, and how it is to be rectified;
2) give Eesti Pank a detailed description of the duration and causes of the malfunction, the services affected, the parties affected, and the measures taken or to be taken, no later than one week after the event.
(4) A malfunction within the meaning of this regulation is any error or failure in the operation of the system or any other event that makes the processing or settlement of payment transactions impossible.
§ 6. Reports and self-assessment
(1) A system operator that is on the list indicated in subsection 2 of this section must compile and submit to Eesti Pank a self-assessment and the following reports:
1) “Report on transactions made in payment and settlement systems”, code 1691 (Appendix 1);
2) “Report on participation in payment and settlement systems by parties providing payment services”, code 1692 (Appendix 2);
(2) Eesti Pank publishes on its website a list of the system operators that must compile and submit to Eesti Pank the self-assessment and reports specified in subsection 1 of this section.
(3) Eesti Pank decides whether or not a system operator should be included in the list specified in subsection 2 of this section on the basis of the importance of the system in the Estonian payment environment and the principle that similar systems shall be treated equally under similar conditions. Eesti Pank particularly includes in the list system operators whose system has one or more of the following characteristics:
1) the system has a market share of more than 25% of the number of euro payments in the Estonian payment environment;
2) Eesti Pank considers that the operation of the system entails a significant risk to the operation of cash circulation or vital payment services in Estonia.
(4) Once Eesti Pank has decided whether or not to include the system operator in the list specified in subsection 2 of this section, it notifies the system operator of this in writing. The notice will indicate the time that the obligation to submit reports or self-assessment begins or ends and, if necessary, other information that the system operator needs for submitting reports. Eesti Pank notifies the system operator that it has been included in the list at least six months before the list is published.
§ 7. Principles for compiling the self-assessment and reports
(1) The data for the reports listed in §6(1)1) of this Decree are submitted for each reporting period. The data submitted in the report listed in §6(1)2) of this Decree are as at the end of the reporting period.
(2) The self-assessment referred to in §6(1) of this Decree describes compliance with the requirements for the system, and it must be compiled in accordance with the instructions for the self-assessment, which are on the Eesti Pank website.
§ 8. Reporting period and self-assessment period and submission dates
(1) The reporting period for report data listed under §6(1)1) of this Decree is the calendar month.
(2) The reporting period for report data listed under §6(1)2) of this Decree is the calendar year.
(3) The self-assessment referred to in §6(1) of this Decree is generally updated every three years. Eesti Pank has the right to:
1) change the length of the periods listed in this section by agreement with the system operator;
2) require unilaterally that the system operator submit a self-assessment within a reasonable time after the rules or principles of the system have been significantly changed.
(4) The reports specified in §6(1) of this Decree are to be submitted by the tenth calendar day after the end of the reporting period. If the due date for submitting reports is a non-working day, the report is submitted on the next working day.
(5) The due date for submitting the self-assessment referred to in §6(1) of this Decree is set by Eesti Pank.
§ 9. Submission of the self-assessment and reports
(1) The reports specified in §6(1)1) and 2) of this Decree shall be submitted to Eesti Pank electronically in the XML (eXtensible Markup Language) format, as set out in Decree No. 4 of the Governor of Eesti Pank of 29 May 2018 “Requirements for the electronic submission of reports”.
(2) If errors are found in the report, the system operator must submit a new, corrected report electronically to Eesti Pank.
(3) The self-assessment is submitted to Eesti Pank as a text file. If errors are found in the self-assessment or if the self-assessment does not meet the requirements of the assessment instructions specified in §7(2) of this Decree, the system operator must submit a new, corrected self-assessment to Eesti Pank.
Chapter 3 Assessment of systems
§ 10. Assessment of systems
(1) Eesti Pank assesses systems on the basis of the legislation and standards, the requirements published on its website, and consideration of the systemic importance for the Estonian payment environment.
(2) At the request of the system operator, Eesti Pank may provide an assessment of the draft principles and rules of a system being established.
(3) Eesti Pank assesses the principles and rules of the systems listed in §6(2) of this Decree at least once every three years. If the principles or rules of the system change significantly, Eesti Pank assesses the impact of the changes on the operation of the system. Eesti Pank can give a preliminary assessment of the possible impact of significant changes that are being planned.
§ 11. Defining the results of the assessment of systems
The results of the system assessment are given as one of the following four rating levels:
1) “observes the requirements” if any shortcomings found are minor and manageable and could be considered to come up in the course of normal business operations;
2) “broadly observes the requirements”, if one or more shortcoming has been identified that the system operator must address by the defined timeline;
3) “partly observes the requirements”, if one or more shortcoming has been identified that may become serious if they are not addressed promptly. Such shortcomings must be addressed with high priority.
4) “does not observe the requirements”, if one or more shortcoming has been identified that is a serious issue of concern to the operation of the system. Such shortcomings must be addressed immediately.
Chapter 4 Issuing instructions and recommendations to system operators
§ 12. Instructions and recommendations from Eesti Pank to system operators
(1) Eesti Pank may issue instructions and recommendations to the system operators to improve the structure of the systems, to arrange the transmission and receipt of transfer orders more efficiently, to reduce risks, or to ensure the continuity of payment services.
(2) An instruction is understood in this Decree to be a proposal issued by Eesti Pank that a system operator take measures that are necessary or useful for addressing shortcomings in the operation of the system. Eesti Pank issues instructions that are based on the conclusions made during the system assessment and the shortcomings found.
(3) A recommendation is understood in this Decree to be any explanation or specification given by Eesti Pank for how the requirements for the system should be applied.
§ 13. Procedure for issuing instructions
(1) Before issuing an instructions as defined in §12(1) of this Decree, Eesti Pank informs the system operator of the reasons for issuing the instruction and sets a deadline for submitting explanations or objections. The procedure for issuing and following instructions and for setting deadlines for applying them can be specified in the cooperation agreement defined in §4 of this Decree.
(2) Eesti Pank issues instructions to the system operator in writing.
(3) The system operator must submit to Eesti Pank a timetable for applying the instructions within 40 calendar days at the latest after the instruction is issued. Eesti Pank monitors the application of the instructions until they have been applied in full.
(4) If the system operator does not execute the instructions within the time set for doing so, it must justify the delay to Eesti Pank and state the time when the instructions will be applied.
(5) If the system operator does not comply with the instructions within the prescribed time and Eesti Pank considers that failure to comply with the instructions may cause the circumstances specified in §24(4)1), 2) or 3) of the Payment and Settlement Systems Act, Eesti Pank may make a proposal to Finantsinspektsioon for managing the risks related to the participation in the system.
Madis Müller
Governor
Appendix 1 Report on transactions made in payment and settlement systems
Appendix 2 Report on participation in payment and settlement systems by parties providing payment services
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