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13.10.2011: Ukraine puts payment systems under tighter supervision

The National Bank of Ukraine has left itself with a right to intervene in operations of largest national and international payment systems. For violation of requirements participants of the market may face serious penalties, including imposition of certain limitations for further work in Ukraine. Market participants fear negative consequences of tighter control.

According to the draft regulation for the NBU’s supervision over payment systems which was published on the regulator’s website this week, it is proposed to divide all systems into groups. “Systemically important” payment systems are the ones which hold more than 10% of interbank operations, carry out open market operations, and have processed more than 50% of retail payments during the year (50% relatively to total number of all processed payments, of course). “Important” systems are responsible for 5-10% of interbank operations and more than 25% of retail ones during the year. Transactions on stock exchanges and goods markets are also settled through them, under condition that the volume of such transactions for half a year exceeds 10% of interbank transactions. “Socially important” are the ones which participate in social programs of the government and process more than 25% of citizens’ money without opening an account.

Not only the National Bank wants to monitor those systems, but also in make corrections to their operations. “Systemically important” and “important” ones will have to do real time calculations and real time monitoring of risks. They will have to ensure steady operations even in extraordinary conditions, proper protection of information and management of risks. In case they fail the regulator’s requirements, they will be warned in a written form and some of their functions will be suspended. They may also face administrative fines or may be even excluded from the register.

The National Bank explains the reform by necessity to protect non-cash operations. “According to the Basel criteria, payment systems are entities of high risk. It is not enough just to set normative standards – one needs to monitor how they are being followed. Companies which will first of all be controlled by the National bank are Visa, MasterClub, NSMEP (the National System of Massive Electronic Payments – GAAP-IFRS.COM) and UkrCard”, - said Viktor Kravec, head of the department for regulation of payment systems and payment. – “The National bank has no right to intervene in contractual relations between banks and payment systems, but it may regulate questions which have to be stipulated in contracts”.


Source: Kommesant-Ukraine

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