Pursuant to Article 38 paragraph 3 under m) of the Croatian National Bank Act (official gazette Narodne novine, No. 36/2001) and Article 44 paragraph 1 items 7 and 8 of the National Payment System Act (official gazette Narodne novine, No. 117/2001), the Council of the Croatian National Bank at its session held on 9 March 2005 enacted the following DECISION on the Croatian Large Value Payment System and on the Settlement in Bank Accounts Held with the Croatian National Bank Article 1 This Decision shall regulate the Croatian Large Value Payment System (hereinafter: CLVPS), clearing rules and settlement in bank accounts held with the Croatian National Bank. Article 2 (1) The CLVPS shall be a system for the settlement of interbank payment transactions on the real time gross settlement principle. (2) CLVPS participants shall be the Croatian National Bank and banks (hereinafter: participants). (3) Payment transactions in the CLVPS shall be settled across participants' accounts. (4) A special participant in the CLVPS shall be the Central Depository Agency, which shall participate in the settlement through the CLVPS in the manner laid down in Article 11 of this Decision. (5) Payment transactions shall be settled through the CLVPS during a clearing day in accordance with the Decision on the Work Schedule for Settlement/Clearing through the Interbank Payment Systems. (6) The Croatian National Bank shall be the owner and operating manager of the CLVPS. Article 3 (1) The Croatian National Bank shall manage bank accounts through the CLVPS. (2) The accounts of a bank and of the Croatian National Bank in the CLVPS shall be their respective settlement accounts. (3) A participant shall have one settlement account opened in the CLVPS. (4) The settlement account of a participant in the CLVPS shall also be its account for regular operations.
Article 4 (1) Apart from the settlement account referred to in Article 3 of this Decision, the Croatian National Bank shall have accounts opened in the CLVPS for the purpose of the National Payment System functioning, particularly: - a clearing account for the final settlement of payments made through the National Clearing System (hereinafter: NCS clearing account); and - a transfer account for payments related to settlements in securities trading (hereinafter: transfer account for securities settlement). (2) Payment transactions by which the Croatian National Bank performs the settlement of final net positions in the clearing accounts of banks and of the Croatian National bank in the NCS shall be executed across the NCS clearing account. (3) Payment transactions related to securities trading shall be executed across the transfer account for securities settlement. (4) Payments related to securities trading referred to in paragraph 3 of this Article shall only be the payments made on the basis of payment orders issued in accordance with the regulations governing securities trading, to credit or debit the transfer account for securities settlement opened with the Croatian National Bank. (5) Participants shall execute payment transactions related to securities trading exclusively through the CLVPS. Article 5 (1) A bank may only issue payment orders to debit its own settlement account. (2) The Croatian National Bank may issue payment orders to debit the settlement accounts of all participants by way of account transfers. The Croatian National Bank shall make an account transfer based on a participant's order or pursuant to regulations. Article 6 (1) A bank may issue payment orders to debit its settlement account with payment priorities (payment queue) ranging from 1 to 98, where 1 represents the highest and 98 the lowest payment priority. Payment orders with legally prescribed payment queue shall be issued with payment priorities ranging from 1 to 10. A participant shall use payment priorities ranging from 11 to 98 according to its needs. (2) The Croatian National Bank may make an account transfer to debit a participant's settlement account with a 0 payment priority, which is the highest payment priority. The Croatian National Bank shall make an account transfer with a 0 payment priority pursuant to regulations. 2
Article 7 (1) Payment transactions shall be executed up to the amount of collateral in a settlement account. (2) The collateral in a settlement account shall be the disposable balance in a participant's settlement account increased by a limit. The limit on a participant's settlement account shall be set by the Croatian National Bank and shall correspond to the amount of an authorised overdraft in the participant's settlement account. The Croatian National Bank shall prescribe the manner of setting the limit. Article 8 (1) A payment transaction shall be deemed settled after the settlement account of a participant who is the ordering customer has been debited and after the settlement account of a participant who is the beneficiary customer has been credited. (2) Payment transactions shall be settled individually to the amount to which they have been ordered (by applying the real time gross settlement principle). (3) Payment transactions shall be settled on a clearing day corresponding to the specified value date. (4) A participant may issue payment orders bearing a future value date. Payment orders bearing a future value date shall be settled on the clearing day corresponding to the specified value date. (5) A participant who is the ordering customer shall receive a confirmation of the payment transaction settlement in its settlement account. (6) Payment transactions with no collateral in the participant's settlement account shall be recorded in the payment queue pending the provision of collateral, but not later than the end of a clearing day. At the end of a clearing day, payment transactions from the payment queue shall be returned and the participant shall be notified of the returned payment transactions. (7) At the end of a clearing day, a participant shall receive a report on the changes effected in its settlement account and on the account balance for that day. Article 9 The Croatian National Bank may, pursuant to regulations, prevent a bank from disposing of funds in its settlement account. 3
Article 10 (1) The Croatian National Bank shall settle the final net positions in the clearing accounts of banks and the Croatian National Bank in the NCS at the end of a clearing day (hereinafter: NCS net position) by way of account transfers in participants' settlement accounts. (2) In the case of a positive NCS net position, the Croatian National Bank shall credit a participant's settlement account and debit its NCS clearing account. In the case of a negative NCS net position, the Croatian National Bank shall debit the participant's settlement account and credit its NCS clearing account. Article 11 (1) Participants shall order payment transactions crediting the transfer account for securities settlement by means of payment orders issued in accordance with the regulations governing securities trading, to credit the transfer account for securities settlement opened with the Croatian National Bank. (2) The number of the transfer account for securities settlement opened with the Croatian National Bank shall be 1001005-1310020013. (3) Payment transactions debiting the transfer account for securities settlement shall be ordered by the Central Depository Agency as an authorized person, on the basis of legal authorization, in accordance with the regulations governing securities trading. (4) Payment transactions in the transfer account for securities settlement shall be ordered, executed and settled in the manner prescribed by this Decision for settlements accounts. (5) The Central Depository Agency shall perform all operations related to the settlement of payment transactions across the transfer account for securities settlement in the manner and under the conditions prescribed by this Decision for participants. Article 12 At the end of a clearing day, the balances in the NCS clearing account and in the transfer account for securities settlement shall be zero. Article 13 (1) The ordering of payment transactions and other operations related to the participation in the settlement through the CLVPS shall be carried out by means of appropriate types of messages. Messages used by participants to order payment transactions shall be payment messages. (2) The settlement of a payment transaction in a participant's settlement account shall be conditional on the technical correctness of the payment message used for ordering the payment transaction. 4
(3) All messages referred to in paragraph 1 of this Article shall be exchanged through the SWIFT telecommunications network. The exchange and types of the messages, as well as the method of their creation and use must comply with SWIFT standards. Article 14 (1) Within 90 days following the receipt of its operating license, a bank shall get equipped for the exchange of payment messages through the SWIFT telecommunications network and it shall file an application with the Croatian National Bank to participate independently in the settlement through the CLVPS. (2) At a bank's request, the Croatian National Bank shall provide the bank with the Functional Specification for obtaining an independent access to the CLVPS. (3) The Croatian National Bank shall perform operations related to the participation in the settlement through the CLVPS on behalf of banks referred to in paragraph 1 of this Article, which are not technically equipped for the exchange of messages through the SWIFT telecommunications network. Article 15 (1) Constituent parts of this Decision shall be the Tariffs for the Services of the Croatian Large Value Payment System and the Instruction Concerning the Operational Procedures for the Croatian Large Value Payment System, which shall regulate: - types of payment messages; - technical correctness of payment messages; - method of entering specific elements of the payment order into payment messages; - other types of messages; - method of issuing payment orders between the Croatian National Bank and other banks; - method of making account transfers; - participation in the settlement through the CLVPS by banks which are not technically equipped for the exchange of messages through the SWIFT telecommunications network; - other CLVPS operational procedures. (2) The Governor of the Croatian National Bank shall be authorised to pass the amendments to the Tariffs and the Instruction referred to in paragraph 1 of this Article. Article 16 The provisions of this Decision relating to the execution of payments across the transfer account for securities settlement shall apply as of 1 July 2005. 5
Article 17 (1) This Decision shall enter into force on the eighth day following its publication in the official gazette Narodne novine. (2) On the day of entering into force of this Decision, the Decision on the Croatian Large Value Payment System and Settlement in Bank Accounts Held with the Croatian National Bank (official gazette Narodne novine, Nos. 14/2002 and 27/2003) and the Decision on the Tariffs for Services of the Croatian Large Value Payment System with the Croatian National Bank (official gazette Narodne novine, No. 49/2004) shall cease to be valid. Dec. No.: 663/2005 Zagreb, 9 March 2005 CROATIAN NATIONAL BANK COUNCIL CHAIRMAN GOVERNOR Dr Željko Rohatinski 6