Vol. 470 Cape Town 16 August 2004 No.
Amendment Bill, 2004 in Parliament during the current parliamentary term. The Bill is published in accordance with Rule 241 (l)(c) of the Rules of the National Assembly. Interested persons and institutions are invited to submit written representation on the Bill to the Secretary to Parliament by no later than 3 September 2004.
Words in bold type in square bracketsindicateomissionsfrom existing enactments.
To amend theNationalPaymentSystemAct, 1998, so astoprovideforthe withdrawal of recognition of a payment system management body by the South African Reserve Bank; to provide for designated settlement systems; to enable payments to third persons; and to provide for the issuance of directives by the South African Reserve Bank; and to provide for matters connected thereto.
Amendment of section 1 of Act 78 of 1998 1.
'Companies Act' means the Companies Act, 1973 (Act No.
by the substitutionforthedefinition of "payment clearinghouse" of the bJ' the substitution for the definition of "payment instruction" of the follow-ing definition: '.
by the deletion of the of "system definition participant.".
Amendment of section 2 of Act 78 of 1998 2.
(b)of subsection (3) of the following paragraph: "(bjmay at any time be withdrawn in writing by [that] the board.".
Amendment of section 3 of Act 78 of 1998 3. Szctio~3 of the principal Act is hereby amended--.
by the. ubstitution for subsection (2) of the fr!!
[it] the payment system management body will [be] enable[d] the ReserveBanktoadequatelyoverseethe affairs of thepayment systemmanagementbodyand its members andwill assist the Reserve Bank in the discharge of the Reserve Bank's responsibili-ties, specified in section lO(l)(c)(i) of the South African Reserve Bank Act, regarding the monitoring, regulation and supervision of payment, settlement systems.
Act, 1990, and in paragraph (dd)(i) of the definition of "the business of a bank" in section 1of that Act and that complies with the entrance and other applicable requirements laid down in the rules of a payment system management body, as approved by the Reserve Bank, maybe granted limited membership by such a payment system management body."
such person is the Reserve Bank, a bank, mutual bank or branchof a foreign institution and, in the case [of] where a payment system management jihaij body[, the body is] has been recognised by the Reserve Bank as[a payment system management body in terms ofl contemplated in subsection (l), such person is a member of the payment system.
(bj such person is a designated settlement system operator [in the case of that other person, the person is a member of a payment system management body recognised by the Reserve Bank as contemplated in paragraph (a)].
Amendment of section 4 of Act 78 of 1998 4.
to [determine] recommendfor approvalbytheReserve Bank criteria subject to and in accordance with which a member that is also a ReserveBank settlementsystemparticipant, may be authorised to [introduce any person to provide payment ser- vices.
Insertion of section 4A in Act 78 of 1998 5.
4A. (1) The Reserve Bank may designate a settlement system if it considers that such designation is in the interest of the integrity, effectiveness, efficiency or security of the payment system.
the rules of the settlement system; and any additional information it may deem appropriate.
any other matters that the Reserve Bank considers appropriate.
(4)The Reserve Bank shall designate a settlement system as a designated settlement system for purposes of this Act by notice in the Gazette and give writtennotice of such designation to the designated settlementsystem operator.
the person who is the operator of the settlement system that is the subject of the designation; and any terms and conditions to which the designation is subject.
by amending or revoking any condition to which the designation is subject; or by making the designationsubject to a new condition or new conditions.
(a)No variation of the conditions to which a designation is subject or revocation of designation shall have retroactive effect.
(0)The variation or revocation shall not affect thevalidity or 10 enforceability of the rules of the designated settlement system, nor shall it affect any payment to or out of the account of asettlementsystem participant or netting or settlement that took place, prior to the coming into effect of the variation or revocation.
TheReserve Bank shall, afterhavinggiven written notice to the 15 designated settlement system operator, vary or revoke the designation of the settlement system by notice in the Gazette.
Substitution of section 5 of Act 78 of 1998 6.
Settlement provision 50 5. (1) Settlement is effected in money or by means of entries passed through the Reserve Bank settlement system or the designated settlement system.
A settlement that has been effected in money or by means of an entry to the credit of the account maintained by a settlement system participantin 55 the Reserve Bank settlement system or the designated settlement system is final and irrevocable and may not be reversed or set aside.
(3)An entry to or payment out of the account of a designated settlement system participant to settleapayment or settlement obligation in a designated settlement system is final and irrevocab!e and may nor t.
Amendment of section 6 of Act 78 of 1998 7.
(1) No person may clear payment instructions unless that person is a [system participant.
bank, mutual bank or branch of a foreign institution that is allowed to clear in -terms of section 4(2)(dj(i).
Substitution of section 7 of Act 78 of 1998 8.
A person may as a regular feature of that person's business accept money or payment instructions from any other personforpurposes of makmg payment on behalf of that other person to a third person to whom that payment is due, if-(nj the first-mentioned person is the Reserve Bank, a bank, mutual bank, branch of a foreign institution, or a designatedsettlement system operator; or the first-mentioned person is the postal company defined in section 1 of the Post Office Act, 1958 (Act No. 44of 1958), or the Postbank as defined in section 51of the Postal Services Act, 1998 (Act No. 124 of 1998); or the money is accepted or payment made in accordance with directives issued by the Reserve Bank from time to time in terms of section 12.
Substitution of section 8 of Act 78 of 1998 9. The following section is hereby substituted for section 8 of the principal Act.
The provisions of this sectionapplydespiteanything to the contrary in the law relating to insolvency or in the Companies Act, the Banks Act or the Mutual Banks Act.
Acurator or similar official appointed to a settlement system participant may give written notice to the Reserve Bank towithdraw such participant's participation in the Reserve Bank settlement system, in which event such settlement system participant shall no longer be entitled to clear or participate in the Reserve Bank settlement system, other than for purposes of discharging payment or settlement obligations in accordance agreements to which that settlement system participant is a party, or any relation to such agreements.
the application for winding-up, when it is presented to the court; and any subsequent winding-up order, when it is granted, must be lodged with the Reserve Bank as soon as practicable.
When a copy of an application for winding-up or subsequent winding-up order is lodged with the Reserve Bank in terms of subsection and the Reserve Bank settlement system participant in respect of whom the copy islodgedis a designatedsettlement system participant, the Reserve Bank must as soon as practicable after having received the copy, notify the designated settlement system operator.
If a settlement system participant is wound cp, the liquidator or similar OffiCiiii,.
any provision containedin the rules of the settlementsystem or in clearing, netting and settlement agreenlcnts to which that Settlement system participant is a party, or any rules and practices applicable to the settlement system participant in relation to such agreements; and any payment or settlementthat is final and irrevocablein terms of section 5(2)or (3).
Substitution of section 9 of Act 78 of 1998 10.
to the Reserve Bank or the designated settlement system operator as security for a loaninrespect of its settlement obligations may be utilisedby the Reserve Bank or the designated settlement system operator, as the case may be, to the extent required for the discharge of those settlement obligations of the settlement system participant; or in terms of a written [agreement with any] payment clearing houseor settlementagreement, as security in respect of its payment or settlementobligations, may be utilised by the [paymentclearing house] Reserve Bank to the extent required for the discharge of those payment or settlement obligations.
Amendment of section 10 of Act 78 of 1998 11.
*(1) The Reserve Bank has access to any information relating to [the] a pay-mer -..-.-n n--l---LLl -1.
values of payment and settlement instructions or payment and settlement obligations], and [system participants] any person must on request provide such information to the Reserve Bank in such form and at such times as the Reserve Bank may require.
"(3)Despite subsection (2) of this section and section33 of the South AfricanReserve BankAct, the ReserveBank may discloseany information of which the disclosure is necessary to protect the integrity, effectiveness or security of the payment system, or if required by law to do so;".
Amendment of section 11 of Act 78 of 1998 12.
(2) If any Reserve Bank settlement systemparticipantconsiders itself [wronged] aggrievedby a decisiontakenby the Reserve Bank under a provision of this Act, the matter is deemed to constitute a dispute between that Reserve Bank settlement system participant and the Reserve Bank, which dispute must be settled as provided in this section.
The Reserve Bank settlement system participant concerned must, withinthree (3) months after the decision of the Reserve Bank, in writing, furnish the Reserve Bank with full particulars of its grievance, and thereafter the Reserve Bank settlement-system participant and the Reserve Bank must attempt to settle the dispute byconsensuswithin seven business days of the receipt by the Reserve Bank of those particulars.
If the Reserve Bank settlement system participant and the Reserve Bank do not succeed in settling the dispute as contemplatedin subsection (3),they may agree to attempt to settle the dispute by mediation within a further period of 10 business days.
the Reserve Bank settlement system participant concerned and the Reserve Bank at or following such meeting attempt to settle the dispute by consensus; and the Reserve Bank settlement system participant concerned and the Reserve Bank share the mediator's costs equally.
to a singlearbitrator to be agreed on between the Reserve Bank settlement system participant and the Reserve Bank; or failing such agreement, to an arbitrator appointed at the request of theReserve Bank settlement system participant and the Reserve Bank by arecognised body concerned withthefacilitation and promotion of the resolution of disputes by means of mediation or arbitration.
"(9) The decision of the arbitrator is final and binding on the Reserve Bank settlement system participant concerned and the Reserve Bank.".
Amendment of section 12 of Act 78 of 1998 13.
(I) The Reserve Bank may from time to time, after consultation with the 5 payment system management body, issue directives to any person regarding a payment system or the application of the provisions of this Act.
if any other matters that the Reserve Bank considers appropriate.
cease or refrain from engaging in the act, omission or course of conduct or perform such other acts as are necessary to remedy the situation; or 25 jb performsuchacts as arenecessary to comply with the directive or to effect the changes; or provide the Reserve Bank with such information and documents, relating to the matter as specified in the directive.
The provisions of this section shall not apply to a designated settlement 30 system.
The Reserve Bank may after consultationwith the payment system management body, cancel in writing any previously issued directives.
Any person who neglects, refuses or fails to comply with a directive issued under subsection (3) is guilty of anoffence.
Any directive issued in terms of this Act shall take effect three months after it has beenissued or such other date as determined by the Reserve Bank.
Amendment of section 13 of Act 78 of 1998 14.
"(1) Despite anything to the contrary in any [legislation] relating to the retention of records, the Reserve Bank, Reserve Bank settlement system [and system] participants, PCH systemoperatorsand system operators must retain all records obtained by them during the course of 50 the operation and administration of [the] a payment or Reserve Bank settlement system for a period of five years [as] from the date of each particular record."
(2) Subsection (1) shall not apply to a designated settlement system 55 operator, and any obligationof such a settlement systemin relation to the retention of records shall be specified as a condition of the designation of such a settlement system uncier section 4Ai5).
"(3)The retention of records in terms of subsection (1) may be effected as envisagedin section 16 of theElectronic Communications and Transactions Act, 2002 (Act No. Irrespective of whether criminal proceedings have been or may be instituted againsta person in respect of an offence in termsof any section of this Act, the Reserve Bank may apply to a High Court having jurisdiction for an order directing a person to comply with this Act or a directive issued in terms of this Act.
Substitutionof section 14 of Act 75 of 1998 16.
section 10(4), is liable to a fine not exceeding R1 000 or to imprisonment for a period not exceeding six months, or to both such fine and such imprisonment.
1.1 The Standing Committee for the Reviewof the Act has reviewed the National Payment System Act, 1998 (Act No 78 of 1998) ("the Act") as required in terms of section 15, to cater for new developments.
1.2 The most importantdevelopment isthe proposedinclusion of the South African ("SA") Rand in the multi-currency Continuous Linked Settlement ("CLS"). Other matters include the clarification of the role of the payment systemmanagementbody(currently the Payments Association of South Africa), the issuance of directives by the South African Reserve Bank ("SARB") and payments to third persons.
Certain definitions have been amended or inserted to allow designatd Settlement system operators (e.g., CLS Bank) to participate in tine settlement system. CLS Bank will have a settlement account with the Reserve Bank to enable the Rand settlement leg in foreign exchange transactions.
The settlement provisions have been amended to cater for finality of settlementrelative todesignated settlementsystems (i.e., pay-ins, pay-outs and settlement in relation to CLS).
The Act has been amended to cater for the possibility of withdrawal of the recognition of the payment system management body by the SARB. The amendments also clarify the roles between the SARB and the payment system management body and allow limited membership to the payment system management body (i.e., limited membership by non-banks).
The provision of payment services by non-banks as envisaged in current Act couldnotbeimplemented. The provisions relating to payments to third persons have been amended to an enabling provision. It is envisaged that directiveswill be issuedafterconsultationwith the paymentsystem management body and various stakeholders. A three months grace period will be given before implementation.
The Act has been amended to grant wider powers to the SARB in relation to the issuance of directives, to discharge its oversight obligations and ensure the integrity, effectiveness, efficiency and security of the payment system.
Miscellaneous amendments are made and new provisions inserted to clarify certain definitions, the utilisation of assets as security to the SARBor payment clearing house, access to information. settlement of disputes and retention of records.
The National 'Treasury, the Department of Trade and Industry, Department of Communications, banking industry, payments industry, Payments Association of South Africa, Smart Cards Society of South Africa and the South African National Payments Forum ("SANPAY").
The State Law Advisers and the National Treasury are of the opinion that this Bill must be dealt with in accordance with the procedure established by Section 75 of the Constitution since it contains no provision to which the procedure set out in Section 74 or Section 76 of the Constitution applies.