THE NATIONAL PAYMENT SYSTEM AMENDMENT BILL 2004

1. South African Reserve Bank THE NATIONAL PAYMENT SYSTEM AMENDMENT BILL 2004 Dave C Mitchell 31August 2004

2. Agenda National Payment System Department • NPS in Perspective • Standing Committee for the Review of NPS Act • Background • Proposed Changes to NPS Act • Consultative Process (six weeks) • Conclusion and Questions

3. NPS Networks National Payment System Department

4. Continuous Linked Settlement (CLS) National Payment System Department Foreign Bank Domestic Transactions Foreign RTGS Payments Forex Transactions Settlement Trade Details CLS Local Bank Trade Details Settlement Forex Transactions SAMOS Domestic Transactions Payments

5. Central Bank Central Bank CLS Bank CLS NETWORK SARB PCH CLC CLEARING BANK NETWORK NETWORK PAYMENT BANK NETWORK PCH PCH Electronic Card SETTLEMENT CPSP NETWORK Retailer BANK CUSTOMER NETWORK CPSP Retailer CPSP PAYMENT ATM NETWORK CPSP CPSP Post CUSTOMER Broker office NETWORK CUSTOMER NETWORK Payment System Networks

6. Standing Committee for the Review of NPS Act National Payment System Department • Established August 2000 i.t.o Section 15 of NPS Act • Membership • SARB (ex officio) • Appointed individuals from banking industry • Tenure – 3 (three) years (renewable)

7. Background National Payment System Department • Broad overview-problem statement • CLS Bank • Withdrawal of recognition of PSMB • Directives • Practical problems on implementation of payment intermediation

8. Proposed Changes to NPS Act National Payment System Department • Cater for CLS • Changes to the role of payment system management body (PSMB) • Directives by the Reserve Bank (SARB) • Payments to third persons

9. CLS & Consequential Amendments National Payment System Department • CLS Bank: SA-Multi-currency Settlement • RTGS Settlement account with SARB-PvP • Reserve Bank settlement system/participants • Designated settlement system • Designated settlement system participants • Finality of settlement (pay-ins and pay-outs) • No clearing by non-banks and CLS • Curatorship and liquidation

10. Payment system management body National Payment System Department • Enable operations of NPS without a PSMB • Clarification of the roles of Reserve Bank v PSMB • Enlarge scope for PSMB • Limited membership of institutions exempted and excluded from the Banks Act

11. SARB Directives National Payment System Department • Enhanced powers for SARB - directives • Directives as a tool for consultations • Directives as work-in-progress • agency arrangements; • recognition of payment or payment products by SARB; and • conduct of system operators.

12. Payments to third persons National Payment System Department • Enabling approach v current restrictive S7 • Postbank rights carried over S7(2) (c) • Use of directives

13. Consultative process-Stakeholders National Payment System Department • Government Departments (NT, DTI, DOC, DOJ) • Roadshows • Banking Industry • Institutions providing payments to third persons • PCH system operators • End-users • Business Associations

14. Parliamentary Bill Prioritisation National Payment System Department • Draftsman-Classification of Bill • Portfolio Committee on Finance • Public Hearings • Target date for promulgation (1 October 2004)

15. Conclusion and Questions National Payment System Department • Comments • Recommendations • Inputs • Questions