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Article (3): Eligibility and Criteria for Designation as Systemically Important Financial Infrastructure System

C 9/2020 Effective from 10/2/2021
  1. As stipulated in Article (126) (2) of the Central Bank Law, if a licensed LVPS falls within the eligibility for designation as set out in the aforementioned Article, the Central Bank may designate such LVPS as systemically important.
     
  2. In forming an opinion as to whether an LVPS satisfies the designation criteria, the Central Bank may consider one or more of the following factors in order to determine whether or not the LVPS is a Systemically Important Financial Infrastructure System: -
     
    1. 2.1. The estimated aggregate value of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day. This refers to the total value of individual instructions transferred, cleared or settled in the LVPS. It also represents the sum of total debits (or credits) to all accounts maintained by the system prior to or in the absence of any Netting of transactions in a normal business day. For established systems during the transition period, the estimated value can be worked out with reference to historical data and business plan.
       
    2. 2.2. The estimated average value of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day. This refers to the aggregate value of instructions transferred, cleared or settled through the system in a normal business day, divided by the number of instructions processed.
       
    3. 2.3. The estimated number of Transfer Orders transferred, cleared or settled through the LVPS in a normal business day.
       
    4. 2.4. The estimated number and the type of Participant Persons of the LVPS.
       
    5. 2.5. Whether the LVPS is linked to any Designated Systems that are licensed or regulated by other Regulatory Authorities in the State.
       
  3. The above factors are intended to identify an LVPS whose proper functioning is material to the monetary or financial stability of the State or that should be designated, having regard to matters of significant public interest or public order. During the designation process, should the need arise, the Central Bank will discuss with the SO and/or SI of the relevant LVPS so as to understand the design and features of the system and assess whether it fulfills the criteria of a Systemically Important Financial Infrastructure System.