By Shiela Bertillo
The Bangko Sentral ng Pilipinas (BSP) has issued the governance policy for Operators of Payment System (OPS) as part of the phased-in implementation of Republic Act No. 11127 or the National Payment Systems Act (NPSA).
The central bank stated that the issuance supports the adoption of the governance standards under the Principles for Financial Market Infrastructures, the internationally recognized standards jointly issued by the Bank for International Settlements and the International Organization for Securities Commissions. Including OPS, the international standards are applicable to financial market infrastructures.
The governance standards define the legislative requirements for governance arrangements and standards that all OPS must follow. It also establishes the criteria for qualifications of individuals elected or appointed as directors or officers of an OPS, as well as their disqualification basis.
Accordingly, the rules prohibit directorships among a clearing switch operator (CSO), its critical service provider and the payment system management body that governs the automated clearing house for which such CSO renders clearing services.
The regulation also provides governance criteria that specify the quality of stewardship among OPS, “considering that these entities play key roles in maintaining the safe, efficient, inexpensive and convenient flow of funds in the economy.”
The central bank noted that although the policy aims to address governance concerns specific to OPS, the principles adopted in the policy issuance are broadly aligned with the governance standards applicable to BSP-supervised financial institutions and the provisions of relevant domestic laws and regulations.
In the meantime, OPS with concurrent authorities, such as a bank or an electronic money issuer, must comply with the more stringent criteria.
“Consistent with the BSP’s proportional and risk-based approach to payment system oversight, more stringent requirements shall apply to operators of designated payment systems in view of the potential of designated payment systems to pose systemic risks to the financial system,” BSP wrote in the statement. “Moreover, a failure in such designated payment systems could undermine public confidence in the national payment system.”
Considering the adjustments needed in the governance arrangements of OPS, the Circular provides a period of six months for OPS to comply with general provisions of the issuance. However, provisions on temporary disqualification of directors/officers of OPS will take effect immediately.
The issuance of the governance policy will enable the regulatory environment, through the proper implementation of the NPSA, be consistent with the maintenance of the safe and efficient functioning of the national payment system in support of monetary and financial stability.
The NPSA provides a comprehensive legal and regulatory framework which supports maintaining a payment system to control systemic risks and providing an environment conducive to the sustainable growth of the economy.
In September, the BSP suspended Lyka, a social media platform that allows its users to utilize “Gift cards in Electronic Mode” (GEMs) as a mode of payment, along with its local partner Digital Spring, on the grounds of unauthorized operation as a payment system. (Read More: BSP Orders Lyka to Stop Operating, Invites Registration)
Accordingly last month, the Bangko Sentral ng Pilipinas (BSP) said that it is closely monitoring play-to-earn game Axie Infinity in regards to how players and merchants are using and exchanging Smooth Love Potion (SLP) as a form of payment and it is looking into Axie Infinity’s possibility to be classified as an OPS; if it is, Axie Infinity or Sky Mavis, its game developer, is encouraged to register as one. (Read More: BSP Closely Monitors Local Axie Infinity SLP Merchants System)
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