Payment Systems

The NBU oversees payment systems covering as follows: 

• payment systems monitoring
• assessing payment systems for their compliance with Ukrainian law and international oversight standards
• inducing change (as needed, issuing instructions and recommendations on improving operations and imposing corrective measures, if violations are found).

Currently in Ukraine, the following entities are subject to oversight:

• payment system operators
• participants in payment systems
• payment service providers (clearing and processing institutions, and other entities authorized to provide services or perform operational and other technical functions within payment systems).

Other Financial Market Infrastructures

The NBU has drawn up the Assessment Methodology for Financial Market Infrastructures based on international oversight standards: Principles for financial market infrastructures, CPMI – IOSCO, 2012, and assessment methodology guidelines: Disclosure framework and Assessment methodology, CPSS-IOSCO, 2012. The document was drafted for the preliminary assessment of the National Depository of Ukraine that is legally assigned to perform functions of the central securities depository and the securities settlements system.

The International Monetary Fund recommended the NBU to expand the oversight function to cover the central securities depository and the central counterparty in order to foster development of capital markets in Ukraine, reduce systemic risks, implement international standards and the best world practices for oversight of financial market infrastructures.

The Methodology will be applicable to the following financial market infrastructures:

• the central securities depository
• the securities settlement system
• the central counterparty.

The Methodology defines the procedure and application specifics of international oversight standards and prescribes guidelines for assessment of the aforesaid infrastructures.

The NBU conducts on-site and off-site inspections of overseen entities.

On-Site Monitoring of Overseen Entities

This monitoring of overseen entities is conducted on-site to control compliance with Ukrainian law, detect and prevent risky operations.

In H1 2019, two payment system operators and three participants of payment systems were inspected on-site.

Main violations were associated with:

• failure to recognize transactions on fund transfers in reporting systems
• misrepresentation of financial statements
• services provided in violation of rules approved by the NBU
• failure to ensure business continuity and information security
• noncompliance with the protection of consumer rights in terms of payment system services.

For the found violations the NBU imposed corrective measures as set out in Article 41 of the Law of Ukraine On Payment Systems and Money Transfer in Ukraine.

Off-Site Monitoring of Overseen Entities

Off-site monitoring is intended to examine operation of payment systems according to the following indicators:

• the value and the type of transactions in the payment system and their respective share in the total transactions in the country executed in systems of the same type
• the number of participants of the payment system with a breakdown by types and the share of participants in the total transactions executed in payment systems
• the value and types of transactions executed in the payment system by payment service providers with a breakdown by other services etc.

The purpose of off-site monitoring is to ensure compliance of overseen entities with Ukrainian laws on payment systems and fund transfers.

According to the off-site monitoring findings on compliance of overseen entities with regulatory requirements of the NBU to posting information on official websites of payment system operators and payment system participants, in H1 2019, the NBU imposed corrective measures as set out in Ukrainian law.

Assessment of Payment Systems

The NBU assesses payment systems in order to prevent, detect, and rectify violations in the operations of payment systems in line with Ukrainian law and to improve performance of payment systems in line with international oversight standards.

The NBU performs the following types of assessments of payment systems:

• assessment of a payment system that intends to operate in Ukraine
• comprehensive assessment of a significant payment system
• targeted assessment (assessment of individual aspects of payment system operations).

According to assessment findings the NBU drafts conclusions and recommendations to be provided to the payment system operator in order to bring operation of the payment system in line with laws and international oversight standards.

Assessment of Financial Market Infrastructures

The NBU began a preliminary comprehensive assessment of the National Depository of Ukraine Public Joint Stock Company for compliance with international oversight standards.

The National Depository of Ukraine Public Joint Stock Company is assessed according to performance of functions of the central securities depository and the securities settlement system in adherence with the approved Assessment Methodology for Financial Market Infrastructures and comprises the following stages:

• determining the scope of assessment and collecting facts on each key consideration
• preparing main conclusions and reporting on the level of compliance of an assessed entity according to each principle
• preparing the report on assessment findings.