HH Sheikh Mohammed Enacts DIFC's New Payment System Settlement Finality LawPress Release 09 Aug 2009 10:18 am
First Such Legislation in the GCC Region; Law Paves the Way for Building Regional Transaction Processing Hub in DIFC
HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has enacted the Dubai International Financial Centre's (DIFC) new Payment System Settlement Finality (PSSF) Law that creates the legal foundation for building a regional transaction processing hub in DIFC that will provide payment systems and other ancillary services.
The first such legislation in the GCC region, the new PSSF Law paves the way for the launch of the Real-time Automated Payments in DIFC (RAPID), a new service that will provide transaction processing services from within DIFC to banks and their customers both in DIFC and the wider Middle East and North Africa (MENA) region. However, the benefits of the PSSF Law will not be restricted to RAPID and will be available for all payment systems designated under the conditions of the Law.
HE Dr. Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC) said: "The enactment of the PSSF Law forms part of a comprehensive infrastructure that DIFC is creating to catalyse the development of the financial services industry in the region. This is in accordance with the vision of HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai to establish Dubai as a hub for global finance."
"Today, under the leadership of HH Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of DIFC, the Centre will take further strides in creating a world class legal and regulatory environment for the financial services industry". He added.
In developing this law, DIFC has adopted legal best practices from Europe, Hong Kong and New Zealand, among others, to ensure finality of designated payments. Apart from the development of RAPID, the PSSF Law will assist GCC-based companies in conducting legally sound payments within the region instead of having to use infrastructures outside of the region, which often do not settle within the region's own operating hours.
The PSSF Law particularly supports payments that involve participants from multiple jurisdictions. For example, the European equivalent, the Settlement Finality Directive, was a critical law that made the European currency union possible.
The Law assures participants in a designated payments system that the rules of such a payment system will be upheld in the DIFC Courts even in the event of insolvency. This helps ensure that each payment system has a well-founded legal basis, as required by the Core Principles for Systemically Important Payment Systems (CPSIPS) promulgated by the Bank for International Settlements.