JOHN CARLOS I

KING OF SPAIN

To all who present it and understand it.

Sabed: That the General Courts have approved and I come to sanction the following Law.

EXPLANATORY STATEMENT

I

The significant increase in transfers of money and securities funds between the European Union's financial institutions and the rest of the world that has occurred in the last decade has intensified the concern that have always felt the supervisory authorities for ensuring the stability of financial systems.

In particular, it should be noted that payment and securities settlement systems are basic pieces to ensure the good end of transactions that are formalized on a daily basis in all types of financial markets.

In such systems it is usually operated using the payment compensation technique, in which a multitude of transactions, generating rights and obligations, among the participants of a system, are transformed, at the end of a given period of time, in a single right or in a single obligation, whichever is the positive or negative balance, for each participant. It is here, in the main way, where the so-called 'systemic risk' can originate, which consists in the failure to fulfil the obligations of a participant in a system of payments or the settlement of securities to the impossibility of other participants comply, in turn, with their respective obligations and, in particular, with those relating to settlement, in accordance with the rules of the system, which may even lead to the collapse of a system, if it is not instruments necessary to control the risks inherent in their activity.

II

The European Union's Commission also echoed the problem and drew up a number of reports which have served as a basis for drafting a Community standard which would allow a harmonised legal solution for the whole of Europe. the European Union, since the problems that are being resolved are, more and more, cross-border in nature.

The rule has already been approved by the Council of the European Union. This is Directive 98 /26/EC of the European Parliament and of the Council of 19 May on the firmness of settlement in payment and securities settlement systems.

The purpose of this Law is to incorporate the aforementioned Directive into Spanish law.

III

The main objectives of the Directive, which are therefore also of this Law, are as follows:

1. To reduce the legal risks involved in the participation in payment systems and securities settlement systems, especially as regards the firmness of settlements, the legal validity of clearing arrangements and the enforceability of securities (a) the legal basis for the guarantees provided by the participants to meet their obligations, as well as to minimise the financial disturbances which may be caused by not having the appropriate legal instruments, particularly in cases of insolvency.

2. Ensure that payments can be made on the internal market without any impediment, thereby contributing to the efficient and economic functioning of cross-border payment mechanisms in the European Union.

3. To contribute, through the acceptance of guarantees constituted for monetary policy purposes, to the achievement of greater monetary stability and to the development of the legal framework necessary for the European System of Central Banks and the Bank The European Central Bank can carry out its monetary policy.

at the same time, the Directive provides for greater integration of Community credit institutions into the internal payment systems of other European Union States, thereby favouring the freedom of movement of Community credit institutions. capital and the free provision of services and contributing to the creation of monetary union and the introduction and development of the euro, through the appropriate legal configuration of efficient payment mechanisms, inter alia, the so-called TARGET, to serve to channel the financial flows between the European System of Central Banks, the European Central Bank and credit institutions, in implementation of the common monetary policy.

IV

This Law is structured as follows.

In Chapter I, its object is expressed, which is to incorporate the aforementioned Directive into the internal legal order, while delimiting its scope, distinguishing between systems and participants in the same, including the guarantees offered to ensure the smooth functioning of the payment and securities settlement mechanisms, with special mention

to the monetary policy operations to be carried out by the European Central Bank and the Central Banks of the States of the European Union.

As far as participants are concerned, credit institutions and investment firms that are accepted as members of a system and who are responsible for assuming obligations may be involved. financial resources derived from its operation. The European Central Bank, the Banco de España, the Central Banks of the Member States, the international financial organisations of which Spain is a member and the management and settlement agents of the European Central Bank may also participate in the systems. other systems.

In Chapter II, the regime of the Spanish systems and that of its participants is established. Since, in accordance with the Directive, the national authorities must expressly recognise the systems to which the special scheme set out in the Law is to be applied, a double procedure is chosen. First of all, the requirements to be met by the systems which can be recognised are laid down, including those which have general rules of accession and operation approved by the relevant supervisory authority. Among these rules, those determining the time at which a transfer order is deemed to be accepted by a system, as well as the establishment of the appropriate control and risk management instruments, are essential. Second, it is recognized as systems subject to the Law those that already exist in Spain, to be understood as fulfilling the requirements that, in general, establishes the Law.

In Chapter III, compensation and transfer orders of both funds and securities are regulated. The most significant is that it is granted to the transfer orders and to the compensation which, if any, takes place between them, firmness and legal validity for both the participants and third parties, provided that they have been accepted in compliance with the system rules. In such a case, such operations will not be opposed, which will reduce, to a very large extent, any possibility of systemic risk.

Chapter IV deals with the consequences arising from the finality of the liquidation in respect of insolvency proceedings-suspension of payments and bankruptcy-which may be initiated by a participant. Whenever such procedures are initiated after transfer orders have been received and accepted by a system, they shall have no effect on such orders. Therefore, the goods which have been the subject of transfer may in no case be claimed by the bodies concerned, without prejudice to the fact that those who consider themselves to be harmed exercise the judicial proceedings which they consider appropriate for the purposes of require, where appropriate, any compensation that corresponds to or the responsibilities that arise.

But this cannot affect the validity of the operations that have been performed on a system, complying with the rules of the system.

The same described scheme shall apply to guarantees that a participant in favour of the system or other participants would have constituted when an insolvency proceedings were initiated. The beneficiaries of the guarantees, including the monetary authorities, shall enjoy the absolute right to separate the goods offered as collateral.

All exceptions to the insolvency law contained in the Law must be justified by the main objective pursued, repeatedly expressed, by establishing the legal and technical instruments which are considered to be essential to avoid systemic risk and to ensure the stability of the financial system, which is a public interest priority.

Finally, in Chapter V, the Interbank Payments Service is created, as the heir of the current Banking Compensation Chamber of Madrid, providing it with a corporate legal form and a structure that will allow the largest security and agility in its operation.

CHAPTER I

Object and Scope of Law

Article 1. Object.

The purpose of this Law is to incorporate into the Spanish law the provisions of Directive 98 /26/EC of the European Parliament and of the Council of 19 May on the firmness of settlement in payment systems and 'securities settlement', regulating the validity and effectiveness of the clearing and settlement operations carried out in these systems, and of the guarantees provided by the participants in these systems, as well as the guarantees of the securities operations carried out by the Central Banks of the Member States and the European Central Bank and the effects the insolvency proceedings on such transactions and guarantees.

It is also the object of this Law to regulate certain aspects of the legal system of Spanish payment and securities settlement systems, to the effect of which it is determined which are these and the Service of Interbank Payments.

Article 2. Scope.

This Law shall apply to:

a) Payment and clearing systems and settlement of securities or derivative financial instruments (hereinafter, systems).

(b) Monetary policy operations, or associated with the liquidation of a system, carried out by the Bank of Spain, the European Central Bank and the other Central Banks of the European Union.

(c) The participants in a system and the contractors of the operations referred to in point (b).

For these purposes, participants are the credit institutions and investment firms, Spanish or authorized to operate in Spain, the Treasury and the equivalent bodies of the Communities. Autonomous regions and entities belonging to the public sector as listed in Article 3 of Regulation (EC) No 3603/93 of 13 December 1993 laying down definitions for the application of the prohibitions referred to in Article 104 and Article 104 (1) of the Treaty, which are accepted as members of the system, in accordance with the regulatory standards for the same and are responsible for taking financial obligations arising from its operation.

The European Central Bank, the Banco de España and the other Central Banks of the Member States of the European Union, as well as the international financial organizations of which the European Central Bank is a member of the European Central Bank, will also be participants. Spain is a member.

They may also be participants in a system, provided they are accepted by it according to its regulatory standards:

-The manager of other systems.

-The settlement agent for other systems. Such agent shall be a Central Bank or other body or entity

to facilitate system participants, accounts in which transfer orders accepted by that system are settled, or used by the system for the deposit of funds or securities.

-A central counterparty, which is defined as an entity interposed among the participants in a system that exercises its exclusive counterpart in relation to its transfer orders; and-A clearing house, which is defined as an organization responsible for calculating the net positions of participants in a system.

(d) the guarantees which are constituted in the framework of a system and of the operations referred to in point (b)

For these purposes, any realisable asset, including money, which has been the subject of a deposit, a pledge, a repurchase agreement, a right of retention or any other legal business that has been made, shall be understood as collateral. in order to ensure the rights and obligations arising from the operation of a system, or of monetary policy operations, or associated with the settlement of systems, made with the Bank of Spain, the European Central Bank or the other Central Banks of the European Union.

CHAPTER II

System of Spanish systems

Article 3. Requirements.

It may be recognized as Spanish systems, for the purposes of this Law, the procedures or agreements subject to Spanish law that meet the following requirements:

(a) That they have as their object the execution and, where applicable, the clearing of funds or securities transfer orders. The fact that a system also executes transfer orders on other types of assets or financial instruments shall not prevent its recognition in the terms provided for in this Act.

(b) Having the participation of at least three entities which are credit institutions or investment firms, as defined respectively in Directives 77 /780/EEC and 93 /22/EEC, authorised to operate in Spain, provided that at least one of them has its central administration in Spain.

(c) Having general rules of accession and functioning approved by the Bank of Spain, by the National Securities Market Commission or by the competent authority of the Autonomous Community, in the case of services of clearing and settlement of securities created in official secondary markets of a regional nature or in markets or trading systems of the same scope which are not official in nature, in the latter cases prior to the Bank's report of Spain or the National Securities Market Commission.

Such rules shall provide that no transfer order may be accepted from a participant to which an insolvency proceedings have been initiated, once that opening has been known to the system, and shall determine, in particular, the time at which the transfer orders submitted to the system and the means available to the system for the control and coverage of the settlement risks arising from the accepted orders are accepted. by the same means, including the means between which the power of its manager or settlement agent may be included for check whether the orders submitted to the system comply with the rules of the system and allow their settlement to occur.

For the purposes of this Law, those rules shall be effective once they are published in the "Official Gazette of the State" and, in addition, if applicable, in the corresponding "Official Journal".

d) That they liquidate the funds transfer orders into an open cash account at the Banco de España.

(e) which are managed by the Banco de España or by an entity subject to its supervision, to that of the National Securities Market Commission or to that of the body that is competent for the Autonomous Community in the services of clearing and settlement of securities created in official secondary markets or on markets or trading systems of the same scope which are not official in character.

Article 4. Recognition.

For the purposes of this Law, the recognition of a system must be declared by resolution adopted by the Government, at the request of the entities participating in it or by means of a reasoned request from the Bank of Spain, the National Securities Market Commission or the relevant supervisory body of the regional authority.

The government's resolution, which will be adopted on a proposal from the Ministry of Economy and Finance, and which will count, in any case, with the prior report of the Bank of Spain, the National Securities Market Commission, and, if necessary, the (a) the supervisory body concerned with a regional authority shall indicate, in particular in the event that it has not been adopted at the request of the entities participating in the system, the reasons which, taking into account the desirability of strengthening the the stability of the financial system and payments, the reasons for its recognition and the attachment to the provisions of this Law. The resolution adopted by the Government will be published in the "Official State Gazette".

Article 5. Discipline regime.

The systems recognised in accordance with Article 4 shall be subject, as the Bank of Spain or the National Securities Market Commission is the authority responsible for the supervision of its managing body, to the intervention and sanctioning established in Law 26/1988, of July 28, of Discipline and Intervention of the Credit Entities, or to that established in Law 24/1988, of July 28, of the Market of Securities, without prejudice to the competences of supervision, inspection and sanction corresponding to the Autonomous Communities in relation to the systems of clearing and settlement of securities created in official secondary markets or in markets or trading systems of the same scope that do not have such a condition.

Article 6. Notifications.

The Banco de España and the Comisión Nacional del Mercado de Valores shall notify the Commission of the European Union of the systems recognized under this Law that are managed by them or by entities subject to their monitoring, and shall be the bodies responsible for receiving or sending the communications referred to in Article 6 (2) and (3) of Directive 98 /26/EC.

The supervisory bodies of autonomic securities clearing and settlement systems will perform or receive the aforementioned notifications through the National Securities Market Commission.

Article 7. Reporting obligations.

Credit institutions and Spanish investment services companies shall inform the competent authority for their supervision, in the terms that it establishes, of their participation in foreign systems.

The Banco de España, the Comisión Nacional del Mercado de Valores (Comisión Nacional del Mercado de Valores, or the supervisory bodies of a regional level), as appropriate, will publish in the "Official Journal of the State" and, if necessary, in the "Official Journal" autonomic corresponding, the relationship of entities participating in the Spanish systems, as well as any high or low in such relationship.

The participants will be obliged to report on the Spanish and foreign systems in which they participate and on the fundamental rules governing those who have a legitimate interest in applying for the information.

Article 8. Spanish systems recognized by this Law.

For the purposes of this Law, and without prejudice to the recognition of new systems in the future, in accordance with Article 4, they are considered and recognised as Spanish payment and clearing systems and settlement of securities and derivative financial products:

(a) The Bank of Spain's Settlement Service, including its links to the other systems which, in other countries, form part of the payment interconnection and settlement system managed by the European System of Banks Central.

(b) The Spanish Interbank Payments Service, currently managed by the Banking Clearing House of Madrid, and whose purpose is to facilitate the exchange, clearing and settlement of payment orders, encrypted in euro or in other currencies to be established in their operating rules, which are submitted to the credit institutions of that Member State which have been admitted to the Service.

(c) The Securities Clearing and Settlement Service, managed by "Securities Clearing and Settlement Service, Limited Company," and whose regulation is contained in Law 24/1988 of July 28, of the Securities Market, and in its development provisions.

d) The Clearing and Settlement Service of the Stock Exchange of Barcelona, managed by the "Sociedad Rectora de la Bolsa de Valores de Barcelona, Sociedad Anonima", regulated by Law 24/1988 and its development provisions State and regional.

e) The Clearing and Settlement Service of the Stock Exchange of Bilbao, managed by the "Sociedad Rectora de la Bolsa de Valores de Bilbao, Sociedad Anonima", regulated by Law 24/1988 and its development provisions State and regional.

f) The Service of Compensation and Settlement of the Stock Exchange of Valencia, managed by the "Sociedad Rectora de la Bolsa de Valores de Valencia, Sociedad Anonima", regulated by Law 24/1988 and its development provisions State and regional.

g) The Central de Annotations of the Public Debt Market in Annotations, managed by the Banco de España, and whose regulation is contained in Law 24/1988, of July 28, of the Securities Market, and in its provisions of development.

(h) The compensation and settlement regimes for contracts traded on the markets "MEFF, Sociedad Rectora de Productos Financieros Derivados de Renta Variable, Sociedad Anonima", and " MEFF, Sociedad Rectora de Productos Financial Derivatives of Fixed Income, Limited Company ", managed by these companies and authorized by the Minister of Economy and Finance, as well as in the market" FC&M, Society Rector of the Market of Futures and Options on Citrus, Public limited liability company ", in accordance with the provisions of Law 24/1988 of 28 July.

i) The system of clearing and settlement of "AIAF Mercado de Renta Fija, Sociedad Anonima", whose operation was authorized by the Minister of Economy and Finance, in accordance with the provisions of Article 77 of the Law 24/1988, July 28.

CHAPTER III

Firmness of the liquidations

Article 9. Compensation.

For the purposes of this Law, compensation shall be deemed to be the replacement, in accordance with the rules of operation of a system, of the rights and obligations arising out of the transfer orders accepted by it, by a single credit or by a single obligation, so that only such credit or net obligation is payable.

Article 10. Fund and securities transfer orders.

For the purposes of this Act, orders for the transfer of funds and securities shall be the instructions given by a participant who are intended to:

(a) Put a quantity of money at the disposal of a final recipient, or assume or cancel a payment obligation as defined in the rules of a system, provided that the instructions are cured for execution by means of a seat on the accounts of a participant, a Central Bank or a credit institution.

b) Transmit the property or any other right over one or more derivative financial products or securities, by logging into a registry or otherwise crediting the transmission.

Article 11. Validity and firmness of the transfer orders.

1. Transfer orders submitted to a system by its participants, once received and accepted in accordance with the rules of operation of the system, shall be irrevocable for their payer.

The orders referred to in the preceding paragraph, the compensation which, where appropriate, takes place between them, the obligations resulting from such compensation, and those which are intended to liquidate any other commitments provided by the system to ensure the good end of the accepted transfer orders or of the compensation made, shall be firm, binding and legally enforceable for the participant obliged to comply with and oppose third parties, may be cancelled pursuant to Article 878 of the Code of Commerce, not contested or annulled for no other cause.

2. The provisions of the above paragraph:

(a) It is without prejudice to any action which may be taken by the body or any creditor to require, where appropriate, the compensation which corresponds, or the responsibilities arising, for a performance contrary to the law, or any other cause, of those who have performed such action or who have been unduly beneficiaries of the operations carried out.

(b) No obligation for the settlement manager or agent to ensure or supplement the lack of cash or securities of a participant for the purposes of the settlement of an order or a clearing, or the an obligation to use in such a means other than those provided for in the rules of operation of the system.

CHAPTER IV

Effects of insolvency proceedings

Article 12. Insolvency proceedings.

For the purposes of this Law, bankruptcy proceedings and the suspension of payments are considered insolvency proceedings, as well as any measure of a universal nature, as provided for by Spanish or other State legislation, for the liquidation of an entity or for its reorganization, which seeks to have the suspension of the transfer orders, or of the payments that the participant may or must make, or the imposition of limitations on the same.

Article 13. Effects on transfer orders and compensation.

In addition to the provisions of Article 11, the opening of a procedure for the insolvency of a participant in a system shall not affect the obligations of that participant:

(a) arising from the transfer orders received and accepted by the system prior to the time when the said opening was communicated to the system or which, exceptionally, had been submitted after the the opening of the insolvency proceedings and compensation or settlement on the same day, provided that the system operators are able to prove that they have not been aware of and should have had no knowledge of the initiation of such proceedings.

(b) resulting from the compensation which, if any, is carried out between those orders on the same day as the communication has been received.

(c) The purpose of which is to liquidate on that day any other commitments provided by the system to ensure the good end of the accepted transfer orders or the compensation made.

These obligations shall be settled, in accordance with the rules of the system, under the guarantees and other assets and commitments established for these purposes by the system.

Article 14. Effects on guarantees.

1. In the event of the opening of a procedure for the insolvency of a participant in a system, its managing body or its settlement agent and, where appropriate, the other participants in the insolvency proceedings, they shall have an absolute right of separation with respect to the guarantees. constituted, by the participant himself or by a third party, in his favor.

2. This separation right shall also assist the Banco de España in respect of guarantees provided in its favour by any entity which is its counterpart or guarantor in monetary policy operations, or associated with the liquidation of the systems.

3. The separation rights referred to in the preceding paragraphs shall also benefit, in respect of guarantees lodged in their favour in Spain within the framework of the analogous operations they carry out, to the European Central Bank, to any other Central bank of a Member State of the European Union, and to the management or settlement agents of existing systems in the European Union which are communicated in accordance with the provisions of Article 6 and Article 10 of this Regulation. Directive 98 /26/EC.

4. In particular, neither the constitution or acceptance of the guarantees referred to in the preceding paragraphs, nor the balance of the accounts or records in which they are materialised, shall be impugable in the case of retroactive measures linked to the insolvency proceedings. The guarantees shall also not be subject to vindication in the terms provided for in Article 324 of the Trade Code for the securities.

5. The cash and securities in which the securities are realised may be applied to the settlement of the guaranteed obligations, even in the event of the opening of insolvency proceedings, and may be provided by the managing or settlement agents of the the system and the Central Banks to follow, in the case of securities, the disposal procedure provided for in Article 322 of the Trade Code.

For the disposal of securities, the delivery to the governing body of the corresponding secondary market of the public or private document of the lodging of the guarantee, together with the certification issued by the Central Bank, shall be sufficient. or by the managing body or the settlement agent of the system, accrediting of the amount of the amounts due, liquid and enforceable, which are executed, accompanied by the securities themselves, or the certificate certifying that they are registered in the register which proceed.

The date of incorporation of the guarantee on the books or records of the system or of the Central Bank, as well as the balance and date shown in the aforementioned certification, shall provide evidence against the institution itself and third parties.

6. Without prejudice to the above paragraphs, the excess resulting from the liquidation of the corresponding obligations under the said guarantees shall be incorporated into the equity of the participant subject to the procedure of the insolvency.

Article 15. Transfer orders made and guarantees incorporated in other Member States of the European Union.

1. In the event of the opening of insolvency proceedings of a Spanish entity participating in a system recognised in another Member State of the European Union, in accordance with Directive 98 /26/EC, the rights and obligations arising from its participation in it, shall be determined by the national legislation applicable to that system.

2. The Spanish legislation will be applicable, in terms of its actual legal effects, to the legally registered guarantees in a register based in Spain in favour of a Spanish or foreign system, of its participants or the Banco de España, of the Banco de España. European Central or other Central Banks of the Member States of the European Union, linked to their monetary policy operations or associated with the liquidation of those systems.

The securities legally incorporated and registered in a register based in another Member State in favour of a Spanish system, its participants or the Banco de España linked to monetary policy operations or associated with the settlement of the systems shall be governed by the law of the relevant Member State, with regard to their actual legal effects.

3. The provisions set out in the preceding paragraphs shall apply even in relation to securities lodged with securities issued in accordance with Spanish

,

and when some and others are legally registered in a register based in another Member State, but in this case, in the case of securities represented by means of notes, the Ministry of Economy and Finance, proposal by the supervisory authorities of the managing bodies of the Spanish systems, establish appropriate liaison and conciliation procedures to ensure appropriate correspondence between the entries of those foreign registers and the corresponding Spanish register of those securities and the legal effectiveness of the guarantees constituted on the same.

Article 16. Fixing and reporting of the opening of insolvency proceedings.

1. For the purposes of this Law, an insolvency proceedings shall be deemed to have been initiated against a participant in a system where:

(a) Under Spanish law, a declaration of bankruptcy is issued or an application for the suspension of payments is accepted, or (b) a measure of character is adopted by a judicial or administrative authority. universal, as provided for by Spanish or other State legislation, for the liquidation of an entity or for its reorganization, which seeks to have the suspension of transfer orders, or payments which may or may be made by the participant, or the imposition of limitations on them.

2. Any Court which receives the application for the opening of proceedings for the insolvency of a credit institution or an investment firm must communicate it immediately and, at most, within the working day following that of the filing of the the application, the Banco de España and the National Securities Market Commission, requesting in the same written communication the relationship of the systems to which the affected entity belongs and the name and address of its manager. Such bodies shall send the information requested within the following working day, indicating to the Court, in addition, the information necessary to ensure that the successive communications to be sent by the Court, in accordance with the provisions of the next section, arrive at the knowledge of the respective supervisor and the respective managers to the greatest urgency.

3. Any court or tribunal which has opened proceedings for the insolvency of a credit institution or investment firm participating in a system shall, at the same time as the adoption of its decision, communicate its literal content to the monitor and the manager of the systems to which the affected entity belongs. The manager shall immediately inform the system participants of the situation.

This communication shall be transmitted by the Bank of Spain or the National Securities Market Commission, as appropriate, immediately to the other Member States.

Similarly, the Banco de España and the National Securities and Exchange Commission will bring to the attention of the managers of the respective Spanish systems, communications of the same nature as they receive from another Member State. of the European Union or a third country.

The supervisory bodies of autonomic securities clearing and settlement systems will perform or receive the aforementioned communications through the National Securities Market Commission.

4. The communication to the relevant system of insolvency proceedings initiated in relation to a participant shall be understood to mean that the system operator receives the communication referred to in paragraph 3 above or, in the case of in the case of a participant subject to the law of a non-member State of the European Union, at the time when the system manager is aware of its existence by communication of the affected participant itself, or by any other means ensuring its effective existence and scope.

CHAPTER V

The "Interbank Payments Service, Anonymous Society"

Article 17. Nature, functions and monitoring.

1. The management of the Spanish Service for Interbank Payments, as referred to in Article 8 (b) of this Law, shall be undertaken by an anonymous company which shall be entitled under the social name of " Service for Interbank Payments, Society Anonymous ".

Such a company shall act under the principle of financial equilibrium and shall have the sole purpose of facilitating the exchange, clearing and settlement of funds transfer orders between credit institutions.

The company may participate in the other systems governed by this Law, without it being able to assume risks other than those derived from the activity that constitutes its exclusive object. The Minister of Economy and Finance, prior to the Bank of Spain's report, will establish those financial intermediation activities that society can perform and that are necessary for the development of its functions.

In the context of its social object, the company may establish with other bodies or entities that develop analogous functions, within or outside the national territory, the relationships it deems appropriate for the best development of the functions that they are responsible for, and assume the management of other systems, or similar purpose services, other than the Spanish Interbank Payments Service.

2. The company shall lay down the basic rules for the operation of the systems it manages, including the system of accession to them, the conditions governing the orders placed on those systems and the time at which they are deemed to be accepted. as the compensation procedures for the same and the means of coverage of the obligations assumed by the participants.

The company may accept, manage and execute the guarantees to constitute in the systems it manages, keep records of the operations and guarantees and, in general, perform all acts of disposition and administration are necessary or appropriate for their best operation.

The condition of the company's shareholder will not be required to participate in the Interbank Payments Service.

3. The supervision of the company will be exercised by the Banco de España, which it will be responsible to authorize, prior to its adoption by the corresponding organs of the society, the social statutes and its modifications, as well as the norms the basic functioning of the systems and services it manages and the other instructions governing its operation, without prejudice to the powers conferred on the bodies of the company by those statutes or rules. The basic rules for the operation of the systems shall be published in the "Official State Gazette".

4. The intervention and sanctioning regime established by Law 26/1988 of 28 July, of Discipline and Intervention of the Credit Entities, will apply to society.

Article 18. Legal regime.

1. The actions of the "Inter-bank Payments Service, Limited Company", will be nominative and must be fully disbursed. The Minister for Economic Affairs and Finance, after a report by the Banco de España, will establish the criteria for determining the entities directly involved in the processes of exchange, clearing and settlement of transfer orders. funds to participate in the capital of the "Interbank Payments Service, the Anonymous Company", and to distribute the capital of the latter among those funds.

2. For the extension or reduction of the capital of the company, where they are motivated by high or low shareholders, the agreement of the Board of Directors shall be sufficient, without application of the provisions of Articles 158 and 166 of the Law of Public Limited Companies.

3. The members of the Board of Directors of the company, and their directors general or assimilated, shall meet the conditions of good repute and professionalism required of the administrators of the private banks. The exercise of such charges shall be compatible with the performance of similar charges, or any other activity or service, in any type of credit institution; such charges shall not count on the limitations which, in respect of the maximum number of Company boards or directors, govern for the directors and senior managers of the Spanish credit institutions.

The Council will appoint its President, on a proposal from the Bank of Spain.

4. The company shall be subject to audit of its accounting statements, in accordance with the terms of Law 19/1988, of July 12, of Audit of Accounts, and its implementing rules.

Additional disposition first.

At the time of its constitution, which must occur within a maximum period of one year, counted from the entry into force of this Law, "Service of Interbank Payments, Company Anonymous", will assume the full rights and obligations for which the Banking Clearing House of Madrid is the holder. The House shall take the necessary measures to make the preceding provision effective.

The credit institutions that, at the date of entry into force of this Law, are members of the Chamber of Banking Compensation of Madrid may be shareholders of "Service of Interbank Payments, Company Anonymous".

The Banco de España will publish in the "Official State Gazette" the date of the entry into operation of the aforementioned Service.

Additional provision second.

This Law is adopted pursuant to Article 149 (1.6.a and 11.a) of the Constitution.

Additional provision third.

The deadline for resolving and notifying the resolution in the sanctioning procedure applicable to the subjects acting on the financial markets, regulated by Royal Decree 2119/1993 of 3 December, as well as in the proceedings Penalties resulting from the commission of the infringements provided for in Law 19/1998 of 12 July, of Audit of Accounts, will be one year, extensible as provided for in Articles 42.6 and 49 of Law 30/1992, of 26 November, of the Legal of Public Administrations and of the Common Administrative Procedure.

Additional provision fourth.

The following provisions of Law 40/1979 of 10 December on the Legal Regime for the Control of Changes are amended:

1. A new paragraph three is added to Article 2 of the following wording:

" Three. In accordance with Articles 57.2 and 60.1 of the Treaty establishing the European Community, it shall be prohibited or limited, in terms of Community rules, to carry out certain movements of capital. and its related recovery, payment or transfer operations in respect of third countries for which Community Regulations have been issued by adopting the appropriate measures.

Likewise, and pursuant to Article 59 of the Treaty establishing the European Community, it shall be deemed to be prohibited or limited, in terms of Community rules, to the performance of certain capital movements and their corresponding recovery, payment or transfer operations in respect of third countries for which the Council of the European Union has adopted safeguard measures.

When, in accordance with the provisions of the two preceding paragraphs, the Community rules recognize the powers of the Member States or impose upon them the necessary measures necessary for the correct application of the those rules, the Government, by agreement of the Council of Ministers, shall establish any necessary subsequent specifications, including the applicable authorisation procedure, if it were to proceed.

In accordance with Article 60.2 of the Treaty establishing the European Community, the Government, by agreement of the Council of Ministers, acting on a proposal from the Minister for Economic Affairs and Finance, may not, have adopted the measures referred to in Article 60.1 of that Treaty, for serious political reasons and for reasons of urgency, to take unilateral action against a third country in respect of capital movements and payments. '

2. A new paragraph 4 is added to Article 2 of the following wording:

" Four. The Government, by agreement of the Council of Ministers, acting on a proposal from the Minister for Economic Affairs and Finance, may prohibit or limit the performance of certain capital movements and their corresponding recovery, payment or transfer operations. for a State or group of States in application of measures taken by international bodies other than the European Community, of which Spain is a member. "

3. Article 10 (1) is reworded as follows:

" One. It constitutes a very serious administrative infringement of the control of changes in the performance of acts, businesses, investments, transactions in general or operations which have been prohibited as a result of the measures taken under the the provisions referred to in Article 2 (3) and (4) of this Law. '

4. Paragraph 1 of Article 10 is set out in paragraph 2.

5. Article 10 (2) is replaced by paragraph 3, which is amended as follows:

" Three. Constitutes minor administrative infringement:

(a) The failure to declare the acts provided for in Article 2 of this Law when required by the rules of change control.

(b) Failure to comply with the requirements made in writing by the competent bodies in the performance of their duties. "

6. Article 10 (3) is replaced by the following paragraph 4, which is given new wording:

" Four. Very serious infringements will be sanctioned with a fine, which may amount up to the economic content of the transaction.

Serious violations will be sanctioned with fine, which may amount to up to half the economic content of the operation.

Minor infractions will be punishable by fine, which may amount to 5 per 100 of the economic content of the operation. "

7. Article 10 (4) and (5) shall be the subject of paragraphs 5 and 6 respectively.

Additional provision fifth.

1. The wording of the third paragraph of Article 10 of Law 46/1984 of 26 December, regulating the collective investment institutions, is amended, which will have the following wording:

" 3. The securities and other assets that the portfolio includes shall not be eligible for or constitute a guarantee of any kind, except to serve as collateral for the institution's operations in the official secondary derivatives markets. Where applicable, the securities and assets that are part of the portfolio shall be deposited in the custody of the depositaries covered by this Law. However, they may be the subject of securities lending operations with the securities to be regulated. "

2. The wording of Article 25 of Law 46/1984 of 26 December, which is the regulator of the Collective Investment Institutions, shall be amended to read as follows:

" Article 25. Equity investment.

The equity of these funds will be invested in fixed income securities and high liquidity financial instruments, in accordance with the requirements that are required to be regulated.

You may not be a part of these funds shares, convertible bonds, nor, in general, any right to participate in corporate capital.

Nor may they be part of the assets of these active funds with a remainder of repayment or repayment in excess of the amount to be determined on a regulated basis, except in the case of fixed income securities whose profitability is determines, at a frequency not exceeding one year, by reference to a short-term interest rate index, and provided that the investment in these securities does not exceed 25 per 100 of the institution's asset. '

Additional provision sixth. Declaration of 31 December 1999 as being indeft for the purposes of settlement of obligations in inter-bank payment systems.

1. In relation to the transactions to be settled through the systems referred to in Article 8 of this Law, on 31 December 1999 it shall be deemed to be indeft for all purposes.

2. The consideration of the said date as an indeft day shall also be:

(a) To the documents, means of payment and transfers of funds presented to compensation through the National System of Electronic Compensation, regulated by Royal Decree 1369/1987, of 18 September, even for the purposes of practice of a notarial or equivalent statement.

(b) Any other settlement transaction to be carried out on current accounts opened at the Banco de España.

Additional provision seventh.

The fourth additional provision of Law 29/1998 of July 13, regulating the Administrative-Administrative Jurisdiction, is amended, incorporating a point 6 to its current wording:

" 6. The decisions of the Minister for Economic Affairs and Finance, which resolve the resources of the Court against acts or provisions dictated by the Accounting and Audit Institute, directly, in a single instance, before the Chamber of National Audience-Administrative Dispute. "

Single transient disposition.

Without prejudice to the application of the provisions of this Law, from the moment of its entry into force, the Spanish systems recognized in Article 8 of this Law shall publish their general rules of accession and operation in the Official Gazette of the State and, in addition, if necessary, in the corresponding autonomous "Official Journal", within the maximum period of six months, to be counted from the entry into force of this Law.

First disposition first.

The Government is empowered to provide the necessary provisions for the development and implementation of this Law.

Final disposition second.

This Law shall enter into force on the day following its publication in the "Official State Gazette".

Therefore,

I command all Spaniards, individuals and authorities, to keep and keep this Law.

Madrid, 12 November 1999.

JOHN CARLOS R.

The President of the Government,

JOSÉ MARÍA AZNAR LÓPEZ