A new law that will create a legal foundation for the establishment of a regional transaction processing hub in the Dubai International Financial Centre (DIFC), providing payment systems and other ancillary services, has been enacted by Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai, Mohammed Bin Rashid Al Maktoum.
The first such legislation in the GCC region – the Payment System Settlement Finality (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 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.
Omar Bin Sulaiman, Governor of the Dubai International Financial Centre, said, "The enactment of the PSSF Law forms part of a comprehensive infrastructure that DIFC is creating to catalyze the development of the financial services industry in the region. This is in accordance with the vision of Mohammed Bin Rashid Al Maktoum to establish Dubai as a hub for global finance."
According to a statement from the DIFC, in developing this law, it has combined legal best practices from Europe, Hong Kong and New Zealand, amongst 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 DIFC’s statement noted.
The Law also provides additional protection to those using recognized payment systems. According to the DIFC, the rules of such payment systems will be upheld in the DIFC Courts even in the event of insolvency. The DIFC's statement concludes that this will help 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.
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