Nội dung toàn văn Circular 42/2015/TT-NHNN on open market operation
STATE BANK OF VIETNAM | SOCIALIST REPUBLIC OF VIETNAM |
No. 42/2015/TT-NHNN | Hanoi, December 31, 2015 |
CIRCULAR
ON OPEN MARKET OPERATION
Pursuant to the Law on the State bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;
Pursuant to the Law on the State bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;
Pursuant to the Decree No. 156/2013/ND-CP dated 11 November 2013 of the Government, providing for functions, duties, authorities and organizational structure of the State Bank of Vietnam;
At the request of the Director of the Monetary Policy Department;
The Governor of the State bank of Vietnam promulgates the Circular on open market operation.
Chapter I
GENERAL PROVISIONS
Article 1. Scope
This Circular provides for the organization and performance of open market operation at the State bank of Vietnam (hereinafter referred to as “State bank”)
Article 2. Regulated entities
1. Units affiliated to the State bank.
2. Credit institutions and branches of foreign banks established, operating in accordance with the Law on credit institutions (Except for microfinance institutions and people’s credit funds) and recognized as a member in open market operation by the State bank (hereinafter referred to as “member").
Article 3. Definitions
1. “Open market operation” refers to an activity by a State bank to either buy or sell financial instruments to (or from) the members.
2. “Repurchase agreement (Repo)” means the purchase and receipt of ownership to financial instruments from a member by the State bank, at the same time the member commits to re-purchase those financial instruments after a certain period of time.
3. “Reverse repo” means the sale and transfer of ownership to financial instruments to a member by the State bank, at the same time the State bank commits to re-purchase those financial instruments after a certain period of time.
4. “Outright purchase” means the purchase and receipt of ownership to financial instruments from a member by the State bank without a commitment to re-sell those financial instruments.
5. “Outright sale” means the sale and transfer of ownership to financial instruments to a member by the State bank without a commitment to re-purchase those financial instruments.
6. “Volume tender” means the bid consideration on the basis of the volume of financial instruments offered by a member, the volume of financial instruments which the State bank needs to buy or sell and the interest rate announced by the State bank.
7. “Interest-rate tender” means the bid consideration on the basis of interest rate, the volume of financial instruments offered by a member, interest rate and the volume of financial instruments at which the State bank is willing to buy or sell.
8. Fixed-rate allotment means a pricing method in which all bid-winning volume is calculated at a same bid-winning interest rate.
9. Variable-rate allotment means a pricing method in which each winning amount is calculated at the respective offering interest rate stated in its bid.
10. “Date of notice” refers to the day on which the State bank issues a notice on sale or purchase of financial instruments.
11. “Date of bidding” refers to the day on which the State bank organizes the bidding, bid consideration and announces the bid results.
12. “Date of purchase” refers to the day on which the ownership of financial instruments is transferred to the buyer and the buyer makes payment for financial instruments to the seller.
13. “Date of re-purchase” refers to the day on which the buyer transfer the ownership of bought financial instruments (regarding repo and reverse repo) back to the seller and the seller pays the re-purchase price of the financial instrument to the buyer.
14. “Haircut” means the ratio between the value of financial instruments at the valuation time in repo, reverse repo and the selling price between the State Bank and a member specified by the State bank in each period.
15. Transaction rate of financial instruments means the rate of financial instruments participating in open market operation (selling price between the State Bank and members).
16. Period of repo or reverse repo means the period of days that starts from the day succeeding the purchase day to the date of re-purchase, including weekends and public holidays.
17. Remaining term to maturity of a financial instrument refers to a period of time beginning on the day of purchase/sale organization and ending on the date on which its principal payment is due.
Article 4. The Board of Executives of open market operation
1. The Board of Executives of open market operation (hereinafter referred to as “Board of Executives”) shall operate the open market operation under the provisions of this Circular on behalf of the Governor of the State bank. The Governor of the State bank shall decide the establishment and operation of the Board of Executives.
2. The Board of Executives shall have the following rights and duties:
a) Execute the open market operation;
b) Decide the direction of the execution of open-market operations in each period; c) Handle issues arising during the execution of open-market operations.
Article 5. Eligibility requirements for members of open market operation
Credit institutions and branches of foreign banks (except for microfinance institutions and people’s credit funds) shall be recognized as a member in open market operation when all of the following conditions are satisfied:
1. Have a VND checking account opened at the State bank.
2. Have a swift code granted by the State bank.
Article 6. Procedures for recognizing members of open market operation
1. Credit institutions and branches of foreign banks that wish to participate in open market operations shall send an application for participating in open market operation in accordance with Annex No. 01/TTM enclosed herewith to the State bank directly or by post so as to be considered granting the certificate of member of open market operation.
2. Within 05 working days from the receipt of the application for participating in open market operation, the State bank shall grant the certificate of member of open market operation to the credit institution or the foreign bank branch if it satisfies the requirements specified in Article 5 hereof. If the application is not sufficient, a written notice must be sent to the credit institution/foreign bank branch.
3. The procedure for re-recognizing members for members that have ended their membership status as specified in Point b Clause 1 and Clause 2 Article 7 hereof shall be implemented similar to those applying for the first time.
Article 7. Termination of membership
1. The membership shall be terminated in the following cases:
a) A member is merged, consolidated, divided, dissolved or declared bankrupt;
b) When the VND checking account opened at the State bank of a member is closed, the State bank shall issue a written notice on the termination of membership of such member.
2. The member that wishes to terminate its membership status and has fulfilled its obligations to the State bank on the open market operation shall send an application for termination of membership status in accordance with Annex No. 02/TTM enclosed herewith to the State bank directly or by post. Within 05 working days from the receipt of the application for termination of membership status the State bank shall issue a written notice on the termination of membership status to the member.
3. When terminating a membership status, the transaction center of the State bank (hereinafter referred to as “transaction center”) shall notify the Information Technology Department to withdraw the access password and electronic signature password of the member.
Article 8. Signing authority in open market operation
1. The person who has the authority to sign the documents related to the recognition, termination of membership and open market operation at the State bank on behalf of the credit institution or the foreign bank branch is its legal representative.
2. The Director of the Transaction center is the person who has the authority to sign the documents related to the recognition, termination of membership and open market operation with the members (or may authorize the Deputy Director of the Transaction center to sign and be responsible for such authorization)
Article 9. Provision of access password, electronic signature password and decentralization for members
When a credit institution or foreign bank branch is recognized as a member, the State bank shall provide his/her the access password, electronic signature password and create accounts with various levels of privileges for staffs participating in the open market transaction at the request of such member.
The provision of access password and electronic signature made by the Information technology department shall comply with the regulations of the State bank on the management, use of digital signature, digital certificates and digital signature certification service of the State Bank. The decentralization for members participating in the transaction of open market operation shall be done by the Transaction center in accordance with the procedure for open market operation.
Article 10. Financial instruments traded through open market operation
1. Financial instruments which are permitted by the State bank to be traded through open market operation shall satisfy the following conditions:
a) They may be transferred and are in the list of financial instruments entitled to be traded through open market operation;
b) They belong to the legal beneficial right of the member;
c) They are issued in VND;
d) They are deposited directly at the State bank or deposited at customer accounts of the State bank opening at the Vietnam Stock Depository Center before applying for sale of financial instruments to the State bank;
dd) Their remaining term to maturity in repo/reverse repo is longer than the period of repo/reverse repo under the notice of the State bank; they may only be applied for sale before the registered final maturity date.
2. The list of financial instruments entitled to be traded through open market operation and the haircut regulated by the Governor of the State bank.
Article 11. Methods of sale or purchase of financial instruments
1. Repo
2. Reverse repo
3. Outright purchase
4. Outright sale
Article 12. Transaction day
Transactions in open market operation shall be done on a working day. If the re-purchase date or the maturity date of financial instruments is not on a working day, the payment and transfer of ownership of financial instruments shall be done on the following working day and interests may only be calculated in accordance with the period of repo/reverse repo.
Article 13. Procedures of open market operation
1. The procedure of open market operation guides the following contents:
a) Recognition and termination of membership status in open market operation;
b) The State bank and the members signing, delivering and receiving the framework contract for purchase/sale of financial instruments;
c) The State bank (Transaction center) notifying the sale or purchase of valuable papers;
d) Members depositing financial instruments;
dd) Members submitting bid submissions;
e) The State bank (Transaction center) organizing bid consideration;
g) The State bank (Transaction center) announcing bid results;
h) The State bank and the members signing, delivering and receiving the specific contracts for purchase/sale of financial instruments;
i) Making payment and transfer of ownership of financial instruments;
k) Handling cases involving members not making payment or not complying with the contract;
l) Handling other issues.
2. The Governor of the State bank of Vietnam regulates specific procedures of open market operation.
Chapter II
SPECIFIC PROVISIONS
Article 14. Bidding method
Open market operations are conducted via volume tender or interest-rate tender. The State bank shall select an appropriate bidding method based on the objectives of operating the monetary policy in each period.
1. Volume tender
a) The State bank notifies the interest rates for sale or purchase of financial instruments to the members;
b) The State bank decides to notify or not notify the volume of financial instruments needed to be sold or purchased by the State bank in the bidding notice of each transaction in the open market operation;
c) The members register to bid financial instruments to be purchased or sold at the interest rate announced by the State bank;
d) If the total volume of financial instruments bidding for by the members is equal or lower than the volume of financial instruments to be purchased or sold of the State bank, the bid-winning volume is equal to the total volume of financial instruments bidding for by the members and the bid-winning volume of each member is the volume of financial instruments bidding for by such member;
dd) If the total volume of financial instruments bidding for by the members exceeds the volume of financial instruments to be purchased or sold of the State bank, the bid-winning volume of each member is distributed in proportion to the volume of financial instruments bidding for by such member and corresponding to the volume of financial instruments based on the par value rounded down to a multiple of the par value of such financial instruments; the bid-winning volume is equal to the total volume of financial instruments bidding for by the members and not exceeding the volume of financial instruments to be purchased of sold of the State bank;
e) If the bid-winning member registers many types of financial instruments to be purchased or sold in the bid submission:
(i) If those do not include the financial instruments of which the exchange ratio at each transaction in open market operation has been stipulated by the State bank, the State bank shall determine the priority order of each type of financial instruments as follows:
- Financial instruments with shorter maturity term;
- Financial instruments registered for sale or purchase in larger volume;
(ii) If those include both financial instruments of which the exchange ratio is stipulated and financial instruments of which the exchange ratio is not stipulated, the State Bank shall consider the bid based on the principle that the proportion of bid-winning financial instruments must be correspondent with the exchange ratio of financial instruments registered at the bid submission in accordance with effective provisions of the State Bank. The determination of priority order between the financial instruments of which the exchange ratio is not stipulated and those of which exchange ratio is stipulated shall be implemented in accordance with provisions specified in (i) Point e Clause 1 of this Article.
2. Interest-rate tender
a) The State bank decides to notify or not notify the volume of financial instruments needed to be sold or purchased by the State bank in the auction notice of each transaction in the open market operation;
b) The State bank decides whether to apply the fixed-rate allotment or variable-rate allotment;
c) Members shall apply for bidding upon different interest rates (at the maximum of 3 offering interest rates for a repo/reverse repo in a bid submission) and volumes of financial instruments to be purchased or sold respectively subject to such interest rates. Offering interest rates shall be calculated in percentage per year (%/year) and shall be rounded up to decimals with 2 numerals following the decimal point;
d) Members’ bid submissions shall be put in order of offering interest rates from higher to lower ones in cases where the State Bank purchases financial instruments, or from lower to higher ones in cases where the State Bank sells financial instruments;
dd) The State bank shall consider bids according to the descending order from the highest offering interest rate to the lowest offering interest rate (in case the State bank purchases financial instruments) or according to the ascending order from the lowest offering interest rate to the highest offering interest rate (in case the State bank sells financial instruments) within the minimum or maximum offering interest rate range of the State Bank at which the volume of financial instruments to be purchased or sold by the State Bank is obtained;
(i) Regarding fixed-rate allotment: The bid-winning interest rate is the lowest offering interest rate (in case the State bank purchases financial instruments) or the highest offering interest rate (in case the State bank sells financial instruments) within the minimum or maximum offering interest rate range of the State Bank at which the volume of financial instruments to be purchased or sold by the State Bank is obtained;
(ii) Regarding variable-rate allotment: Bid-winning interest rate of each winning member is the interest rates offered by such member;
e) The bid-winning volume of members is the total of offering volumes with interest rates equal to or higher than the bid-winning interest rate (in cases where the State Bank purchases financial instruments) or with offering interest rates equal to or lower than the bid-winning interest rate (in cases where the State Bank sells financial instruments);
g) At the bid-winning interest rate, if the total quantity of financial instruments bidding for by the members exceeds the remaining quantity of financial instruments to be purchased or sold of the State bank, the bid-winning quantity of each member is distributed in proportion to the quantity of financial instruments bidding for by such member at the bid-winning interest rate and corresponding to the quantity of financial instruments based on the par value rounded down to a multiple of par value of such financial instruments;
h) At the bid-winning interest rate of a member, if there are many types of financial instruments to be purchased or sold, the State bank, when considering bids, shall determine each type of financial instruments in the order specified in Point e Clause 1 this Article.
Article 15. Notice on sale or purchase of financial instruments
Prior to each bidding session in open market operation, the State bank (Transaction Center) shall issue a notice on sale or purchase of financial instruments to members with the following contents:
1. Date of bidding.
2. Bidding method.
3. Bid consideration method.
4. Purchase/sale method.
5. The volume of financial instruments to be purchased or sold (calculated according to the selling price or par value) (except for cases without prior notice on the volume of financial instruments to be purchased of sold of the State bank).
6. Types of financial instruments to be purchased or sold.
7. Transaction ratios of financial instruments (in case where the State bank purchases them).
8. Tenor of financial instruments.
9. Issue dates of financial instruments (in case where the State bank sells them).
10. Interest payment method of financial instruments (in case where the State bank sells them).
11. Payment due date of financial instruments (in case where the State bank sells them).
12. Remaining term to maturity of financial instruments (in case where the State bank sells them).
13. Repo/reverse repo period (number of days).
14. Interest rates applied by the State bank when purchasing or selling (in case of volume bidding).
15. Interest rate for issuance on the primary market of financial instruments (in case where the State bank sells them).
16. Time of receipt of the bid submission of members.
17. Bid closing time.
Article 16. Bid submission of members
1. Based on the notice on sale or purchase of financial instruments issued by the State bank, the members shall submit their bid submissions via the computer networks connected to the State bank (Transaction Center) with the following contents:
a) Types of financial instruments to be purchased or sold;
b) Tenor of financial instruments;
c) The volume of financial instruments to be purchased or sold (calculated according to the payment price or par value);
d) Offering interest rate of each financial instrument to be purchased or sold (in case of interest-rate tender);
dd) Issue dates of financial instruments (in case where the member sells them).
e) Interest payment method of financial instruments (in case where the member sells them);
g) Payment due date of financial instruments (in case where the member sells them);
h) Remaining term to maturity of financial instruments (in case where the member sells them);
i) Purchase/sale method;
k) Repo/reverse repo period (number of days);
l) Interest rate for issuance on the primary market of financial instruments (in case where the member sells them).
2. Within the time limit for submission of bid submission, members may cancel their submissions or change their submissions to new ones.
3. The total volume of financial instruments to be purchased or sold of a member in a bid submission must be at least VND 1,000,000,000 (One billion VND).
Article 17. Invalid bid submission
A member’s bid submission is considered invalid in the following cases:
1. The electronic signature of the representative of such member in the bid submission is wrong.
2. The bid submission offers more interest rates than required.
3. The offering interest rate has not been rounded up to decimals with 2 numerals following the decimal point.
4. The total volume of financial instruments in a bid submission is lower than VND 1,000,000,000.
5. The member selling financial instruments does not have, or does not have sufficient financial instruments deposited at the State bank as required.
6. The remaining term to maturity of financial instruments registered for sale is shorter than the repo/reverse repo period.
7. The financial instruments registered for sale are not in the list of financial instruments to be purchased or sold of the State bank or the financial instruments registered for sale after the registered final maturity date.
8. Transaction ratios of financial instruments do not match the ratio specified in the notice of the State bank.
9. The specific volume of financial instruments registered for sale by the members does not match the specific volume eligible for depositing specified in Point d Clause 1 Article 10 hereof (in case the State bank purchases them).
10. The quantity offered to bid is larger than the quantity of financial instruments to be purchased or sold of the State bank (in case the quantity of financial instruments to be purchased or sold of the State bank is announced).
11. The bid submission’s contents are not properly filled in accordance with the procedure of open market operation.
Article 18. Organization of bid consideration
1. The State bank (Transaction Center) shall organize a bid consideration in accordance with the notice on purchase or sale of financial instruments of each bidding session, the regulations specified in this Circular and the procedure of open market operation.
2. The State bank (Transaction Center) shall not consider bid submissions that are found ineligible as prescribed in Article 17 and notify them to the members submitted such bid submissions at the end of the bidding session.
Article 19. Determination of purchasing price or selling price of financial instruments
1. In case of repo/reverse repo
1.1. Value of the financial instrument at the valuation time
1.1.1. Regarding short-term financial instruments:
a) Short-term financial instruments on which interest is paid right upon the issuance:
G: Value of the financial instrument at the valuation time
MG: Face value of financial instrument
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
t: Remaining term to maturity of financial instrument (number of days left).
b) Short-term financial instruments of which both principal and interest are paid in arrears:
In which:
G: Value of the financial instrument at the valuation time
GT: Value of matured financial instrument including face value and interest
MG: Face value of financial instrument
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
t: Remaining term to maturity of financial instrument (number of days left)
Ls: Interest rate for issuance of financial instrument (%/year)
n: Tenor of financial instrument (number of days left).
1.1.2. Regarding long-term financial instruments:
a) Long-term financial instruments on which interest is paid right upon the issuance:
In which:
G: Value of the financial instrument at the valuation time
MG: Face value of financial instrument
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
t: Remaining term to maturity of financial instrument (number of days left).
b) Long-term financial instruments of which both principal and interest are paid in arrears (interest is not compounded with principal amount):
In which:
GT = MG * [1 + (Ls * n)]
G: Value of the financial instrument at the valuation time
GT: Value of matured financial instrument including face value and interest
MG: Face value of financial instrument
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
t: Remaining term to maturity of financial instrument (number of days left)
Ls: Interest rate for issuance of financial instrument (%/year)
n: Tenor of financial instrument (year).
c) Long-term financial instruments of which both principal and interest are paid in arrears (interest is compounded with principal amount):
In which:
GT = MG * (1 + Ls)n
G: Value of the financial instrument at the valuation time
GT: Value of matured financial instrument including face value and interest
MG: Face value of financial instrument
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
t: Remaining term to maturity of financial instrument (number of days left)
Ls: Interest rate for issuance of financial instrument (%/year)
n: Tenor of financial instrument (year).
d) Long-term financial instruments on which interest is paid periodically:
In which:
G: Value of the financial instrument at the valuation time
Ci: Amount of interest and principal payment in the installment i (exclusive of amount of interest and principal payment made on the registered final date prior to the pricing date).
i: Interest and principal payment installment i
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
Ti : Time beginning on the pricing date and ending on the maturity date of principal and interest payment in the installment i (the number of days).
k: The number of interest payment installments in the year.
1.2. Selling price between the State bank and the member is calculated as follows:
GTT = G * (1 - h)
In which:
GTT: Selling price
G: Value of the financial instrument at the valuation time
h: The difference rate between the value of the financial instrument at the valuation time and selling price.
1.3. Re-purchasing price between the State bank and the members is calculated as follows:
In which:
Gm: Re-purchasing price
GTT: Selling price
L: Fixed interest rate or variable interest rate (in case of interest-rate tender) or interest rate announced by the State bank (in case of volume tender) at the bidding session (%/year)
tb: Repo/reverse repo period (number of days).
1.4. The right to receive interest periodically and other income (if any) from financial instruments in repo/reverse repo belongs to the seller. If the buyer receives interest periodically and other income (if any) at the times during the term of repo/reverse repo, the buyer shall return such interest and other income (if any) to the seller at the time of repurchase. The periodical interest and other income (if any) from financial instruments in repo/reverse repo shall not generate any interest during the time the buyer holding such financial instruments.
2. In case of outright sale/outright purchase of financial instruments:
Price for outright sale or purchase of financial instruments between the State bank and members must comply with Point 1.1 Clause 1 this Article.
Article 20. Announcement of bidding results
1. On the bidding date, the State bank (Transaction Center) shall announce the bidding result to each member participating in the bidding via computer network with the following contents:
a) Date of bidding;
b) Bid-winning volume;
c) Bid-failing volume;
d) Date of repurchase/resale (in case of repo/reverse repo);
dd) Bid-winning interest rate;
e) Payment amount.
2. Announcement of bidding results shall serve as the basis for payment and transfer of ownership of financial statement in case or outright sale/purchase, also the basis for making the specific contract in case of repo/reverse repo.
Article 21. Framework contracts for purchase/sale of financial instruments and specific repo/reverse repo of financial instruments
1. The State bank (Transaction Center) and members signing the framework contract for purchase/sale of financial instruments (framework contract) and the specific repo/reverse repo of financial instruments (specific contract) to purchase/sell financial instruments. The signing, receipt and delivery of framework contract and specific contract shall comply with the procedure of open market operation.
2. The framework contract as specified in Annex No. 03/TTM enclosed herewith shall be signed after the credit institution or foreign bank branch is recognized as a member by the State bank. This framework contract shall apply to all purchase/sale of financial instruments between the State bank and the members.
3. The specific contract as specified in Annex No. 04/TTM enclosed herewith shall apply to each repo/reverse repo between the State bank and the members and is an integral part of the framework contract. The members shall sign the specific contract upon the announcement of the bidding result.
4. The framework contract and the specific contract shall serve as the basis for payment and transfer of ownership of financial statement between the State bank and the members in a repo/reverse repo.
Article 22. Making payment and transfer of ownership of financial instruments
1. Upon receiving the bidding result announcement (in case of outright sale/purchase) or the specific contract (in case of repo/reverse repo) signed by the parties, the seller shall transfer the ownership right of financial instruments to the buyer in accordance with law provisions (if the seller is a member, the State bank shall carry out the procedures for transfer of ownership right of financial instruments on behalf of the member according to the framework contract), at the same time, the buyer shall make payment to the seller on the bidding date.
2. In cases of repo/reverse repo, the buyer and the seller shall carry out the procedures for transfer of ownership right of financial instruments and make payment according to the commitments of the parties in the specific contracts on the date when the transaction period expires.
Article 23. k) Handling cases involving members not signing the specific contract, not making payment or not complying with the contract
1. If the member does not sign the specific contract in a repo/reverse repo, the State bank shall cancel the bidding result of such member.
2. If the bid-winning member fails to make payment or fails to pay the full payable amount, the State bank (Transaction center) shall automatically make deduction from such member’s checking account at the State bank to make up for the deficit. If after the abovementioned deduction, the payable amount is still not fully covered, the State bank (Transaction center) shall cancel the unpaid bid-winning amount of such member; the priority order of each type of financial instruments shall comply with Point e Clause 1 Article 14 hereof.
3. When the repurchase payment term is due but the bid-winning member fails to make payment or fails to pay the full payable amount, the State bank (Transaction center) shall automatically make deduction from such member’s checking account at the State bank to make up for the deficit. If the checking account of such member does not have enough money, the State bank shall recognize the deficient amount thereof as overdue debt and the member must bear the late payment interest rate as specified in Clause 5 this Article; at the same time, the State bank shall temporarily hold all the financial instruments and continue to make deduction from the member’s checking account at the State bank to cover the deficient amount (including late payment interest rate) if such checking account has enough money and then return the financial instruments to the member or the State bank may consider selling the financial instruments not yet matured or make payment with the issuing organization when the financial instruments are due to recover the deficient amount (including late payment interest rate).
4. On the date of resale of financial instruments to the State bank, if the member fails to hold enough financial instruments to resell as committed, the State bank shall request the member to supplement the remaining financial instruments for resale to the State Bank. After 05 5 working days from the due date of resale of financial instruments, if the member still fails to hold sufficient financial instruments for resale to the State Bank, the State Bank is entitled to use the amount received and not pay the interest amount to the member; the State bank shall not repurchase financial instruments from the members and the reverse repo is switch to outright sale of financial instruments to the member. At the same time, the member still has to pay the periodical interest and other income (if any) to the State bank in accordance with Point 1.4 Clause 1 Article 19 hereof during the reverse repo.
5. The amount of late payment fines specified in Clause 3 this Article is calculated as follows:
In which:
Gp: Remaining payable amount
Lp: Late payment interest rate (Late payment interest rate equals to 150% of the bid-winning interest rate specified in the specific contract)
np: Number of days of late payment. The number of days of late payment is calculated from the due day of the repurchase payment term to the day calculating the late payment fines
6. The State bank (Transaction center) shall issue a written notice to the members in any of the cases prescribed in Clause 1, 2, 3 or 4 this Article.
Article 24. Suspension of sale or purchase of financial instruments
The State bank shall suspend the sale/purchase of financial instruments to the members in the next 3 bidding sessions in the following cases
1. The member does not sign the specific contract in a repo/reverse repo.
2. The member fails to make payment or fails to pay the full payable amount if winning the bid for purchasing financial instruments, if the repurchase term is due or if the member fails to hold enough financial instruments for resale as committed for the second time onwards, except for force majeure events and the member has submitted a written notice to the State bank (Transaction center).
Chapter III
IMPLEMENTATION CLAUSE
Article 25. Responsibilities of units
1. The Monetary Policy Department shall
a) Take charge and cooperate with units to request the Governor of the State bank to decide the list of financial instruments entitled to be traded through open market operation and the haircut through the open market operation in each period;
b) Propose to the Head of the Board of Executives the types of financial instruments to be purchased/sold, method of purchase/sale, bidding method, bid consideration method, time limit for purchase/sale and interest rates to be applied when purchasing/selling financial instruments;
c) Take charge and cooperate with units in requesting the Governor to promulgate the Decision on organization and operation of the Board of Executives of the open market operation.
2. The Transaction center shall
a) Take charge in establishing and submitting to the State bank the procedures for open market operation in accordance with this Circular;
b) Monitor, evaluate and recognize credit institutions or foreign bank branches as members, terminate membership status and the create accounts with various level of privileges for staffs of the member.
c) Sign, delivery and receive the framework contract, specific contract with the members and handle cases failing to comply with the framework contract and specific contract within their competence;
d) Organize transactions of purchasing or selling of financial instruments between the State bank and the members according to the approval of the Head of the Board of Executives;
dd) Make payment, collect interests (including late payment interest) and do accounting in accordance with law provisions;
e) Carry out the procedures for transfer of ownership right of financial instruments between the State bank and the members;
g) After each transaction in the open market operation, the Transaction center shall report the result of such transaction to the Governor of the State bank, Head of the Board of Executives and the Monetary Policy Department; for other units, the supplementation of information about the result of the transaction in open market operation shall be implemented after receiving the approval of the Governor of the State bank;
h) Act as a focal point for handling issues arising during the transactions in open market operation.
3. The Information technology Department shall:
a) Act as a focal point and cooperate with the Transaction center and other related units in designing, installing and regularly maintaining software programs and ensuring that the transaction and communication network infrastructure for open market operation is stable, smooth, safe and secure, guide members in connecting to the network of the State Bank to conduct open market transactions;
b) Guide the granting and revoking of account password, electronic signature password for members
4. Department of Finance and Accounting shall
Guide the accounting of open market transactions and other issues arising.
5. The Bank Supervision and Inspection Agency shall
Provide names of credit institutions and branches of foreign banks being merged, consolidated, full divided, dissolved and gone bankrupt to the Transaction center and the Information technology Department.
6. Department of Personnel and Organization shall
Act as the focal point and cooperate with units to request the Governor to establish the Board of Executives of open market operation.
Article 26. Responsibilities of members
1. The members must connect to the network of the State bank before joining the open market operation and take responsibilities for personnel, technology and vehicle in the transaction process
2. Carry out other responsibilities as specified in this Circular.
Article 27. Effect
1. This Circular takes effect from April 30, 2016.
2. 2. From the effective date of this Circular, the following documents shall cease to be effective:
a) Decision No. 01/2007/QD-NHNN dated January 05, 2007 of the Governor of the State Bank on THE issuance of the regulation on the open market operation
b) Decision No. 27/2008/QD-NHNN dated September 30, 2008 on the amendment, supplement of several articles of the regulation on the open market operation issued in conjunction with the Decision No. 01/2007/QD-NHNN January 05, 2007 of the Governor of The State Bank;
c) Article 2 of Circular No. 26/2011/TT-NHNN dated August 31, 2011 of the Governor of the State bank on implementing the scheme of administrative procedure simplification in monetary activity under the resolution of the government on the simplification of administrative procedures within the jurisdiction of the State Bank of Vietnam;
d) Article 12 of Decision No. 362/1999/QD-NHNN1 dated October 08, 1999 on the issuance of the regulation on issuance of the state bank bills.
Article 28. Transitional clause
1. Credit institutions and branches of foreign banks recognized as members according to Decision No. 01/2007/QD-NHNN dated January 05, 2007 and Decision No. 27/2008/QD-NHNN dated September 30, 2008 may continue their membership status as prescribed in this Circular without re-registering their membership status.
2. Transactions conducted before the effective date of this Circular on the basis of repo/reverse repo on financial instruments signed between the State bank and the members may continue to be performed under agreements therein.
Article 29. Organization of implementation
Chief of Office, Head of the Monetary Policy Department, Heads of relevant units of Vietnam State Bank, Directors of State Bank’s provincial branches, Chairpersons of Boards of Directors, Chairpersons of Board of Members, General Directors (Directors) of credit institutions and foreign banks’ branches shall be responsible for implementing this Circular./.
| P.P GOVERNOR |
