DECISION

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 DATED 05/01/2007 OF THE GOVERNOR OF THE STATE BANK

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam issued in 1997; the Law on the amendment, supplement of several articles of the Law on the State Bank of Vietnam issued in 2003;
- Pursuant to the Law on Credit Institutions issued in 1997; the Law on the amendment, supplement of several articles of the Law on Credit Institutions issued in 2004;
- Pursuant to the Decree No. 96/2008/ND-CP dated 26/8/2008 of the Government providing for the functions, duties, authorities and organizational structure of the State Bank of Vietnam,
Upon the proposal of the Director of Credit Department,

DECIDES:

Article 1. To amend, supplement several articles of the Regulation on the open market operation issued in conjunction with the Decision No. 01/2007/QD-NHNN dated 05/01/2007 of the Governor of the State Bank as follows:

1. Article 2 shall be amended, supplemented as follows

1.1. Paragraph 10 shall be amended as follows:

“10. Auction day shall be the day when the State Bank organizes the auction, auction appraisal, announces the auction results”.

1.2. To supplement Paragraph 13, Paragraph 14 and Paragraph 15 as follows:

“13. Date of payment: shall be the date when the winning credit institution performs the delivery, receipt of valuable papers and makes payment to the State Bank.

14. Repurchase date: shall be the date when the purchaser resells and transfers the ownership to the bought valuable papers (for time sale, purchase transaction) to the seller, then the seller shall make payment for the repurchase of the valuable papers to the purchaser at the repurchase price.

15. Selling period: shall be the number of days commencing from the auction day of the time sale, purchase session to the repurchase date (including the auction day and excluding the repurchase date)”.

2. Article 5 shall be amended, supplemented as follows:

“Article 5. Recognizing participants to the open market operation

1. Credit institutions shall be recognized as participants to the open market operation upon fully satisfying following conditions:

1.1. They have a deposit account maintained at the State Bank (Banking Operation Department or State Bank branch in province, city);

1.2. They have sufficient necessary facilities to participate in the open market operation, including fax machine, internet connected computer;

1.3. They have registration certificate for participating in the open market operation (in line with the Appendix No. 01/TTM of this Regulation).

2. Credit institutions fully satisfying the conditions as provided for in Paragraph 1 in this Article shall be granted a written recognition by the State Bank as a participant to the open market operation.

3. The written recognition as a participant to the open market operation shall automatically cease its effectiveness in the event where competent State agencies possess documents about the reorganization, dissolution, bankruptcy of the credit institutions or upon the availability of the notice of the State Bank on the failure to fully satisfy the conditions as prescribed in Paragraph 1 of this Article by the credit institutions.

4. Credit Institutions shall return the registration certificate for participating in the open market operation (in line with the Appendix No.01/TTM) to the State Bank (Banking Operation Department) in case where they have been reorganized or where they have fully satisfied the conditions for being reissued the written recognition as a participant to the open market operation.

3. Paragraph 3 in Article 7 shall be amended as follows:

“The exchange of information as stipulated in Paragraph 1 and Paragraph 2 of this Article shall be performed through the information page of the open market operation. Information shall be periodically supplied on a weekly basis at the minimum”.

4. Point 1.3 and point 1.4, Paragraph 1 in Article 8 shall be amended as follows:

“1.3. To be deposited at the State Bank before the registration for sale (including valuable papers directly deposited by the credit institution at the State Bank and deposited at the account of the State Bank opened at the Securities Exchange Center);

1.4. The maximum remaining period of valuable papers which are outright purchased shall be 91 days”.

5. Article 9 shall be amended as follows:

“Article 9. Mode of selling or purchasing valuable papers

1. Time purchase transaction;

2. Time sale transaction;

3. Outright purchase transaction;

4. Outright sale transaction."

6. Paragraph 1 in Article 11 shall be amended as follows:

“1. Transaction days of the open market operation shall be based on the working days, excluding weekend days, holidays and New Year holidays. In the event where the repurchase date or maturity date of the valuable papers falls on weekend days, holidays and New Year holidays, the payment date and date of handing over valuable papers shall be the following working day”.

7. Point 1.6, Paragraph 1 in Article 12 shall be amended as follows:

1.6. Where the winning credit institution registered many types of valuable papers to be purchased or sold in its application for auction participation:

1.6.1. If those do not include valuable papers which the State Bank has provided for the transaction ratio at each transaction session of the open market operation, upon appraising auction, the State Bank shall determine the priority order of each type of valuable paper as follows:

1.6.1.1. The valuable papers of which remaining period is shorter;

1.6.1.2. Valuable paper which is registered for sale or purchase with larger volume.

1.6.2. If those include both valuable papers of which the transaction ratio is stipulated and valuable papers of which the transaction ratio is not stipulated, the State Bank shall appraise the auction based on principle that the proportion of winning valuable papers must be correspondent with the transaction ratio of valuable papers registered at the application for auction participation in accordance with applicable provisions of the State Bank. The determination of priority order between the valuable papers of which the transaction ratio is not stipulated and those of which transaction ratio is stipulated shall be implemented in accordance with provisions at point 1.6.1.1 and 1.6.1.2 of this Article”.

8. Point 1.7, Paragraph 1 in Article 13 shall be amended as follows:

“1.7. Term of sale, purchase transaction”.

9. Paragraph 13 in Article 14 shall be amended as follows:

“13. Term of sale, purchase transaction”.

10. Point 1.8 and point 1.9 in Paragraph 1 of Article 16 shall be amended as follows:

“1.8. Credit Institutions selling valuable papers do not have, or do not have sufficient valuable papers deposited as required;

1.9. The remaining period of valuable papers registered for sale is shorter than the period of time sale, purchase transaction, or exceeds 91 days for outright purchase transaction.”

11. Article 20 shall be amended as follows:

“Article 20. Repurchase contract

1. Each credit institution being a participant to the open market operation shall be required to sign a valuable paper repurchase contract (in accordance with the Appendix No.03/TTM) with the State Bank (Banking Operation Department) which is generally applicable to all time purchase, sale transactions between the State Bank and the said credit institution.

2. Upon arising the time sale, purchase transaction of valuable paper, the seller shall draw up an Appendix attached to the Repurchase contract of valuable paper for each transaction, which provides in details for each type of time sale, purchase transaction between the State Bank and the credit institution and is an integral part of the repurchase contract of valuable paper.

3. The signing, delivery, receipt of repurchase contract of valuable paper and enclosed Appendix shall be implemented in accordance with the guidance in the Process of the open market operation. Repurchase contract of valuable paper and its enclosed Appendix shall be the basis for the payment and delivery, receipt of valuable paper between the State Bank and the credit institution in time sale, purchase transaction.”

12. Article 21 shall be amended, supplemented as follows:

“Article 21. Payment and handover of ownership to valuable papers

1. Upon the receipt of the notice of auction result or the Appendix attached to the repurchase contract of valuable paper signed by and between the parties, the seller must hand over the ownership to the valuable papers to the purchaser, at the same time, the purchaser must make payment for the purchase of valuable papers to the seller. The payment and handover of the ownership to the valuable papers shall be performed on the date of payment.

2. Where the winning credit institution purchases valuable papers, but does not have enough money for payment, the State Bank (Operation Department) shall deduct from the winning credit institution’s account, maintained at the State Bank, an amount enough to make full payment correlative with the winning volume. If there is not enough money for payment, the State Bank shall cancel the result of the winning volume, which has not yet been paid.

3. At the termination date of the time purchase, sale transaction, purchaser and seller shall hand over the ownership to valuable papers and make payment to each other in accordance with commitment of the parties in the Appendix enclosed to the repurchase contract of valuable papers.

4. Where the payment period for the repurchase of valuable papers becomes due, but the credit institution that sells and commits to repurchase the valuable papers fails to make payment or fails to make full payment for the amount payable, the State Bank (Operation Department) shall deduct from its account, maintained at the State Bank, an amount enough to make payment. Where the credit institution’s account does not have enough money, the State Bank shall classify the deficient amount thereof as overdue debt and the credit institution must bear the overdue interest rate of 150% of the unified interest rate or single interest rate or the interest rate announced by the State Bank and applicable to that time sale, purchase transaction over the deficient amount and actual number of days of deferred payment. The penalty amount imposed on the deferred payment shall be calculated under the following formula:

P  =  Gp  x  Lp  x  Np/365

Of which:

P: Penalty amount;

Gp: Deficient amount;

Lp: Penalty interest rate (%/annum);

Np: Number of days of deferred payment.

The State Bank shall temporarily withhold the entire volume of valuable papers of that time sale, purchase transaction in a separate account and deduct from the credit institution’s account, maintained at the State Bank, for recovery of the deficient amount (including interests of overdue debt) if the credit institution’s account has enough money and return the valuable papers to the credit institution, or the State Bank may consider the sale of valuable papers where the maturity of valuable papers does not become due yet, or make payment with the issuing organization where the valuable papers become due for recovery of the deficient amount (including interests of overdue debt) .

13. Paragraph 1 in Article 22 shall be amended as follows:

“1. The State Bank shall give a notice of violation to the winning credit institution who violates one of following cases:

1.1. They do not have enough money for payment equivalent to the winning volume announced by the State Bank;

1.2. They fail to make payment or fail to make full payment of the required amount at the maturity (in case where the credit institution sells and commits to repurchase the valuable papers).

1.3. They do not hand over the ownership to the valuable papers to the State Bank on the payment date (where the credit institution is the seller) or on the repurchase date (where the credit institution is purchaser and commits to resell).

The credit institution, which is the participant to the open market operation, violates one of the cases as provided for in this paragraph for 3 times and more, each time of violation, it shall be temporarily suspended by the State Bank for participating in the open market operation within a period of 1 month since the notice of the third violation.”

14. Paragraph 1, paragraph 2 and paragraph 3 in Article 24 shall be supplemented as follows:

14.1. Point 1.4 shall be supplemented to paragraph 1 as follows:

“Coordinating with the Operation Department to follow up the credit institution which violates the supply of information about the demand for sale, purchase of valuable papers and the sale, purchase activity of valuable papers among credit institutions as prescribed in point 2.2 and point 2.3, Paragraph 2 in Article 7 of this Regulation.”.

14.2. Point 2.4 shall be supplemented to Paragraph 2 as follows:

“2.4. Coordinating with the Operation Department to follow up the credit institution which violates the supply of information about the expected amount of available capital in Vietnamese dong at the credit institution as provided for in point 2.1, Paragraph 2 in Article 7 of this Regulation”.

14.3. Point 3.9 shall be supplemented to Paragraph 3 as follows

“3.9. Following up and acting as a coordinator in dealing with violation for participants to the open market operation which violate provisions of the Regulation and Process of open market operation.”

15. Appendix No.03/TTM attached to this Decision shall replace the Appendix No.03/TTM attached to the Regulation on the open market operation issued in conjunction with the Decision No. 01/2007/QD-NHNN.

Article 2. Repurchase contracts signed by and between the State Bank and credit institutions (in accordance with provisions in Article 20 of the Regulation on the open market operation) and cases where credit institutions are dealt with for violation (in accordance with provisions in Article 22 of the Regulation on the open market operations) prior to the effective time of this Decision shall remain in full force until the time where concerned parties complete all related responsibilities, obligations.

Article 3. This Decision shall be effective after 15 days since its publication on the Official Gazette.

Article 4. Director of Administrative Department, Director of Credit Department, Heads of units of the State Bank, Chairpersons of the Board of Directors and the General Directors (Directors) of the credit institutions engaging in the open market operation shall be responsible for the implementation of this Decision.

APPENDIX NO. 03/TTM

socialist republic of vietnam
Independence – Freedom – Happiness
-------------------------

REPURCHASE CONTRACT OF VALUABLE PAPERS

No: … /HDML

Date……..

- Pursuant to the Decision No…. dated……….. of the Governor of the State Bank on the issuance of the Regulation on the open market operation and Decision No…. dated…… on the amendment of, supplement to the Regulation on the open market operation;

- Pursuant to the Decision No………. dated ……… of the Governor of the State Bank on the list of valuable papers, difference rate between the value of valuable paper at the time of valuation and payment price, transaction ratio of valuable papers through the open market operation,

Party A: (The State Bank of Vietnam) ……………………………………………………

Address: ……………………………..……………………………………………………

Telephone: ………………… Fax: …………………………. Email: …………………….

Account No: …………………………………. opened at: ………………………………

Party A: (Credit Institution) ……………………………………………………

Address: ……………………………..……………………………………………………

Telephone: ………………… Fax: …………………………. Email: …………………….

Account No: …………………………………. opened at: ………………………………..

The two parties hereto agree to enter into the Repurchase contract of valuable paper (hereinafter refereed to as “Contract”) with following terms and conditions:

Article 1. Scope and subjects of application

This is a general contract, which is commonly applicable to any of the time sale, purchase transactions in accordance with provisions in the Regulation on the open market operation between the State Bank of Vietnam and …….. (name of credit institution), which is a participant to the open market operation.

Article 2. Transaction performance

1. Time sale, purchase transaction shall be performed via internet connected computer between the State Bank (Operation Department) and …… (name of credit institution) in line with the open market operation software program supplied by the State Bank.

2. Upon the availability of the notice of auction winning of the State Bank, the Purchaser and the Seller shall confirm the time sale, purchase transaction by the way of signing the Appendix attached to the Contract with following main contents:

2.1. Seller;

2.2. Purchaser:

2.3. Information about the valuable papers to be sold, purchased: code, date of issue, issuing interest rate in the primary market, periodical interest payment (if any), maturity date, volume of valuable papers;

2.4. Repurchase price;

2.5. Selling period;

2.6. Unified interest rate or single interest rate (for the case of auction by interest rate) or interest rate announced by the State Bank (for the case of auction by volume);

2.7. Repurchase date;

2.8. Overdue interest rate.

3. Any payment between the parties shall be made in Vietnamese dong and transferred to the parties’ accounts mentioned in this Contract. The payment and handover of ownership to valuable papers shall be implemented in accordance with provisions in the Regulation on the open market operation, Process guiding the open market operation and commitments in this Contract.

Article 3. Commitments of the Parties

Two parties undersigned herein would like to commit:

1. To comply with terms and conditions of this Contract and related provisions of applicable laws;

2. Representative of each Party signing this Contract is the legal representative of each party;

3. To be fully entitled to hand over valuable papers to the other party at the time of handing over and the other party shall have entire of the rights and interests to those valuable papers and not be liable to any debt obligation, fee or other obligations.

Article 4. Dealing with violation

Any violation of commitments in this Contract shall be dealt with in accordance with provisions of the Regulation on open market operation and applicable legal documents

Article 5. Force majeure

1. Parties shall not be liable for the failure to perform or failure to fully perform responsibilities and obligations relating to provisions in this Contract in case of occurring breakdowns of which the consequence is out of control of the parties, such as: war, uprising, natural disaster, strike… and other force majeure cases in accordance with provisions of applicable laws.

2. Immediately after the occurrence of breakdowns as stated in Paragraph 1 of this Article, the party affected by force majeure shall give a written notice to the other party for exchange and settlement of matters relating to the performance of this Contract.

Article 6. Notice and communication

1. Any notice, requirement or discussion relating to this Contract must be made in writing in Vietnamese and sent via open market operation software program, or sent via email, fax, or sent by post at the address of parties provided for in the beginning of this Contract.

2. Notice and communications shall be confirmed as already received in following cases:

- Immediately after sending via the open market operation software program, sending via email or fax (providing that the sender must receive a confirmation of sending);

- The recipient receives the letter in case of sending by post, but not exceeding 7 days after sending to the recipient;

- Immediately at the time of sending in case of sending by hand in the working time.

3. Each party must inform the other party upon any change of address, phone number, fax number, email address.

Article 7. Transfer

No party shall be authorized to transfer its rights  and obligations under this Contract to a third party without a written consent from the other party. The performance of this Contract is rights and obligations required for the inheritor of rights and obligations.

Article 8. Termination of Contract

This Contract shall automatically cease its effectiveness once cases as stated in paragraph 3 in Article 5 of the Regulation on the open market operation occur, however, terms and conditions of this Contract shall continue to be applicable to the transactions which are under performance

Article 9. Governed laws

This Contract is governed by the provisions of laws of the Socialist Republic of Vietnam.

Article 10. Implementation effectiveness

This Contract shall be effective from the signing date. The Contract is made in 02 copies, each party shall keep 01 copy.

Form attached to the repurchase contract of valuable papers

No: ….. /200… (ordinal number by year)

(Drawn in accordance with the Repurchase Contract No…/HDML dated ……)

Based on the Notice of auction result No…. dated…. of the State Bank, … (seller) agrees to sell following valuable papers to … (purchaser) at the price of … (amount stated under the payment price) within a period of …. (number of days). … (Seller) shall be responsible for delivering the valuable papers to …. (purchaser), at the same time, …. (purchaser) shall be responsible for making full payment for the purchase of valuable papers to ….. (seller) on … (date of payment). …. (Seller) commits to repurchase the above valuable papers at the repurchase price of .. (amount) on the repurchase date. …. (Purchaser) shall be responsible for handing over the said valuable papers to … (seller), at the same time, … (seller) shall be responsible for making full payment for the repurchase of that valuable papers on .. (repurchase date), specifically as follows:

Unit: VND

In the event where the credit institution sells and commits to repurchase valuable papers, but fails to make payment or fails to make full payment for the amount payable to the State Bank on the repurchase date, it must bear the overdue interest rate in accordance with provisions of the State Bank at the rate of … %/annum over the deficient amount and actual number of days of deferred payment.

Note: This Appendix is drawn up by the Seller at the date when the time sale, purchase transaction arises.