Circular No. 06/2013/TT-NHNN dated March 12, 2013 of the State Bank of Vietnam guiding the gold bar trading by the State Bank of Vietnam on the domestic market

THE STATE BANK OF VIETNAM

Circular No. 06/2013/TT-NHNN of March 12, 2013, guiding the gold bar trading by the State Bank of Vietnam on the domestic market

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 86/1999/ND-CP of August 30, 1999, on management of state foreign exchange reserves;

Pursuant to the Government’s Decree No. 24/2012/ND-CP of April 3, 2012, on management of gold business activities;

Pursuant to the Prime Minister’s Decision No. 16/2013/QD-TTg of March 4, 2013, on the gold bar trading by the State Bank of Vietnam on the domestic market;

At the proposal of the director of the Foreign Exchange Management Department,

The State Bank Governor promulgates the Circular guiding the gold bar trading by the State Bank of Vietnam on the domestic market.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

This Circular guides gold bar trading activities between the State Bank of Vietnam (below referred to as the State Bank) and credit institutions and businesses licensed for gold bar trading.

Article 2. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Trading representative of a credit institution or business means the lawful representative of a credit institution or a business in gold bar trading transactions with the State Bank.

2. Direct gold bar trading means a form of trading in which the State Bank decides on and announces its gold bar trading prices, volumes and partners.

3. Gold bar trading through bidding means a form of trading in which the State Bank holds a bidding to determine gold bar trading partners, prices and volumes.

4. Price-based bidding means a form of bidding in which bidders offer bids which serve as the basis for determining the winning bid and the winning gold bar volume.

5. Volume-based bidding means a form of bidding in which bidders register their bid volumes which serve as the basis for determining the winning volume at the price announced by the State Bank.

6. Gold bar batch means the unit of volume in gold bar trading transactions between the State Bank and credit institutions and businesses. The volume of a gold bar batch is decided and notified by the State Bank before the transaction time.

Chapter II

ESTABLISHMENT OF GOLD BAR TRADING RELATION BETWEEN THE STATE BANK AND CREDIT INSTITUTIONS AND BUSINESSESES

Article 3. Dossiers and procedures for establishing the gold bar trading relation with the State Bank

1. A credit institution or business wishing to make gold bar trading transactions with the State Bank shall submit directly or by post 1 (one) set of dossier to register the establishment of the gold bar trading relation to the State Bank (Operation Center). A dossier comprises:

a/ An application for registering the establishment of the gold bar trading relation with the State Bank, made according to a set form;

b/ The enterprise or business registration certificate (certified copy);

c/ The written registration of the specimen signature of the trading representative of the credit institution or business, made according to a set form;

d/ The power of attorney of the trading representative, in case the trading representative is the authorized representative of the credit institution or business.

2. Within 5 (five) working days after receiving a complete and valid dossier, the State Bank (Operation Center) shall send to the credit institution or business a written certification of establishment of the gold bar trading relation with that institution or business, made according to a set form. In case of refusal, it shall notify in writing of the reason to the credit institution or business.

3. In case there is a change in the information of the documents specified at Point a or b, Clause 1 of this Article, within 5 (five) working days after the date of such change, the credit institution or business shall send a written notice together with relevant documents to the State Bank (Operation Center).

Article 4. Trading representatives of credit institutions and businesses

1. The trading representative of a credit institution or business is the at-law or authorized representative of that institution or business.

2. Each credit institution or business may register 3 (three) trading representatives at most.

3. For a trading representative who is the authorized representative of the credit institution or business, the power of attorney must be signed by the at-law representative. The scope of authorization must cover at least the following contents: signing and receiving documents and performing all related tasks in the course of bidding (for bidding), receiving notices of buying and selling prices of gold bars, signing applications for registration of gold bar trading, receiving notices of the volume of gold bars to be traded (for direct trading), and signing written certifications of gold bar trading with the State Bank.

4. When changing a trading representative, the credit institution or business shall send a notice of such change to the State Bank (Operation Center) together with the power of attorney (in case of authorization) and the written registration of the specimen signature of the new trading representative. The change of the trading representative is valid only from the time the State Bank (Operation Center) receives the notice and related documents.

5. Each credit institution or business may assign only 1 (one) trading representative on its registered list of trading representatives to participate in one gold bar trading transaction with the State Bank.

 6. The trading representative of a credit institution or business shall produce his/her identity card or passport when making a transaction.

Article 5. Transaction suspension, cancellation of the gold bar trading relation

1. The State Bank shall suspend gold bar trading transactions with a credit institution or business for 3 (three) months from the time it detects one of the following violations:

a/ The credit institution or business breaches the obligation to sign for certification of transactions according to the process of gold bar trading with the State Bank.

b/ The credit institution or business breaches 3 (three) times the obligation to make payment and deliver and receive gold bars according to the certification of transactions with the State Bank.

c/ The credit institution or business violates 3 (three) times this Circular’s provisions on information and reporting.

d/ The credit institution or business is administratively sanctioned in gold business activities.

2. The State Bank shall suspend gold bar trading transactions with a credit institution or business during the time this institution or business is under special control.

3. The State Bank shall cancel the gold bar trading relation with a credit institution or business when:

a/ The credit institution or business has its establishment and operation license, business registration certificate or enterprise registration certificate revoked.

b/ The credit institution or business has its gold bar trading license revoked.

4. A credit institution or business may not establish the gold bar trading relation with the State Bank within 1 (one) year from the time of cancellation of the gold bar trading relation. The dossier and procedures for credit institutions and businesses to re-establish the gold bar trading relation with the State Bank comply with Article 3 of this Circular.

Chapter III

GOLD TRADING TRANSACTIONS OF THE STATE BANK

Article 6. Type of gold bar eligible for trading

The State Bank shall trade in one-tael gold bars of 99.99% content which are manufactured or permitted for manufacture in different periods by the State Bank.

Article 7. Modes of gold bar trading

1. Direct trading;

2. Trading through price- or volume-based bidding.

Article 8. Transaction documents

A single gold bar trading transaction between the State Bank and credit institutions and businesses has the following documents:

1. For direct trading:

a/ The State Bank’s notice of gold bar purchase or sale and notice of the buying or selling price;

b/ Application for registration of gold bar purchase or sale of credit institutions and businesses;

c/ The State Bank’s notice of gold bar trading volume;

d/ Written certifications of transactions.

2. For trading through bidding:

a/ The State Bank’s notice of bidding and notice of the buying or selling price (for volume-based bidding) or floor and ceiling prices (for price-based bidding);

b/ Bid offers of credit institutions and businesses;

c/ The State Bank’s notice of the bidding result;

d/ Written certifications of transactions.

Article 9. Transaction accounts

1. Credit institutions and businesses shall make deposits and payments to the State Bank through the account notified by the State Bank.

2. The State Bank shall refund deposits and make payments to credit institutions and businesses through accounts registered by credit institutions and businesses upon establishing the gold bar trading relation.

Article 10. Deposits

1. A credit institution or business shall pay a deposit to guarantee its obligation to certify and make a gold trading transaction with the State Bank.

2. The deposit value of a credit institution or business when trading in gold bars with the State Bank is calculated according to the following formula:

Deposit value = Deposit rate x reference price x reference volume

In which:

Deposit rate is calculated in percentage (%);

Reference price is calculated in VND/tael;

Reference volume is the minimum volume of gold bars to be traded (for direct trading), the minimum gold bar volume registered by bid by a credit institution or business (for bidding); or the gold bar volume registered by a credit institution or business for trading (for direct trading) or the gold bar volume bid by each credit institution or business (for bidding).

The State Bank shall notify the deposit rate, reference price and reference volume before each trading transaction.

Article 11. Gold bar trading plans of the State Bank

1. The Foreign Exchange Management Department shall act as the focal point and coordinate with the Monetary Policy Department and the Operation Center in elaborating and submitting gold bar trading plans for gold market intervention in each period to the head of the executive committee for foreign exchange reserves for approval before submission to the Governor for approval.

2. A gold bar trading plan has the following details:

a/ Time of intervention;

b/ Type of gold bars to be traded;

c/ Total trading volume; trading volume of a gold bar batch; minimum and maximum trading volumes of gold bars in a transaction with a partner; bid increment and volume increment;

d/ Trading mode;

e/ Expected traders;

f/ Principles of determination of buying and selling prices (for direct trading), principles of determination of buying and selling prices (for volume-based bidding); principles of determination of floor and ceiling prices (for price-based bidding);

g/ Deposit rate, reference volume, principles of determination of the reference price;

h/ Principles and grounds for determining gold prices and price fluctuation band as the basis to decide to stop trading, for direct trading, or cancel bidding;

i/ Gold purchase and sale on overseas accounts or overseas purchase of gold for import or overseas sale of gold to match the volume of gold traded for intervention.

3. After a gold bar trading plan is approved, the Operation Center shall coordinate with related departments and agencies of the State Bank in implementing such plan.

Article 12. Gold bar trading process of the State Bank

1. Process of direct gold bar trading between the State Bank and credit institutions and businesses:

a/ The State Bank (Operation Center) announces the gold bar trading;

b/ Credit institutions and businesses pay deposits;

c/ The State Bank (Operation Center) examines and announces the transaction-making status of credit institutions and businesses;

d/ The State Bank (Operation Center) announces the buying or selling price;

e/ Credit institutions and businesses register their trading volumes;

f/ The State Bank announces to stop trading (if any);

g/ The State Bank (Operation Center) determines and notifies the volume of trading with each credit institution or business;

h/ Certification of transactions;

i/ Payment and delivery and receipt of gold bars;

j/ Handling of deposits.

2. Process for gold bar trading through bidding between the State Bank and credit institutions and businesses:

a/ The State Bank (Operation Center) announces the gold bar trading bidding;

b/ Credit institutions and businesses pay deposits;

c/ Examination and announcement of the bidding status of credit institutions and businesses;

d/ The State Bank (Operation Center) announces the buying or selling price (for volume-based bidding) or floor and/or ceiling prices (for price-based bidding);

e/ Credit institutions and businesses submit their gold bar trading bid offers;

f/ The State Bank consider the bids;

g/ The State Bank announces cancellation of the bidding (if any);

h/ The State Bank (Operation Center) announces the bidding result;

i/ Certification of transactions;

j/ Payment and delivery and receipt of gold bars;

k/ Handling of deposits.

3. The contents specified at Points a, b, c, d, e, f, g and h, Clause 1, and Points a, b, c, d, e, f, g, h and i, Clause 2, of this Article comply with the State Bank’s gold bar trading process provided by the State Bank Governor.

Article 13. Certification of transactions

Within 30 (thirty) minutes after the time of announcement of the volume and buying or selling price with each credit institution or business (for direct trading) or the bidding result (for bidding), trading representatives of credit institutions and businesses eligible for gold bar trading (for direct trading) or bid-winning credit institutions and businesses (for bidding) shall sign written certifications of gold bar trading transactions with the State Bank.

Article 14. Announcement of transaction results

The Operation Center shall announce in writing of the result of gold bar trading transaction with each credit institution or business after signing transaction certifications.

Article 15. Deadlines for payment and delivery and receipt of gold bars

1. In case the State Bank sells gold bars:

a/ A credit institution or business shall make full payment for its gold bar purchase according to the transaction certification to the payment account of the State Bank within the working day following the day of signing the transaction certification.

b/ At the end of the day of signing of the transaction certification and the end of the following working day, the Operation Center shall make a list of credit institutions and businesses that have made full payment for gold bar purchase during the day and notify in writing such to the Finance-Accounting Department and the Issue and Vault Department for delivering gold bars to the credit institutions and businesses as prescribed at Point c of this Clause.

c/ On the working day following the day of signing of the transaction certification, the State Bank (the Issue and Vault Department) shall deliver gold to credit institutions and businesses that have made full payment for gold purchase to the State Bank on the day of transaction certification. On the second working day following the day of signing of the transaction certification, the State Bank (the Issue and Vault Department) shall deliver gold to credit institutions and businesses having made full payment for gold purchase to the State Bank on the working day following the day of signing of the transaction certification.

d/ In case of delivering gold at a time other than those specified at Points b and c, Clause 1 of this Article, the State Bank shall notify such to credit institutions and businesses in its gold bar trading or bidding announcement.

2. In case the State Bank buys gold bars:

a/ A credit institution or business shall deliver gold bars to the State Bank within 1 (one) working day after the date of signing announcement of the transaction certification.

b/ Immediately after completing the delivery and receipt of gold bars, the Issue and Vault Department shall notify in writing such to the Operation Center for making payment to credit institutions and businesses.

c/ The State Bank (Operation Center) shall pay credit institutions and businesses within 1 (one) working day after completing the delivery and receipt of gold bars.

Article 16. Handling of deposits of credit institutions and businesses

1. The State Bank will not refund deposits and shall send written notices to credit institutions and businesses eligible for gold bar trading with the State Bank (for direct trading) or winning the bid (for bidding) that breach their obligations as prescribed in Article 13, and Point a, Clause 1, and Point a, Clause 2, Article 15, of this Circular.

2. Except the cases specified in Clause 1 of this Article, the State Bank (Operation Center) shall refund deposits to credit institutions and businesses through the accounts registered by credit institutions and businesses with the State Bank according to the following deadlines:

a/ On the transaction day, in case the State Bank stops the trading or cancels the bidding or in case credit institutions and businesses are ineligible for trading or do not win the bid.

b/ On the working day following the transaction day, for credit institutions and businesses buying gold bars from the State Bank.

c/ Within the 2 (two) working days following the transaction day, for credit institutions and businesses selling gold bars to the State Bank.

Article 17. Delivery and receipt of gold bars

The delivery and receipt of gold bars in gold bar trading between the State Bank and credit institutions and businesses shall be conducted at the places announced by the State Bank and in accordance with the State Bank’s regulations.

Article 18. Force majeure events and objective obstacles

1. In case involved parties cannot fulfill the obligations of transaction certification, payment and gold delivery and receipt according to the prescribed deadlines due to a force majeure event or an objective obstacle, the time of occurrence of such event or obstacle may not be counted in the time limits specified in Articles 13 and 15 of this Circular.

2. A party shall immediately notify other parties of a force majeure event or an objective obstacle.

Chapter IV

RESPONSIBILITIES OF CREDIT INSTITUTIONS AND BUSINESSES ELIGIBLE FOR GOLD BAR TRADING WITH THE STATE BANK AND RESPONSIBILITIES OF UNITS OF THE STATE BANK

Article 19. Responsibilities of credit institutions and businesses having established the gold bar trading relation with the State Bank

1. To assure the quality and volume of gold bars sold to the State Bank;

2. To assure safety when transporting gold to or from vaults of the State Bank;

3. To make full payment and fully deliver gold on time as prescribed by this Circular when trading gold bars with the State Bank;

4. To take responsibility for the authenticity of their trading representatives’ competence in gold bar trading transactions with the State Bank; to take responsibility for obligations arising from acts done by their trading representatives and from gold bar trading transactions with the State Bank established by their trading representatives under this Circular.

5. To take responsibility for the truthfulness, accuracy and lawfulness of documents and dossiers related to the gold bar trading with the State Bank, which are sent to the State Bank.

6. In case of division, split, merger, consolidation, acquisition, transformation of legal form, dissolution or bankruptcy, a credit institution or business shall notify in writing to the State Bank (Operation Center) within 5 (five) working days after a competent state agency issues a decision on such event.

7. After buying gold bars from the State Bank, prior to 14h00 every day, a credit institution or business shall send to the State Bank (the Foreign Exchange Management Department) a report on its use of gold bars bought from the State Bank on the preceding working day (made according to a set form). Such reporting will end when the credit institution or business uses up the volume of gold bars bought from the State Bank.

8. Other responsibilities as prescribed in this Circular.

Article 20. Responsibilities of the Operation Center

1. To act as the focal point and coordinate with the Foreign Exchange Management Department in proposing the State Bank Governor to consider and decide on transaction suspension and cancellation of the gold bar trading relation with credit institutions and businesses under Article 5 of this Circular; to notify credit institutions and businesses of the State Bank’s decision to suspend transactions or cancel the gold bar trading relation.

2. To make payments for gold bar trading.

3. To send notices of non-refund of deposits to credit institutions and businesses.

4. To notify and update the list of credit institutions and businesses having established the gold bar trading relation with the State Bank to the Banking Inspection and Supervision Agency and the Foreign Exchange Management Department.

5. To coordinate with the Foreign Exchange Management Department and the Monetary Policy Department in elaborating gold bar trading plans of the State Bank.

6. To coordinate with the Foreign Exchange Management Department in setting buying and selling prices of gold bars (for direct trading and volume-based trading) and floor and ceiling prices (for price-based bidding) under approved trading plans.

7. Other responsibilities as prescribed in this Circular.

Article 21. Responsibilities of the Foreign Exchange Management Department

1. To assume the prime responsibility for, and coordinate with related units in, elaborating gold bar trading plans.

2. To notify in writing violations of Clause 7, Article 19 of this Circular to the Operation Center.

3. To assume the prime responsibility for, and coordinate with the Operation Center in, setting buying and selling prices of gold bars (for direct trading and volume-based bidding) and floor and ceiling prices (for price-based bidding) under approved trading plans.

4. To perform other tasks as prescribed in this Circular.

Article 22. Responsibilities of the Monetary Policy Department

To coordinate with the Foreign Exchange Management Department and the Operation Center in elaborating gold bar trading plans of the State Bank according to monetary policy objectives in each period.

Article 23. Responsibilities of the Issue and Vault Department

1. To assume the prime responsibility for, and coordinate with related units in, regulating gold bar volumes at vaults of the State Bank to serve the State Bank’s gold bar trading.

2. To notify in writing to the Operation Center of credit institutions’ and businesses’ breaches of the obligation to deliver gold bars as a basis for handling deposits as prescribed in Article 16 of this Circular and for considering transaction suspension as prescribed in Clause 1, Article 5 of this Circular.

3. To perform other tasks as prescribed in this Circular.

Article 24. Responsibilities of the Finance-Accounting Department

1. To guide the accounting of the State Bank’s gold bar trading transactions on the domestic and international markets, including accounting of related arising revenues and expenditures.

2. To coordinate with the Issue and Vault Department in the delivery, receipt and transfer of gold at vaults of the State Bank.

Article 25. Responsibilities of the Banking Inspection and Supervision Agency

1. To notify in writing the Operation Center of the information specified at Point d, Clause 1, and Clauses 2 and 3, Article 5 of this Circular.

2. To inspect and supervise credit institutions and businesses in gold bar trading activities with the State Bank in accordance with law.

Chapter V

IMPLEMENTATION PROVISIONS

Article 26. Effect and implementation responsibilities

1. This Circular takes effect on March 13, 2013.

2. The Chief of the Office, the Director of the Foreign Exchange Management Department and heads of units of the State Bank, directors of provincial-level branches of the State Bank; chairpersons of the Boards of Directors and Members’ Councils, company presidents, general directors (directors) of credit institutions and businesses engaged in gold bar trading with the State Bank and related organizations and persons shall implement this Circular.-

For the State Bank Governor
Deputy Governor
LE MINH HUNG