Decision No. 1022/2004/QD-NHNN of August 17, 2004, on the issuance of the regulation on the custody of valuable paper at the State Bank

DECISION

ON THE ISSUANCE OF THE REGULATION ON THE CUSTODY OF VALUABLE PAPER AT THE STATE BANK

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December, 1997 and the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June, 2003.
- Pursuant to the Law on the Credit Institutions No. 02/1997/QD10 dated 12 December 1997;
- Pursuant to the Decree No. 86/2002/ND-CP dated 5 November, 2002 of the Government providing for the function, assignment, authority and the organizational structure of the ministries and ministerial-level agencies;
- Upon the proposal of the Director of the Banking Operation Department,

DECIDES:

Article 1.To issue in conjunction with this Decision "the Regulation on the custody of valuable paper at the State Bank".

Article 2.This Decision shall be effective after 15 days from the date of its publication in the Official Gazette and replace the Decision No. 171/2000/QD-NHNN13 dated 25 March, 2000 of the Governor of the State Bank on the issuance of the Regulation on the registration of short-term valuable paper.

Article 3.The Director of the Administrative Department, the Director of the Banking Operation Department, the Director of the Finance - Accounting Department, the Director of the Banking Informatics Technology Department, Heads of the relevant units of the State Bank, General Managers of the State Bank s branches in provinces and cities under the center Government s management, Chairpersons of the Board of Directors, General Directors (Directors) of the Credit Institutions shall be responsible for the implementation of this Decision.

REGULATION

ON THE CUSTODY OF VALUABLE PAPER AT THE STATE BANK
(issued in conjunction with the Decision No. 1022/2004/QD-NHNN dated 17 August, 2004 of the Governor of the State Bank)

Chapter I.

GENERAL PROVISIONS

Article 1.Governing scope

This Regulation shall provide for the custody of valuable papers which are issued through the State Bank and other valuable papers under the ownership of customers which are used by them in their participation in the money market operations, including: lending secured by the mortgage of valuable papers, discount, overdraft and overnight lending, setting up the net debt limit, open market operation between the State Bank and credit institutions; rediscount operation, lending among members in the auction market of the Government Bonds at the State Bank.

Article 2.Subjects participating in the custody

Subjects participating in the custody of valuable papers at the State Bank shall be credit institutions that are operating in accordance with the Law on credit institutions, permitted to participate in the money market and other organizations being the members of the auction market of the Government Bonds at the State Bank (hereinafter referred to as custody customers)

Article 3.Interpretation

In this Regulation following terms shall be construed as follows:

1. Valuable paper shall include short-term valuable paper and long-term valuable paper used in the money market operations between the State Bank and custody customers stipulated by the Governor of the State Bank.

2. Custody of valuable paper shall mean the management, preservation, and maintenance of valuable paper and execution of the rights of custody customers as the owner of valuable paper by the State Bank upon their proposal.

3. Account custody valuable paper shall be an account opened by the State Bank upon the request of a custody customer for the accounting of valuable papers deposited by the customer.

4. Valuable papers deposited at the State Bank shall include the valuable papers deposited by the custody customers directly at the State Bank and at the account of the State Bank maintained at the Security Exchange.

5. Mortgage of valuable papers shall be an act where the State Bank accepts and freezes valuable papers of customers being deposited at the State Bank, upon the request of custody customers in order to participate in several operations of the money market.

6. Account "Mortgaged valuable paper" shall be an account opened by the State Bank for accounting valuable papers which custody customer requests the State Bank to accept as the mortgage, deposit for their participation in several operations of the money market.

7. Deposit of valuable papers shall be an act where the custody customer requests the State Bank to accept the mortgage of valuable papers at the State Bank to set up a net debt limit.

8. Registration of valuable papers shall be an act where custody customers register with the State Bank the list of valuable papers being deposited at the State Bank for resale in the open market operation or for discount by the State Bank.

Article 4.When taking part in the money market operation with the State Bank, Credit Institutions must carry out the custody of valuable papers at the State Bank. The custody of valuable papers of custody customers shall be carried out by the Operation Department and State Bank s branches in provinces, cities under the central Government s management.

Chapter II.

DETAILED PROVISIONS

Article 5.Types of valuable papers permitted to be deposited at the State Bank shall consist of:

1. Treasury Bills;

2. State Bank Bills;

3. Treasury Bonds;

4. Bonds for central Government s projects;

5. Investment Bonds paid by the Central Government s Budget

6. Foreign currency Bonds;

7. Government Bonds;

8. Other valuable papers decided upon by the Governor of the State Bank from time to time.

Article 6.In order to take part in the custody of valuable papers, custody customers shall prepare and submit to the State Bank "An application for the participation in the custody of valuable paper" under the Form No. 01/LK (attached).

Article 7.Custody of valuable papers

1. In respect of valuable paper which the State Bank directly issues or acts as an issuing agent in the form of book-entry:

a. In case where valuable paper is being monitored at the State Bank: Custody customer shall prepare "An application for the custody of valuable paper" under the Form No. 2/LK (attached) then send it together with related documents to the State Bank. On the basis of the Application for the custody of valuable paper of the custody customer, the State bank shall automatically transfer the valuable papers into the account custody valuable paper of the custody customer.

b. In case where a custody customer who has won the auction buys valuable papers in transaction sessions organized by the State Bank, the State Bank shall automatically transfer those valuable papers into the account custody valuable paper of the custody customer unless the customer requests otherwise.

2. In respect of valuable papers being deposited at the Security Exchange:

The custody customers shall, prior to the use of valuable papers being deposited at the Security Exchange for participating in the money market operations with the State Bank, transfer those valuable papers to the account of the State Bank at the Security Exchange. Upon receipt of the notice from the Security Exchange of the transfer of valuable papers by the customers from their custody account to the account of the State Bank, the State Bank shall transfer the valuable papers to the account custody valuable paper of the custody customers maintained at the State Bank.

3. In respect of valuable papers in forms of other certificates:

The custody customer shall prepare and submit to the State Bank an Application for the custody of valuable paper enclosed with the list of valuable papers and the entire valuable paper certificates. The State Bank shall receive and perform the procedures for the transfer of valuable papers to the account custody valuable paper of the custody customer.

Article 8.Registration of valuable paper for participating in the discount operation, open market operation

- When there is a demand for the discount of valuable papers, the custody customer shall send the State Bank the list of valuable papers requested for the discount in accordance with the provisions of the discount Regulation, the State Bank shall verify, certify the full satisfaction of conditions for participating in the discount operation of the custody customer.

- When there is a demand for the sale of valuable papers in a transaction session of the open market operation, the custody customer shall submit the list of valuable papers registered for sale in accordance with the provisions of the Regulation on the open market operation, the State Bank shall verify, accept the use of valuable papers in the transaction by the custody customer.

Article 9.Mortgage of valuable papers for refinancing

1. When the custody customers are accepted by the State Bank for lending, which is secured by the mortgage of valuable papers, the State Bank shall, based on valid documents, transfer the valuable papers from the account custody valuable paper of the custody customers to the account "mortgaged valuable paper".

2. When the custody customers have completed their repayment obligation to the State Bank, the State Bank shall, based on the repayment documents and the written request for the return of the mortgaged valuable papers of the custody customers, carry out the release of the mortgage, transfer the valuable papers being mortgaged to the account custody valuable paper of the custody customers.

Article 10.Mortgage of valuable papers for overdraft and overnight borrowing

1. Custody customers who have a demand for using the valuable papers being deposited at the State Bank to participate in overdraft and overnight lending operation shall send the State Bank a written request for the mortgage of valuable papers. The State Bank shall transfer the valuable papers from the account custody valuable paper of the custody customers to the account "mortgaged valuable paper" for the performance of the overdraft and overnight lending operation.

2. The State Bank shall release the mortgaged valuable papers of the custody customers in case where there is not any overnight loan and the value of the mortgaged valuable papers exceeds the stipulated limit of the overdraft and overnight lending. For the release of the mortgage, the custody customers shall submit to the State Bank a written Request for the return of the mortgaged valuable papers. The State Bank shall release partially or wholly the mortgaged valuable papers upon the request of the custody customers and transfer the valuable papers being mortgaged to the account custody valuable paper of the custody customers.

Article 11.Deposit of valuable papers for setting up the net debt limit

1. Custody customers who have a demand for using the valuable papers being deposited at the State Bank as a deposit for the setting up of the net debt limit in the low value clearing payment shall send the State Bank a written Request for the deposit. The State Bank shall transfer the valuable paper from the account custody valuable paper of custody customers to the account "mortgaged valuable paper".

Article 12.Mortgage of valuable papers for borrowing funds among custody customers

The custody customers may use the valuable papers directly deposited at the State Bank to mortgage for borrowing funds from each other.

1. Custody customers (the mortgaging party) who have a demand for mortgaging the valuable papers for borrowing funds from other custody customers shall submit following documents to the State Bank:

- An application for the certification and the freeze of valuable papers;

- Agreement minutes between the mortgaging party and mortgaged one together with the list of valuable papers, which are used as mortgaged assets;

2. The State Bank shall receive files and documents, complete procedures to freeze valuable papers and transfer them from the account custody valuable paper of the custody customers to the account "mortgaged valuable paper".

3. During the mortgage time, the mortgaging party may request the State Bank to change the valuable papers being frozen by other valuable papers which are directly deposited at the State Bank in the event where the valuable papers being mortgaged become due. The mortgaging party may also request the State Bank to extend the mortgage time. The State Bank shall, on the basis of the request from the mortgaging party that has been accepted by the mortgaged party, consider permitting the mortgaging party to change the valuable papers or extend the mortgage time of valuable papers.

4. The State Bank shall terminate the freeze and transfer the valuable papers being mortgaged to the account custody valuable paper of the custody customers upon receipt of the written request from the mortgaging party together with the certification of the mortgaged party of the full repayment of the mortgaged loans.

Article 13.Use of valuable papers for discount

1. The valuable papers that are discounted by the State Bank for the entire remaining term:

Upon accepting the discount of the entire remaining term of the valuable papers for the custody customers, the State Bank shall transfer the valuable papers from the account custody valuable paper of the custody customers to the account custody valuable paper of the State Bank. The custody customers shall be responsible for the transfer of the ownership right of valuable papers to the State Bank.

2. The valuable papers that are discounted by the State Bank for a certain period of time:

a. Upon accepting the time discount for valuable papers for the custody customers, the State Bank shall transfer the valuable papers from the account custody valuable paper of the custody customers to the account "mortgaged valuable paper" for management within the mortgage time.

b. When the custody customers complete the repayment obligation under the repurchase commitment, the State Bank shall transfer the valuable papers being mortgaged to the account custody valuable paper of the custody customers.

Article 14.Use of valuable paper for performing the open market operation.

1. Valuable papers definitively purchased, sold:

a. The State Bank purchases the valuable papers

On the auction date, the custody customers shall send the written registration for the sale of valuable papers to the State Bank. The State Bank shall transfer the valuable papers from the account custody valuable paper of the custody customers to the account custody valuable paper of the State Bank. The custody customers shall be responsible for the transfer of the ownership right of valuable papers to the State Bank.

b. The State Bank sells the valuable papers

Based on the auction winning result, the State bank shall transfer its valuable papers to the account custody valuable paper of the custody customers.

2. Valuable papers purchased, sold for a certain period of time:

a. The State Bank shall carry out the term purchase for valuable papers:

- Based on the auction winning result, the contract on the sale and repurchase of valuable papers between the custody customer and the State Bank, the State Bank shall transfer the valuable papers from the account custody valuable paper of the custody customer to the account custody valuable paper of the State Bank.

- When the custody customers seriously comply with commitments stated in the contract, the State Bank shall, based on the valid documents, transfer the valuable papers from the account custody valuable paper of the State Bank to the account custody valuable paper of the custody customers.

b. The State Bank shall carry out the term sale:

- Based on the auction winning result, the contract on the sale and repurchase of valuable papers between the custody customer and the State Bank, the State Bank shall transfer its valuable papers to the account custody valuable paper of the custody customer.

- Upon the expiry of the contract on the sale and repurchase of valuable papers, the State Bank shall transfer the valuable papers from the account custody valuable paper of the custody customer to the account "valuable papers" of the State Bank.

Article 15.Purchase, sale of valuable papers among the custody customers

1. When there is a demand for the sale of valuable papers being directly deposited at the State Bank, the custody customers shall submit to the State Bank a written request for the transfer of valuable papers enclosed with the written certification of the transfer of ownership right over the valuable papers and other related documents if required.

2. Based on the request of the selling custody customer, the State Bank shall transfer valuable paper from the account custody valuable paper of the selling custody customers to the buying custody customers.

Article 16.Payment of principal and interest of valuable papers on their maturity date

1. Payment of the principal and interest of valuable papers directly deposited at the State Bank.

a. For valuable papers that the State Bank directly issues or acts as an issuing agent:

- The custody customer shall send a written request for the payment to the State Bank when the valuable papers become due for both the principal and interest, the State Bank shall complete procedures for the payment, make a corresponding reduction of valuable papers that become due in the account custody valuable paper of custody customer.

b. For other valuable papers

When the valuable papers in form of certificate become due for both principal and interest, custody customers shall make procedures for withdrawing the valuable papers and presenting them to the issuing organization or its issuing agent for payment.

2. Payment of principal and interest of valuable papers deposited at the account of the State Bank maintained at the Security Exchange:

The payment of the principal and interest of valuable papers of the custody customers in the account of the State Bank maintained at the Security Exchange shall be performed by the Security Exchange.

Article 17.Withdrawal of valuable paper

1. Valuable papers directly deposited at the State Bank:

When there is a demand for the withdrawal of the valuable papers in form of certificates that are directly deposited at the State Bank, the custody customers shall send An application for the withdrawal of the valuable papers under the Form No. 3/LK (attached) to the State Bank. The State Bank shall, based on the request of the custody customers, reduce valuable papers in the account custody valuable paper of the custody customers and complete procedures for the return of valuable paper certificates to the custody customers.

2. Valuable papers deposited in the account of the State Bank maintained at the Security Exchange:

a. When there is the demand for the withdrawal of the valuable papers deposited in the account of the State Bank maintained at the Security Exchange, the custody customers shall send the State Bank a written Request for the transfer of valuable papers being deposited at the State Banks account at the Security Exchange to the account of the custody customers maintained at the Security Exchange.

b. On the basis of the request from the custody customer, the State Bank shall request the Security Exchange to transfer valuable papers of the custody customer to the account of the custody customer maintained at the Security Exchange. Then the withdrawal of valuable papers of the custody customer shall be performed by the Security Exchange in accordance with its provisions.

Article 18.Termination of the custody

The custody customers shall make procedures for closing the accounts valuable paper under the provisions of the State Bank when they do not have the demand for the custody of valuable papers at the State Bank.

Chapter III.

IMPLEMENTING PROVISIONS

Article 19.Responsibilities of the custody customer.

- To prepare full file for participating in the custody of valuable papers at the State Bank

- To provide information relating to deposited valuable papers upon the request of the State Bank.

- To correctly comply with the provisions stated in the commitment, contract relating to the valuable papers.

Article 20.Responsibilities of units of the State Bank of Vietnam

1. Banking Operation Department:

a. To provide guidance on the procedure of the valuable paper custody at the State Bank and relevant forms

b. To carry out the custody and accounting of valuable papers at the State Bank in accordance with applicable provisions.

c. To enter into agreements on the custody of valuable papers with the Security Exchange.

2. Finance Accounting Department:

a. To provide guidance on the accounting of the valuable papers custody in accordance with provisions stated in this Regulation

b. To provide guidance on the procedures of the closing, opening of accounts valuable paper.

3. Banking Informatics Technology Department:

To set up an application software program on the custody of valuable papers for the monitoring, management of valuable papers and provide guidance on the technical process relating to custody of valuable papers through the computer network.

4. Branches of the State Bank in provinces, cities under the central Governments management:

a. To carry out the custody of valuable papers for the custody customers that have head office located in the locality under the authorization of the Governor.

b. To make periodical report to the Banking Operation Department on the custody of valuable papers of the custody customers in the locality.

Article 21.Implementing provision

Any amendment of, supplement to the content of this Regulation shall be decided upon by the Governor of the State Bank.

Form No. 1/LK

APPLICATION FOR THE PARTICIPATION IN THE CUSTODY OF VALUABLE PAPERS

To: The State Bank of Vietnam

Name of the unit: (custody customer) ........................................ Code....................................

Address:...............................................................................................................................

Tel:.......................................................................................... Fax:......................................

Serial number of payment account in VND:..............................................................................

Maintained at:........................................................................................................................

Pursuant to provisions of the Regulation on the custody of valuable paper (VP) at the SBV issued in conjunction with the Decision No. dated.. 2004 of the Governor of the SBV, (the unit applying for the custody) would like to apply for the participation in the custody of VP at the SBV with following contents:

1. We would like to introduce the list of officers who have competence for signing transaction documents relating to the deposit, withdrawal, transfer of VP:

2. We would like to undertake:

- To comply with all provisions stated in the Regulation on the custody of VP at the SBV issued in conjunction with the Decision No. ../2004/NHNN dated of the Governor of the SBV and any amendment of, supplement to this Regulation;

- To pay custody fees as stipulated by the SBV from time to time;

- To provide the SBV with information required, concerning the custody VP

Form No. 2/LK

APPLICATION FOR THE CUSTODY OF VALUABLE PAPER

To: The State Bank of Vietnam

(Operation Department or branches of SBV in provinces, cities)

- My name is............................................................................ Position:..............................

- Representative for the bank...................................................................................................

- Address:.............................................................................................................................

- Banking code: ................................... Tel:.............................. Fax:......................................

- Account Custody valuable paper:.........................................................................................

Would like to request for the custody of following VPs:

Form No. 3/LK

APPLICATION FOR THE WITHDRAW OF VALUABLE PAPER

To: The State Bank of Vietnam

(Operation Department or branches of SBV in provinces, cities)

- My name is............................................................................ Position:..............................

- Representative for the bank...................................................................................................

- Address:.............................................................................................................................

- Banking code: ................................... Tel:.............................. Fax:......................................

- Account Custody valuable paper:.........................................................................................

Would like to request for the withdrawal of following VPs: