Circular No. 06/2013/TT-NHNN guiding the activities of buying and selling gold bars in the domestic market

CIRCULAR

Guidelines on the activities of buying and selling gold bars in the domestic market

of the State Bank of Vietnam

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

Pursuant to the Law on Credit Organizations No. 47/2010/QH12 dated June 16, 2010;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Pursuant to Decree No. 86/1999/NĐ-CP dated August 30, 1999 of the Government on the management of the State foreign exchange reserves;

Pursuant to Decree No. 24/2012/NĐ-CP dated April 3, 2012 of the Government on gold trading activities management;

Pursuant to Decision No. 16/2013/QĐ-TTg dated March 4, 2013 of the Prime Minister on the activities of buying and selling gold bars on the domestic market of the State Bank of Vietnam;

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

The Governor of the State Bank of Vietnam issues this Circular guiding the activities of buying and selling gold bars in the domestic market of the State Bank of Vietnam.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

This Circular guides the activities of buying and selling gold bars between the State Bank of Vietnam (hereinafter referred to as the State Bank) and credit institutions, enterprises licensed to engage in the business of buying and selling gold bars.

Article 2. Interpretation of Terms

In this Circular, the following terms are understood as follows:

1. "Representative of credit institutions, enterprises" is the legal representative of credit institutions, enterprises in transactions of buying and selling gold bars with the State Bank.

2. "Direct buying and selling of gold bars" means a form of transaction in which the State Bank decides and announces the price, quantity, and counterparties for buying and selling gold bars.

3. "Buying and selling gold bars through auction" means a form of transaction in which the State Bank conducts an auction to determine the counterparties, prices, and quantities of gold bars to be bought and sold.

4. "Price-based auction" means an auction form where participants submit bid prices to determine the winning price and quantity of gold bars.

5. "Quantity-based auction" means an auction form where participants register bid quantities to determine the winning quantity at the price announced by the State Bank.

6. "Gold bar lot" is the unit of quantity in transactions of buying and selling gold bars between the State Bank and credit institutions, enterprises. The quantity of a gold bar lot is determined and announced by the State Bank before the transaction time.

Chapter II
ESTABLISHING RELATIONSHIPS FOR THE PURCHASE AND SALE OF GOLD BARS BETWEEN THE STATE BANK AND CREDIT INSTITUTIONS, ENTERPRISES

1. Credit institutions, enterprises engaged in the business of buying and selling gold bars that wish to participate in transactions of buying and selling gold bars with the State Bank shall submit directly or send via postal service one set of registration documents to establish relationships for the purchase and sale of gold bars to the State Bank (Trading Department). The documents include:

a) Application for establishing relationships for the purchase and sale of gold bars with the State Bank (in accordance with Form 1 attached);

b) Certificate of Enterprise Registration or Business Registration Certificate (certified copy);

d) Power of attorney from credit institutions, enterprises to the representative in case the representative is appointed by proxy.

2. Within five working days from the date of receipt of complete and valid documents, the State Bank (Trading Department) will notify credit institutions, enterprises in writing confirming the establishment of relationships for the purchase and sale of gold bars with credit institutions, enterprises (in accordance with Form 3 attached). In cases where the relationship for the purchase and sale of gold bars is not established, the State Bank (Trading Department) will notify credit institutions, enterprises in writing and specify the reasons.

3. In case there are changes to the contents of the documents specified in point a and point b of Clause 1 of this Article, within five working days from the date of change, credit institutions, enterprises must notify the State Bank (Trading Department) in writing along with relevant documents.

Article 4. Transaction representatives of credit organizations and enterprises

1. The transaction representative of a credit organization or enterprise is either the legal representative of the credit organization or enterprise or a representative authorized by power of attorney.

2. Each credit organization or enterprise is permitted to register a maximum of three (3) transaction representatives.

3. In cases where the transaction representative of a credit organization or enterprise is appointed by power of attorney, the power of attorney must be signed by the legal representative. The scope of authority must include at least the following contents: signing, receiving documents, and performing all related tasks during the bidding process (for bidding procedures), receiving gold price purchase and sale notifications, submitting applications for gold purchase and sale, receiving notifications on the quantity of gold purchased and sold (for direct purchase and sale), and confirming gold purchase and sale transactions with the State Bank.

5. Each credit organization or enterprise may only appoint one (1) transaction representative listed in the registered list to participate in a single gold purchase and sale transaction with the State Bank.

6. When participating in transactions, the transaction representative of a credit organization or enterprise must present their identity card or passport.

Article 5. Suspension of transactions, cancellation of gold purchase and sale relationships

a) A credit organization or enterprise fails to sign and confirm transactions according to the gold purchase and sale procedures with the State Bank.

b) A credit organization or enterprise fails to settle payments or deliver/receive gold according to the transaction confirmation with the State Bank three (3) times.

c) A credit organization or enterprise violates the information and reporting requirements stipulated in this Circular three (3) times.

d) Credit institutions and enterprises being administratively fined for violations in gold trading activities.

3. The State Bank cancels gold purchase and sale relationships with credit organizations and enterprises in the following cases:

a) A credit organization or enterprise has had its establishment and operation license revoked or its business registration certificate or enterprise registration certificate withdrawn.

b) A credit organization or enterprise has had its gold purchase and sale business license revoked.

4. Credit organizations and enterprises are not allowed to re-establish gold purchase and sale relationships with the State Bank within one (1) year from the date of cancellation of the gold purchase and sale relationship. The procedures for re-establishing gold purchase and sale relationships with the State Bank by credit organizations and enterprises shall be carried out in accordance with the procedures stipulated in Article 3 of this Circular.

Chapter III
GOLD PURCHASE AND SALE TRANSACTIONS OF THE STATE BANK

Article 6. Types of gold bars for trading

The State Bank of Vietnam buys and sells gold bars with a purity of 99.99%, type 01 (one) ounce, which are produced by the State Bank or have been permitted to be produced during certain periods.

Article 7. Forms of buying and selling gold bars

1. Direct buying and selling of gold bars;

2. Buying and selling gold bars through tendering at prices or tendering by volume.

Article 8. Transaction Documents

Transactions for buying and selling gold bars between the State Bank and credit institutions or enterprises shall be evidenced by the following documents:

1. For direct buying and selling:

a) Notification of buying and selling gold bars, notification of purchase price and sale price issued by the State Bank;

b) Registration form for buying and selling gold bars submitted by credit institutions or enterprises;

c) Notification of quantity of gold bars bought and sold issued by the State Bank;

d) Confirmation document of transaction.

2. For buying and selling through tendering:

a) Tender announcement, purchase price or sale price (for tendering by volume), floor price and ceiling price (for tendering at prices) issued by the State Bank;

b) Tender bid sheet submitted by credit institutions or enterprises;

c) Announcement of tender results issued by the State Bank;

d) Confirmation document of transaction.

Article 9. Transaction Accounts

1. Credit institutions and enterprises must deposit and pay money to the State Bank via accounts notified by the State Bank.

2. The State Bank will refund deposits and pay money to credit institutions and enterprises via accounts registered when establishing trading relationships for buying and selling gold bars.

Article 10. Deposit

1. Credit institutions and enterprises must make deposits to ensure their obligation to confirm and execute transactions for buying and selling gold bars with the State Bank.

2. The value of the deposit made by credit institutions and enterprises when buying and selling gold bars from the State Bank is calculated according to the following formula:

Deposit Value = Deposit Ratio x Reference Price x Reference Volume

Where:

Deposit Ratio: expressed as a percentage (%);

Reference Price: expressed in VND per ounce;

Reference Volume: the minimum volume of gold bars for direct buying and selling, or the minimum tender volume of each credit institution or enterprise for tendering; or the volume of gold bars registered for buying and selling by credit institutions or enterprises for direct buying and selling, or the tender volume of each credit institution or enterprise for tendering.

The deposit ratio, reference price, and reference volume are announced by the State Bank before each transaction.

Article 11. Plan for Buying and Selling Gold Bars by the State Bank

2. The plan for buying and selling gold bars includes the following contents:

a) The time of intervention;

b) Type of gold bars for buying and selling;

c) Total volume of gold bars for intervention; volume of gold bars in a single transaction; minimum and maximum volumes of gold bars in a single transaction with a counterparty; bidding price steps and volume steps;

d) Form of buying and selling;

e) Anticipated entities to carry out buying and selling;

f) Principles for determining purchase and sale prices (for direct buying and selling); principles for determining purchase and sale levels (for tendering by volume); principles for determining floor and ceiling prices (for tendering at prices);

g) Deposit ratio, reference volume, principles for determining reference price;

h) Principles and bases for determining gold prices and price fluctuation levels to decide to stop buying and selling in case of direct buying and selling or cancel tendering;

i) Purchasing gold on foreign accounts or purchasing gold abroad for importation or selling gold abroad to offset the volume of gold already sold or purchased for intervention.

Article 12. Process for buying and selling gold bars between the State Bank and credit institutions and enterprises

a) The State Bank (Trading Department) announces the purchase and sale of gold bars;

b) Credit institutions and enterprises make a deposit;

c) The State Bank (Trading Department) checks and announces the eligibility to participate in transactions of credit institutions and enterprises;

d) The State Bank (Trading Department) announces the purchase and sale prices;

e) Credit institutions and enterprises register the volume of purchases and sales;

f) The State Bank announces the cessation of purchases and sales (if applicable);

g) The State Bank (Trading Department) determines and announces the volume of purchases and sales with each credit institution and enterprise;

h) Confirm the transaction;

i) Pay money and deliver/receive gold bars;

j) Handle the deposit money.

a) The State Bank (Trading Department) announces the auction for purchasing and selling gold bars;

b) Credit institutions and enterprises make a deposit;

c) Check and announce the eligibility to bid of credit institutions and enterprises;

d) The State Bank (Trading Department) announces the purchase and sale prices (for quantity-based auctions) or floor and/or ceiling prices (for price-based auctions);

e) Credit institutions and enterprises submit bidding sheets for purchasing and selling gold bars;

f) The State Bank evaluates bids;

g) The State Bank announces the cancellation of bids (if applicable);

h) The State Bank (Trading Department) publishes the auction results;

i) Confirm the transaction;

j) Pay money and deliver/receive gold bars;

k) Handle the deposit money.

3. The contents prescribed in points a, b, c, d, e, f, g, h of Clause 1 and points a, b, c, d, e, f, g, h, i of Clause 2 of this Article shall be implemented according to the Procedures for Buying and Selling Gold Bars of the State Bank of Vietnam issued by the Governor of the State Bank.

Article 13. Confirmation of Transactions

Within thirty minutes from the time of announcing the volume and purchase and sale prices with each credit institution and enterprise (for direct buying and selling) or announcing the auction results (for auctions), the representative of the credit institution or enterprise that has been granted permission to buy and sell gold bars (for direct buying and selling) or won the bid (for auctions) must sign to confirm the transaction of buying and selling gold bars with the State Bank.

The Trading Department notifies in writing the Foreign Exchange Management Department, the Financial Accounting Department, and the Issuance and Treasury Department about the results of buying and selling gold bars with each credit institution and enterprise after signing the transaction confirmation.

Article 15. Payment Deadline and Delivery/Reception of Gold Bars

1. In the case where the State Bank sells gold bars:

a) Credit institutions and enterprises must pay the full amount of money for purchasing gold bars according to the transaction confirmation into the State Bank's settlement account no later than the next working day following the date of signing the transaction confirmation document.

c) On the next working day following the date of signing the transaction confirmation, the State Bank (Issuance and Treasury Department) delivers gold to credit institutions and enterprises that have fully paid for purchasing gold bars on the day of signing the transaction confirmation; On the second working day following the date of signing the transaction confirmation, the State Bank (Issuance and Treasury Department) delivers gold to credit institutions and enterprises that have fully paid for purchasing gold bars on the next working day following the date of signing the transaction confirmation.

d) In cases where the delivery of gold differs from the deadlines stipulated in points b and c of Clause 1 of this Article, the State Bank will notify the credit institutions and enterprises in the announcement of buying and selling gold bars or the auction announcement.

2. In the case where the State Bank buys gold bars:

a) Credit institutions and enterprises must deliver gold bars to the State Bank within one working day from the date of signing the transaction confirmation document.

c) The State Bank (Trading Department) pays money to the credit institutions and enterprises within one working day from the date of completion of the delivery and receipt of gold bars.

Article 16. Handling of Prepaid Money of Credit Institutions and Enterprises

1. The State Bank shall not refund prepaid money and notify in writing to credit institutions and enterprises in cases where credit institutions and enterprises that purchase or sell gold bars with the State Bank (for direct purchases and sales) or win bids (for auction forms) violate their obligations as stipulated in Clause 1, Point a and Clause 2, Point a of Article 15 of this Circular.

2. Except for the cases specified in Clause 1 of this Article, the State Bank (Trading Department) shall refund prepaid money to credit institutions and enterprises through accounts registered with the State Bank according to the following deadlines:

a) On the day of transaction in cases where the State Bank stops purchasing or selling or cancels the auction and in cases where credit institutions and enterprises are not allowed to purchase or sell or do not win the bid.

b) On the next working day after the transaction date for credit institutions and enterprises purchasing gold bars from the State Bank.

c) Within two (2) working days following the transaction date for credit institutions and enterprises selling gold bars to the State Bank.

Article 17. Delivery and Receipt of Gold Bars

The delivery and receipt of gold bars in the activities of purchasing and selling gold bars between the State Bank and credit institutions and enterprises shall be carried out at locations notified by the State Bank and in accordance with the regulations of the State Bank.

Article 18. Force Majeure and Objective Obstacles

1. In cases where the parties cannot perform their obligations to confirm transactions, pay money, and deliver or receive gold within the prescribed time limits due to force majeure or objective obstacles, the duration of such force majeure or objective obstacles shall not be counted towards the deadlines set forth in Articles 13 and 15 of this Circular.

2. The parties shall immediately notify the other party about the occurrence of force majeure or objective obstacles.

Chapter IV
RESPONSIBILITIES OF CREDIT INSTITUTIONS AND ENTERPRISES THAT PURCHASE AND SELL GOLD BARS WITH THE STATE BANK AND RESPONSIBILITIES OF UNITS BELONGING TO THE STATE BANK

Article 19. Responsibilities of Credit Institutions and Enterprises Establishing Transaction Relationships to Purchase and Sell Gold Bars with the State Bank

1. Ensuring the quality and quantity of gold bars sold to the State Bank;

2. Ensuring the safety of gold during transportation to or from the State Bank's warehouse;

3. Paying money and delivering gold fully and on time as stipulated in this Circular when purchasing and selling gold bars with the State Bank;

4. Being responsible for the authenticity of the authority of the transaction representative in gold bar purchase and sale transactions with the State Bank; Being responsible for obligations arising from the actions of the transaction representative and from gold bar purchase and sale transactions established by the transaction representative with the State Bank as stipulated in this Circular.

5. Being responsible for the truthfulness, accuracy, and legality of documents and files sent to the State Bank related to gold bar purchase and sale activities with the State Bank;

7. After purchasing gold bars from the State Bank, before 14:00 each day, credit institutions and enterprises have the responsibility to report to the State Bank (Foreign Exchange Management Department) on the situation of using gold bars purchased from the State Bank on the previous working day (according to the model attached as Appendix 4 to this Circular). Reporting ends when credit institutions and enterprises have used up the quantity of gold bars purchased from the State Bank.

8. Other responsibilities as stipulated in this Circular.

2. Carry out payment business for buying and selling gold bars.

3. Notify in writing to credit institutions and enterprises about non-refund of deposit money.

4. Announce and update the Banking Inspection and Supervision Authority and the Foreign Exchange Management Department on the list of credit institutions and enterprises establishing relationships of buying and selling gold bars with the State Bank.

5. Coordinate with the Foreign Exchange Management Department and the Monetary Policy Department to develop plans for the State Bank's buying and selling of gold bars.

6. Coordinate with the Foreign Exchange Management Department to determine the purchase price, sale price of gold bars (for direct buying and selling and tendering based on volume), floor price, ceiling price (for tendering based on price) according to the approved buying and selling plan.

7. Other responsibilities as prescribed in this Circular.

Article 21. Responsibilities of the Foreign Exchange Management Department

1. Lead and coordinate with relevant units to develop plans for the State Bank's buying and selling of gold bars.

4. Perform other tasks as prescribed in this Circular.

Coordinate with the Foreign Exchange Management Department and the Trading Department to develop plans for the State Bank's buying and selling of gold bars in accordance with monetary policy objectives during each period.

Article 23. Responsibilities of the Issuance and Treasury Department

1. Lead and coordinate with relevant units to regulate the quantity of gold bars at State Bank treasuries to serve the State Bank's buying and selling of gold bars.

3. Perform other tasks as prescribed in this Circular.

Article 24. Responsibilities of the Financial Accounting Department

1. Guide the accounting of domestic and international market gold buying and selling operations of the State Bank, including the accounting of related income and expenses.

2. Coordinate with the Issuance and Treasury Department to implement the export, import, and transfer of gold at State Bank treasuries.

1. Notify in writing to the Trading Department information as stipulated in Point d, Clause 1, Clause 2, and Clause 3, Article 5 of this Circular.

2. Conduct inspection and supervision activities on credit institutions and enterprises' buying and selling of gold bars with the State Bank in accordance with the law.

Chapter V
IMPLEMENTING PROVISIONS

Article 26. Effectiveness and responsibility for implementation

1. This Circular shall take effect from March 13, 2013.

2. The Director of the Office, Heads of the Foreign Exchange Management Department under the State Bank of Vietnam, Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally governed cities; Chairmen of the Board of Directors, Chairmen of the Board of Members, Chairmen of companies, General Managers (Directors) of credit organizations, gold bullion trading enterprises with the State Bank of Vietnam, and related organizations and individuals shall be responsible for implementing this Circular.