Decision No. 1136/2004/QD-NHNN On Issuing the Regulation on the Organization and Operation of the State Bank Trading Department

DECISION

Regarding the issuance of the Rules on Organization and Operation of

The State Bank of Vietnam Trading Department

 ___________________

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QĐ10 dated December 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated June 17, 2003;

Pursuant to Decree No. 86/2002/NĐ-CP dated 5/11/2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;

Pursuant to the Government's Decree No. 52/2003/NĐ-CP dated 19/5/2003 stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam; Male;

At the proposal of the Trading Department and the Director of the Personnel Department;

After reaching agreement with the Minister of Internal Affairs,

DECISION:

Article 1. Issued together with  this Decision is the "Rules on Organization and Operation of the State Bank of Vietnam Trading Department".

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Decision No. 38/1999/QĐ-NHNN9 dated January 21, 1999 of the Governor of the State Bank of Vietnam on the issuance of the Rules on Organization and Operation of the State Bank of Vietnam Trading Department.

Article 3. The Head of the Office, the Director of the Personnel Department, the Director of the Trading Department, and the Heads of units related to the State Bank of Vietnam shall be responsible for implementing this Decision.

Regulation

Organization and operation of

The State Bank of Vietnam Trading Department

(Issued together with Decision No. 1136/2004/QĐ-NHNN

dated September  10  2004 of the Governor of the State Bank of Vietnam)

PART I

General Provisions

Article 1.  The Trading Department is a unit within the organizational structure of the State Bank of Vietnam, having the function of assisting the Governor in performing certain central bank business operations..

Article 2.  The Trading Department is a dependent accounting unit, maintaining a balance sheet and having its own seal for transactions in accordance with the law.  The management of the Trading Department is headed by the Director, with Deputy Directors assisting the Director; the Director and Deputy Directors are appointed by the Governor. The organization and operation of the Trading Department shall be carried out according to the principle of democratic centralism and the chief executive system.

Article 3. Functions and powers of

Chapter II

The Trading Department has the following functions and powers:

The State Bank of Vietnam Trading Department

Article 4.  1- Implementing open market operations and credit operations of the State Bank; acting as an agent for the National Treasury in accordance with current regulations, specifically:

a -

Organizing and participating in open market trading sessions.  b - Performing agency services for the National Treasury: organizing and participating in government bond auction sessions.

c - Carrying out credit operations of the State Bank in accordance with current regulations, including:

- Providing rediscount loans to banks through loan applications; discounting and rediscouting commercial bills and other negotiable instruments; providing secured loans through collateral of commercial bills and other negotiable instruments.

- Providing loans to designated entities by the Government.

- Overnight lending; lending to financial institutions in cases of insolvency.

- Collecting fees for guarantees and re-guarantees in accordance with the Guarantee Regulations.

- Preparing operational reports as prescribed.

d -

Providing temporary advances to the State Budget in accordance with the law.  đ - Serving as Secretary to the Government Bond Auction Committee, Open Market Operations Management Committee, or other committees as decided by the Governor.

e - Developing and guiding the implementation of procedures for open market operations, government bond auctions, and other negotiable instruments; procedures for discounting negotiable instruments, overnight lending, and other operations assigned by the Governor.

g - Paying auction fees; settling government bonds and other negotiable instruments as prescribed; carrying out other expenses as regulated by the state.

h - Organizing the custody, registration, preservation, and disposal of collateral and negotiable instruments in accordance with established regulations.

i - Issuing and revoking membership certificates for financial institutions participating in open market operations, government bond auctions, and other negotiable instruments; issuing electronic signature keys for members.

Opening accounts and conducting transactions with the National Treasury, domestic financial institutions, foreign banks, and international financial organizations; accounting for economic transactions occurring at the Trading Department, specifically:

2. a - Processing account opening, closing, and management procedures for deposits and loans in Vietnamese dong and foreign currencies for financial institutions and other domestic organizations in accordance with current regulations.  b - Conducting accounting for deposits and loans in Vietnamese dong

and foreign currencies. Male c -

Accounting for economic transactions arising from open market operations, government bonds, central bank bills, other negotiable instruments, and the interbank foreign exchange market. Male d - Accounting for cash receipts and payments in foreign currencies and Vietnamese

dong at the Trading Department's operational fund in accordance with established regulations.  đ - Calculating and collecting interest on deposits and loans according to credit contracts.

e - Calculating and paying monthly interest on deposits to financial institutions and the National Treasury. Male g - Implementing service fee collection for payment transactions through the State Bank of Vietnam Trading Department in accordance with current regulations.

h - Opening transaction accounts at the Securities Trading Center; organizing accounting, registration, and transactions related to securities accounts opened at the Securities Trading Center.

i - Accounting for transactions related to the country’s foreign exchange reserves and preparing relevant reports.

k - Recording, storing, and safely keeping checks, sample money, treasury bills, bonds, and other negotiable instruments in accordance with regulations.

l - Calculating, recording, and monitoring the value of collateral held at the Trading Department to determine overdraft and overnight lending limits, net debt limits applicable to low-value electronic interbank payments.

m - Recording and tracking the Assets side of the State Bank of Vietnam on term and non-term deposits, entrusted investments, and bond and bill investments in foreign currency at foreign banks and international financial organizations.

n - Checking and reconciling foreign bank documents with original documents; reviewing and processing discrepancies (if any).

p - Monitoring and urging the Ministry of Finance to repay principal, interest, and fees to the IMF for government loans.

q - Organizing the accounting of Trading Department’s operational revenues and expenditures in accordance with established regulations.

n - Verify and reconcile foreign bank documents with original documents; review and address discrepancies (if any).

p - Monitor and urge the Ministry of Finance to repay principal, interest, and fees to the IMF for government loans.

q - Organize accounting for the business transactions of the Trading Department according to prescribed regulations.

3. Carry out management and business operations with foreign exchange sources held by the State Bank and deposited abroad in the forms of deposits, bonds, bills, foreign currency trading, gold, and other investment forms as prescribed by the Governor to ensure asset safety, meet payment capabilities, and generate profits, specifically:

a - Manage and monitor foreign exchange funds held by the Trading Department (Foreign Exchange Reserve Fund, Exchange Rate Stabilization Fund and Gold Price Fund, other foreign exchange sources) to develop appropriate investment plans according to the State Bank's Foreign Exchange Reserve Management Board's directives on structure, limit, term, and type of investment.

b - Transfer capital between agency banks to ensure payment capability and implement profitable investments.  generate income.

c - Conduct immediate foreign currency buying and selling for the purpose of adjusting the foreign currency structure within the Foreign Exchange Reserve Fund, Exchange Rate Stabilization Fund, and Gold Price Fund.

d - Carry out foreign currency and securities buying and selling for profit within permitted limits. Implement new investments, monitor soon-to-mature investment amounts to continue investing at favorable interest rates based on market information exchanges with foreign partners and daily deposit interest rate reviews.

đ - Examine foreign partner investment mandates presented to the Head of the State Bank's Foreign Exchange Reserve Management Board for decision or review and sign investment mandates within authorized limits.

e - Monitor the implementation of active investment mandates to ensure compliance with contractual commitments.

g - Report on domestic and international financial and monetary market developments to the Governor for reporting to the Prime Minister and relevant ministries and sectors as required.

h - Prepare regular or ad hoc reports to the Governor and the Management Board regarding matters related to these operations.

4. Carry out agency relationship operations, specifically:

a - Establish and implement agency relationships; monthly, quarterly, or ad hoc credit rating reports on State Bank partners.

b - Within the Governor's specified limits, determine limits applicable to each partner for investment, transaction buying and selling limits, custody limits, and limits for each transaction type.

c - Monitor limits applied by partners to the State Bank in investment transactions, foreign currency buying and selling, and other market transactions.

d - Review conditions and terms applied by each partner to the State Bank in investment, settlement, foreign currency buying and selling, and other market transactions.

đ - Conduct short and medium-term studies on economic and monetary situations in countries with currencies in the foreign exchange reserve structure to forecast exchange rate fluctuations and central bank monetary policy changes serving the State Bank's foreign currency trading and international payment operations; daily news on exchange rate and interest rate movements of relevant currencies serving the State Bank's foreign currency trading operations.

e - Monitor and promptly grasp international monetary market developments to formulate short-term strategies (daily, weekly, monthly, quarterly) serving the State Bank's foreign currency trading operations on international markets.

g - Sign contracts for subscribing to global financial and monetary information services.

h - Study and develop the State Bank's foreign exchange business operations.

5. Carry out international payment operations, specifically:

a - Open, close, and manage transaction accounts, settlement accounts, and securities custody accounts with foreign banks and other partners.

b - Receive and send transaction confirmations with partners to ensure accurate matching with executed transactions.

c - Execute payment transfers to complete foreign currency buying and selling transactions, deposit investment transactions, securities buying and selling transactions on international and interbank foreign exchange markets; transfer bonds, transfer money according to investment mandates; transfer money according to orders from State Bank departments; transfer money from the State Bank's domestic commercial bank accounts to foreign countries.

d - Monitor payments to the State Bank from partners to ensure accuracy according to executed transactions or State Bank or third-party transfer orders.

đ - Reconcile foreign exchange account statements with all foreign partners with whom the State Bank has accounts.

e - Monitor and pay fees to partners as agreed.

g - Collect principal and interest on fixed and non-fixed term deposits, securities investment amounts, and matured investment mandates.

h - Monitor and inspect to ensure partner banks fulfill payment and securities custody obligations for the State Bank in international and interbank foreign exchange market transactions; conduct inquiries when partners fail to follow State Bank instructions according to international practices.

i - Select partners capable of providing quality payment and securities custody services for the State Bank.

k - Monitor collateral and mortgage accounts for issuing Vietnam Brady Bonds at the US Federal Reserve; monitor, calculate, and notify the Ministry of Finance to execute collateral account fees at the US Federal Reserve and pay coupon interest on Vietnam Government-issued bonds to bondholders.  issued by the Government of Vietnam to pay the bondholder.

l - Ensure smooth and secure operation of the international payment system according to SWIFT International Committee requirements; establish periodic SWIFT key systems and other security requirements; study and apply standard message formats, and regularly update standard message format changes.

m - Prepare international payment operation reports as required.

n ||| Take the lead and coordinate with relevant units to implement the upgrade of the SWIFT payment system according to the requirements of the International SWIFT Committee. Participate in the SWIFT Vietnam Committee. Male .

p ||| Exchange encryption keys with partners on the principle of ensuring absolute secrecy and security.

q ||| Sign related documents concerning tax exemption for foreign investments made by the State Bank.

6 ||| Organize and manage the participation in the inter-bank foreign exchange market, specifically:

a ||| Submit to the Governor for recognition of membership for credit organizations wishing to participate in the inter-bank foreign exchange market.

b ||| Monitor the operation of the inter-bank foreign exchange market and the foreign currency needs of members, report to the Foreign Exchange Management Department, and simultaneously submit to the Governor for decision-making on intervention measures.

c ||| Directly conduct transactions on the inter-bank foreign exchange market (spot transactions, swaps, forward contracts, options, and other derivative transactions as prescribed by the Governor).

(spot transactions, swaps, forward contracts, options, and other derivative transactions as prescribed by the Governor).

d ||| Carry out the purchase and sale of foreign currencies to intervene in exchange rates and implement monetary policy as directed by the Governor.

đ ||| Determine the buying and selling rates between the Vietnamese Dong and other foreign currencies in the inter-bank foreign exchange market to provide to relevant units and international financial organizations in accordance with current regulations.

e ||| Report promptly to the Governor and inform competent units about developments in the inter-bank foreign exchange market to formulate appropriate policies and intervention measures. Prepare regular and ad hoc reports on activities in the inter-bank foreign exchange market as prescribed.

7 ||| Monitor the equity contributions at international financial-monetary organizations where Vietnam is a member; implement reconciliations and reports as prescribed. Male góp tại các tổ chức tài chính -tiền tệ quốc tế mà Việt Male là hội viên; thực hiện các sao kê, báo cáo theo quy định.

8 ||| Carry out settlement and transfer operations, electronic payments, and inter-bank electronic payments, specifically:  thanh toán, chuyển tiền  điện tử và thanh toán điện tử liên ngân hàng, cụ thể:

a ||| Serve as the central point of the inter-bank electronic payment system: establish and manage net debit caps applicable to low-value payments, oversee the clearing and settlement of the system.

b ||| Perform the tasks of a member of the inter-bank electronic payment system: outgoing transfers, incoming transfers, inquiries, responses to inquiries, reconciliation of transfers in accordance with the charter.

c ||| Conduct low-value payment transactions within the State Bank's system: outgoing transfers, incoming transfers, inquiries, responses to inquiries, reconciliation of transfers according to the operational procedures.

d ||| Conduct low-value payments and participate in the clearing and settlement of inter-bank electronic payments.

đ ||| Submit to the Governor for removal of a member from the inter-bank electronic payment system when violating overdraft rules, overnight lending, and notify other members and provincial branches directly under the Central Government.

e ||| Prepare reports on electronic transfers and inter-bank electronic payment settlements as prescribed.

g ||| Manage and use encryption keys in electronic transfers and inter-bank payments.  và thanh toán liên ngân hàng.

9 ||| Carry out cash receipts and payments for units with accounts at the Trading Department; manage operational funds in Vietnamese Dong, foreign currencies, and securities at the Trading Department, specifically:  a ||| Balance cash receipt and payment needs to meet customers' cash demands promptly and adequately.

b ||| Organize cash receipts and payments for customers in accordance with operational procedures.

c ||| Manage and ensure the safety of vaults and securities stored at the Trading Department.

10 ||| Calculate and determine mandatory reserve deposits and manage the reserves of credit organizations, specifically:

a ||| Update deposit balances of credit organizations opened at provincial branches directly under the Central Government.

b ||| Determine mandatory reserve deposit amounts, notify credit organizations to implement during the period.  c ||| Aggregate deposit balances of credit organizations across the entire system; calculate average deposit balances of credit organizations, transmit to provincial branches directly under the Central Government where the credit organization's headquarters is located to address excess or shortage of mandatory reserves in the month.

d ||| Prepare reports on the implementation of mandatory reserves by credit organizations in accordance with current regulations.

11 ||| Implement accounting and statistical reporting systems as prescribed by the State and the State Bank: prepare balance sheet reports in Vietnamese Dong and foreign currencies, and other accounting reports as prescribed.  12 ||| Organize inspections, controls, and evaluations of transactions occurring at the Trading Department, specifically:

a ||| Conduct daily monitoring of investment and trading transactions on the international market to ensure compliance with the Governor's regulations.  b ||| Regularly or ad hoc inspect and control all business operations of the Trading Department to prevent and limit risks, meeting asset safety requirements.

c ||| Conduct daily monitoring of international payment operations and operational fund inflows and outflows. Male d ||| Propose risk prevention measures in various business areas of the Trading Department.

đ ||| Monitor and propose to the Trading Department Director to implement recommendations from inspection and audit teams.  13 ||| Carry out other tasks assigned by the Governor.

Organizational structure and management  The organizational structure of the State Bank Trading Department includes:

1. Foreign Exchange Trading Department;

2. International Payment Department;

3. Inter-bank Payment Department;

4. Accounting Department;

Risk Management and Internal Control Department (referred to as the Risk Management Department);

Chapter III

Business Operations Department;

Article 5.  Money Market Department;

7. Treasury Department.

The duties of Departments and independent specialists are defined and assigned by the Trading Department Director in accordance with this Charter.

The working system of the Trading Department operates under a mechanism combining independent specialists with departmental organization.

Duties and authorities of the Trading Department Director

1. Organize the implementation and bear personal responsibility before the Governor for all aspects of the Trading Department's work; decide on programs, plans, and measures to implement the Trading Department's tasks as stipulated in this Charter.

Business Operations Division  Money Market;

7. Treasury Division.

The duties of the Divisions and independent specialists shall be defined and assigned by the Trading Department Director in accordance with this Regulation.

The operating system of the Trading Department shall be implemented through a combination of independent specialist mechanisms and divisional organization.

Article 6. Duties and powers of the Trading Department Director

1. Organize and personally take responsibility before the Governor for all aspects of the Trading Department's work; decide on programs, plans, and measures to implement the Trading Department's tasks as stipulated in this Regulation.

2. Decide on investments, purchases, and sales of foreign currencies within the scope of the Governor's authorization; sign transaction documents with customers under the operations of the Trading Department; sign financial budgets, settlements, and transaction documents of the Trading Department;  Sign documents on behalf of or pursuant to the Governor's authorization within the authority delegated by the Governor;

3. Implement management and utilization of staff according to分级授权和行长的委托;

Article 7.  Duties and powers of the Deputy Director of the Trading Department

1. Assist the Director in directing and managing certain areas of work of the Trading Department as assigned by the Director and be responsible to the Director for the results of the assigned work;

Substitute the Director's signature on administrative documents and transaction documents as assigned by the Director;

When the Director is absent, a Deputy Director authorized by the Director shall represent the Director to handle the department's affairs and be responsible for the matters resolved, and  must report back when the Director is present;

Chapter IV

Implementation Provisions

Article 8. Any amendments or supplements to this Regulation shall be decided by the Governor of the State Bank.