Decision No. 53/2001/QD-NHNN On Issuing the Tender Regulation for Treasury Bills at the State Bank

Pursuant to …;

Regarding the issuance of the Treasury Bill Auction Regulations at the State Bank

_________________________

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997, and the Law on Credit Institutions No. 02/1997/QH10 dated December 12, 1997;

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government on the tasks, powers, and responsibilities for state management of ministries and ministerial-level agencies;

Pursuant to Decree No. 01/2000/NĐ-CP dated January 13, 2000 of the Government regarding the issuance of the Government Bond Issuance Regulations;

After reaching consensus with the Ministry of Finance and upon the proposal of the Director of the Credit Department.

DECISION:

Article 1. The Treasury Bill Auction Regulations at the State Bank are hereby issued together with this Decision.

Article 2. This Decision shall take effect fifteen days from the date of signature and shall replace Decision No. 61/QĐ-NH19 dated March 8, 1995 of the Governor of the State Bank on the issuance of the Treasury Bill Auction Regulations.

Article 3. The Heads of the Office, Directors of the Credit Department, Governors of the State Bank’s Trading Departments, Heads of relevant units under the State Bank, Governors of the State Bank Branches in provinces and centrally-administered cities, Chairmen of Management Councils, General Managers (Directors) of entities participating in the Treasury Bill Auctions are responsible for implementing this Decision./.

 REGULATIONS

Treasury Bill Auctions at the State Bank

____________________

(Issued together with Decision No. 53/2001/QĐ-NHNN dated January 17, 2001)

of the Governor of the State Bank)

PART I

GENERAL PROVISIONS

Article 1. Scope of application

These regulations govern the Treasury Bill Auctions at the State Bank.

Article 2. Treasury Bill Auctions at the State Bank involve the State Bank acting as an agent for the Ministry of Finance in issuing Treasury Bills through wholesale auctions among primary market participants.

Article 3. Principles of Auction

1. Transparency and equality of rights and obligations among auction participants.

2. Confidentiality of bidding information of participants and the directed interest rate of the Ministry of Finance (if applicable).

Article 4. Forms of selling Treasury Bills.

1. Par value form: Treasury Bills are sold at par value; principal and interest are paid in full at maturity.

2. Discount form: Treasury Bills are sold below par value and redeemed at par value at maturity.

Article 5. Eligible Participants in the Treasury Bill Auctions

1. Banks operating in Vietnam including commercial banks, development banks, investment banks, policy banks, cooperative banks, joint venture banks, foreign bank branches, and other types of banks operating under the Law on Credit Institutions.

2. Financial companies, insurance companies, insurance funds, investment funds operating in Vietnam.

Chapter II

SPECIFIC PROVISIONS

Article 6. Conditions for Participation in the Treasury Bill Auction Market at the State Bank.

Entities eligible to be recognized as participants in the Treasury Bill Auction Market at the State Bank must meet the following conditions:

1. Legal entity status established in accordance with current Vietnamese laws;

2. Minimum statutory capital of 20 billion Vietnamese dong;

3. Having a Vietnamese dong account opened at the State Bank’s Trading Department or designated State Bank branches (for credit institutions, financial companies, deposit insurance companies) or at another credit institution that is a participant in the Treasury Bill Auction Market (for other entities);

4. Submitting an application to participate in the Treasury Bill Auction Market at the State Bank and registering a list of authorized signatories for auction participation documents (according to Form No. 01/TPKB attached).

Article 7: Recognition of Participants in the Treasury Bill Auctions.

1. The State Bank will issue a certificate recognizing participation in the Treasury Bill Auction Market to entities meeting the conditions stipulated in Article 6 of these regulations.

2. The State Bank may revoke the participation certificate of market participants if they fail to meet the prescribed conditions.

Article 8. Notice of Auction

1. Two working days prior to the auction, based on the Ministry of Finance's request to issue Treasury Bills, the State Bank will notify the participants in the Treasury Bill Auction Market and publicize the information through mass media.

2. The State Bank (Trading Department) will send out the Treasury Bill issuance notice through the following methods:

a. Via the computer network if participants are connected to the State Bank.

b. By fax to participants and designated State Bank branches.

3. Posting at the State Bank’s Trading Department in Hanoi, designated State Bank branches, and publicizing through mass media.

4. If participants do not participate in five consecutive auctions, the State Bank will cease direct fax notifications for subsequent auctions. Direct notifications will resume when participants return to the auction process.

5. The content of the State Bank's Treasury Bill issuance notice follows Form No. 02/TPKB attached.

Article 9. Registration for Auction

1. Participants' auction registration is uniformly conducted using Form No. 03/TPKB attached. Participants submit their registration forms between 8 AM and 12 PM on the auction day.

2. The contents recorded in the participants' registration forms are standardized as follows:

a. Interest rates are recorded as percentages per annum (%) and rounded to two decimal places;

b. Each form can record up to five different interest rates. The quantity registered for each interest rate must be a multiple of 100 million Vietnamese dong;

c. The volume registered at each interest rate and the total amount must be written in both figures and words. In case of discrepancy between figures and words, the volumes registered at those bid rates will be invalid and excluded from the registration form;

d. The original registration form must bear the signature of the legal representative of the participant, registered with the State Bank, sealed in an envelope. In cases where the registration form is transmitted via a computer network connected to the State Bank, confidentiality must be ensured according to State Bank regulations.

3. The subscription form of members participating in the market but without an account at the State Bank shall clearly state the account number and name of the bank (which is a member of the market) where such member has opened an account.

Article 10. Deposit Guarantee

1. Bidders must deposit a bid bond with the State Bank (the State Bank Trading Department or designated branches of the State Bank) to ensure their responsibility for participating in the auction. The minimum bid bond amount is equal to 5% of the value of the bid registration.

If the bid registration form does not guarantee the required bid bond amount, the volume of Treasury bills registered for bidding will be considered for auction at 20 times the amount of the bid bond (corresponding to the minimum bid bond requirement of 5%).

2. The State Bank shall open a separate bid bond account to record the bid bond amounts for members. The bid bond amount will not accrue interest during the period of the bid bond.

3. For members without an account at the State Bank, the bid bond shall be deposited through a bank that is a member of the market to deposit the bid bond with the State Bank.

4. The bid bond amount will be transferred to the State budget in case a successful bidder refuses to purchase Treasury bills or fails to have sufficient funds to pay for the purchase of Treasury bills as stipulated.

5. The State Bank will return the bid bond amount to unsuccessful bidders on the day of the auction.

Article 11. Method of submitting bid registration forms.

1. In each auction, a bidder may only submit one bid registration form for each term of Treasury bills.

2. Bid registration forms shall be directly submitted into the ballot box placed at the State Bank (State Bank Trading Department or designated branch of the State Bank) or transmitted via computer network to the State Bank Trading Department according to the State Bank's information security regulations.

3. The ballot box shall be locked with two keys held by two authorized officers, each holding one key. In the case of bid registration forms submitted via computer network, the password must be kept by an authorized person to ensure the confidentiality of the bid registration forms before opening the bids.

Article 12. 1. Before 13:00 on the day of the bid opening, participants must submit their bid forms to the State Bank. The bid opening begins at 13:30 on the day of the auction under the supervision of the Treasury Bill Auction Committee.

1. The opening of bids takes place at 13:30 on the day of the auction under the witness of the Inter-Ministerial Auction Committee.

2. The processing department shall check the validity of the bid registration forms (through two inspectors who separately confirm and sign on the bid registration forms, and the person responsible for the processing department signs to confirm). Bid registration forms and bid registration amounts that are invalid (content of the bid and bid registration forms do not comply with the provisions of Clause 2, Article 9 and do not meet the required bid bond amount as stipulated in Article 10 of this Regulation) shall be eliminated. The State Bank Trading Department or designated branch of the State Bank shall notify members whose bid registration amounts or bid registration forms have been eliminated and specify the reasons for non-compliance.

3. After eliminating invalid bid registration forms and bid registration amounts, the designated branch of the State Bank shall transmit the consolidated auction table and bid registration forms of members to the State Bank Trading Department in Hanoi (by fax and computer network according to specific codes) for centralized auction at the State Bank of Vietnam.

Article 13. 1. In the case of a competitive interest rate auction:

1. Auction principle: The quantity of successfully auctioned Treasury bills is determined based on the bid interest rate from low to high.

a. In the case of a directed interest rate: The winning bid interest rate is the highest bid interest rate within the range of the directed interest rate at which the quantity of successfully auctioned Treasury bills does not exceed the planned issuance quantity of Treasury bills.

b. In the absence of a directed interest rate: The winning bid interest rate is the highest bid interest rate at which the quantity of successfully auctioned Treasury bills does not exceed the planned issuance quantity of Treasury bills.

2. In the event that the total bid quantity at the winning bid interest rate exceeds the planned issuance quantity, the quantity of Treasury bills at the winning bid interest rate will be allocated proportionally among the bid quantities at that interest rate, ensuring that the quantity of successfully auctioned Treasury bills does not exceed the planned issuance quantity of Treasury bills.

3. The winning bid interest rate applies to all successfully auctioned Treasury bills to calculate the selling price of Treasury bills.

4. The auction results must be confirmed by authorized representatives of the Ministry of Finance and the State Bank belonging to the Treasury Bill Auction Committee.

Article 14. Selling price of Treasury bills.

1. For Treasury bills issued at par value.

The selling price of Treasury bills is 100% of the face value. The total payment amount for Treasury bills upon maturity (including principal and interest) is calculated using the following formula:

n

T = G + (G x Ls x ------- )

365

Where:

T: Total amount (principal and interest) to be paid for Treasury bills upon maturity.

G: Selling price of Treasury bills.

Ls: Winning bid interest rate of Treasury bills (expressed as a percentage per annum).

n: Term of Treasury bills (expressed in days).

2. For Treasury bills issued at discount.

The selling price of Treasury bills is lower than the face value of the Treasury bills (minus the portion of interest that members receive during the period of purchasing Treasury bills), and upon maturity, members will be paid the face value of the Treasury bills when issued. The selling price of Treasury bills is calculated using the following formula:

MG

G = ---------------------------

Ls x n

1 + ---------------

365 x 1000

Where:

G: Selling price of Treasury bills.

MG: Face value of Treasury bills.

Ls: Winning bid interest rate of Treasury bills (expressed as a percentage per annum).

n: Term of Treasury bills (expressed in days).

3. The amount that successful bidders must pay shall be rounded to the nearest hundred dong.

Article 15. Notification and reporting of auction results

After determining the auction results, the Treasury Bill Auction Committee reports the auction results to the Minister of Finance and the Governor of the State Bank; simultaneously, directly notifies the participating bidders by fax or via computer network (if available) according to Model No. 04/TPKB attached, posted at the State Bank Trading Department, designated branches of the State Bank, and announced on mass media.

Article 16. Payment for purchasing and delivery of Treasury bills.

1. Pursuant to the tender result announcement of the State Bank, successful tender members must fully pay the amount for purchasing Treasury bills to the State Bank (State Bank Trading Department or designated branches of the State Bank) within two working days from the tender date. Simultaneously, the State Bank will record the credit of the Treasury bill account (in case of Treasury bills in the form of book entries) or deliver the Treasury bill certificate (in case of issuance of Treasury bills in the form of certificates) to successful tender members.

2. In case the State Bank does not receive the payment from successful tender members on the due payment date, the State Bank will automatically deduct from the deposit accounts of successful tender members at the State Bank (if available); or request credit organizations that are members of the market to deduct from the deposit accounts of successful tender members to make full payment for purchasing Treasury bills; if the deposit account balance is insufficient, the State Bank will cancel the unfulfilled tender results and transfer the bid bond of the member to the State Budget.

3. The State Bank will credit the deposit account of the State Treasury opened at the State Bank Trading Department with the full amount paid by successful tender members for purchasing Treasury bills, no later than the morning of the third working day, starting from the tender organization date.

Article 17. Payment of Treasury bills upon maturity.

1. One working day before the payment due date of Treasury bills, the Ministry of Finance (Central State Treasury) will transfer the payment for Treasury bills (including principal and interest) to the State Bank (State Bank Trading Department). If the State Bank has not received the transfer document from the Central State Treasury on the payment due date, the State Bank will automatically deduct from the deposit account of the Central State Treasury to make payment to the owners of Treasury bills.

2. The State Bank will pay the principal and interest (if any) to the owners of Treasury bills on the maturity date of Treasury bills. In case the payment due date of Treasury bills coincides with a weekend, holiday, or Tet, the principal and interest of Treasury bills will be paid on the next working day.

Article 18. Responsibilities of units under the State Bank of Vietnam

1. State Bank Trading Department.

a. Examine and issue/revoke membership recognition certificates for entities participating in the Treasury bill tender market.

b. Implement the instructions of the Treasury Bill Tender Committee in issuing announcements for Treasury bill issuance, receiving tender registration forms, organizing tenders, and announcing tender results to participating members and designated branches of the State Bank as stipulated in this Regulation.

c. Announce the issuance of Treasury bills and tender results of Treasury bills through mass media.

d. Prepare reports on tender results and submit them to the Governor of the State Bank and the Minister of Finance, concurrently sending them to the Credit Department, Monetary Policy Department, and Financial Accounting Department.

đ. Receive payment for purchasing Treasury bills from successful tender members and pay matured Treasury bills to their owners. Carry out the issuance and recovery of Treasury bills for members when they win the tender and upon maturity of Treasury bills.

e. Record accounting transactions related to tender operations and manage Treasury bill bid bonds according to regulations.

h. Based on the provisions of this Regulation, the Director of the State Bank Trading Department shall promulgate the operational procedures for Treasury bill tendering.

2. Financial Accounting Department.

Guide the accounting recording system for Treasury bill tender operations.

3. Issuance and Treasury Department.

a. Coordinate with the Central State Treasury to organize printing and storage of Treasury bill certificates in accordance with regulations on printing and storing valuable documents.

b. Organize transportation, storage, and handover of Treasury bill certificates to the State Bank Trading Department and designated branches of the State Bank.

c. Maintain records and settle accounts for Treasury bill certificates in accordance with current regulations.

4. Designated Branches of the State Bank.

a. Check the qualifications of members in the area, notify the State Bank Trading Department to report to the Governor for revocation of membership recognition certificates of members in the area who do not meet the conditions to participate in the Treasury bill tender market.

b. Post tender announcements for Treasury bills at branch headquarters.

c. Receive tender registration forms and manage bid bonds of participating members.

d. Open bids and compile bid sheets of members in the area participating in the tender (after excluding invalid bids and bid amounts), then transmit them via computer network to the State Bank Trading Department for evaluation.

Article 21. 1. Amend and supplement Point d of Clause 2 of Article 24 as follows:

Amendments and supplements to this Charter shall be decided by the Governor of the State Bank./.