Decision No. 61/QD-NH19 on the issuance of the Regulation on the organization of treasury bill bidding

Pursuant to …;

On the issuance of the regulation on the organization of Treasury bill bidding

________________

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the State Bank Law promulgated by Decree No. 37-LCT/HĐNN dated May 24, 1990;
Pursuant to Decree No. 15-CP dated March 2, 1993 of the Government regarding the tasks, powers, and responsibilities of state management by ministries and ministerial-level agencies;
Pursuant to Government Decree No. 72-CP dated July 26, 1994 on the issuance of the Regulation on the issuance of government bonds;
Pursuant to Circular No. 1-NHNN/TC issued by the State Bank and Ministry of Finance on February 10, 1995 guiding the issuance of Treasury bills through the State Bank;
At the proposal of the Head of the Capital Market Research and Development Board,

DECISION:

Article 1. Attached hereto is the Regulation on the Organization of Treasury Bill Bidding.

Article 2. This Decision shall take effect from the date of signing.

Article 3. The Director of the Office of the Governor, the Heads of the Credit Department, the Issuance and Treasury Department, the Accounting and Finance Department, the Director of the State Bank Trading Branch, the Head of the Capital Market Research and Development Board, the Heads of relevant Departments and Bureaus of the Central State Bank, the Directors of the State Bank Branches in provinces and centrally-administered cities, the General Directors (Directors) of state-owned and joint-stock commercial banks, investment and development banks, joint venture banks, foreign bank branches, financial companies, insurance companies, insurance funds, and investment funds shall be responsible for implementing this Decision.

REGULATIONS

Treasury bill bidding.
(Issued together with Decision No. 61-QĐ/NH19 dated March 8, 1995 of the Governor of the State Bank).

Article 1. Treasury bill bidding is a form of issuing Treasury bills through wholesale sales via bidding among market participants in the primary issuance of Treasury bills.

Article 2. Characteristics of Treasury bills:

2.1. Treasury bills are collected, recorded, and paid in Vietnamese Dong;

2.2. The minimum face value is one million Vietnamese Dong. Other denominations are determined and announced by the Ministry of Finance and the State Bank;

2.3. Treasury bills have terms of 1 month, 3 months, 6 months, and 9 months;

2.4. Treasury bills are discount instruments: sold at a price lower than their face value and redeemed at face value upon maturity;

2.5. Treasury bills can be issued in book-entry or bearer form;

Holders of Treasury bills in bearer form may deposit them with the State Bank (Trading Branch or designated Branch) or member banks.

2.6. Treasury bill bidding involves interest rate bidding.

Article 3. The frequency of Treasury bill issuance is once a week, every two weeks, or monthly. Specific frequencies will be decided by the Ministry.

Article 4. Participants in the bidding include:

4.1. Credit institutions operating in Vietnam: state-owned commercial banks, joint-stock commercial banks, investment and development banks, joint venture banks, foreign bank branches, and financial companies;

4.2. Insurance companies, insurance funds, and investment funds.

Article 5. Conditions for participation in the market:

Entities mentioned in Article 4 above wishing to become members of the market must meet the following conditions:

5.1. They must have legal person status and be established under current Vietnamese law;

5.2. For banks and financial companies, they must have Vietnamese Dong accounts and Treasury bill accounts opened at the State Bank Trading Branch or designated State Bank Branch;

Other entities mentioned in Point 4.2 must have Vietnamese Dong accounts opened at member banks and Treasury bill accounts opened at the State Bank (Trading Branch or designated State Bank Branch).

5.3. They must have a minimum statutory capital of 20 billion Vietnamese Dong;

5.4. They must comply with the provisions of this Regulation;

5.5. They must submit an application to join the market to the State Bank.

Credit institutions that do not meet the minimum statutory capital requirement stipulated in Point 5.3 may indirectly participate in bidding through market members by agreement between the parties.

Article 6. Entities mentioned in Article 4 wishing to join the market must submit an application to the Credit Department of the State Bank.

Based on the conditions set out in Article 3, the State Bank will issue a certificate of market membership to entities meeting the conditions.

The response time for issuing the certificate is 15 days from the date of receipt of the application.

After being granted permission to be a member of the Treasury bill bidding market, market members must always adhere to the above conditions. In case of violation, if the State Bank has reminded but the entity does not rectify or repeatedly violates, the State Bank will revoke the certificate of market membership.

Annually, the State Bank will review the membership status based on the conditions above and the regular participation of those members in the market.

Each member may only appoint one representative to participate in bidding. In necessary cases, the main office may authorize a branch to act as a representative.

Article 7. Notice of bidding:

Five days before organizing the bidding, based on the Ministry of Finance's request for Treasury bill issuance, the Treasury Bill Bidding Board will convene and draft the Treasury bill issuance notice.

Article 8. Method of notification:

Two days before the bidding, the State Bank will send the Treasury bill issuance notice through the following channels:

8.1. The Credit Department of the State Bank will send the bidding notice by fax to members and designated State Bank Branches;

8.2. Sending through the computer network, if members are connected to the Central State Bank;

8.3. Posting at the Credit Department of the Central State Bank in Hanoi and designated State Bank Branches;

During the same period, a summary of the Treasury bill issuance notice will also be published in mass media. The summary of the bidding notice will contain the following information:

- Expected issuance volume,

- Issuance date,

- Due date of the Treasury bill,

- Registration deadline.

Article 9. Registration for bidding:

9.1. Registration for bidding is conducted using a prescribed form;

If there are multiple terms of Treasury bills in the same issuance round, each term must be registered on a separate form;

9.2. The bid interest rate is recorded as an annual percentage and rounded to two decimal places.

Each bidding registration form may register up to five different interest rates. The quantity registered for each interest rate must be a multiple of one hundred million Vietnamese dong.

At each interest rate level, the quantity registered must be recorded both in words and in figures. In case there is a discrepancy between the figure and the word representation, such registration will be deemed invalid and excluded from the bidding registration form.

9.3. The bidding registration form (one original copy) must bear the signature of either an officer type A or two officers type B who have registered in the application to participate in the market and must be placed in an envelope sealed with a stamp.

9.4. The bidding registration form of members referred to in Point 4.2 must be accompanied by a confirmation of payment guarantee issued by the member bank.

Article 10. Deposit Guarantee:

Thirty minutes before the end of the bidding registration time, participating members must ensure a minimum deposit guarantee of five percent of the value of the bidding registration.

The State Bank shall open a separate deposit guarantee account to record the amount of deposit guarantee for the members.

During the deposit guarantee period (from the date of deposit to the issuance date), the deposit guarantee amount will not accrue interest.

The State Bank will return the deposit guarantee amount to non-winning members immediately after the bidding result is announced.

For winning members, the deposit guarantee amount will be deducted from the payment amount of the treasury bill.

Article 11. Method of submitting the bidding registration form:

11.1. Members participating in the bidding must submit the bidding registration form no later than 12 o'clock on the day of the auction. Each member is only allowed one registration form for each term of the treasury bill and for each auction. Once the registration form has been submitted, the registering entity may not make any further modifications.

11.2. The bidding registration form must be directly delivered to the Central State Bank in Hanoi or to the branch of the State Bank designated for this purpose.

11.3. The State Bank will place a box for receiving registration forms at the Credit Department of the Central State Bank and at the branches of the State Bank designated for this purpose. The box will be locked and have two keys held separately by two authorized officers.

Article 12. Handling of the bidding registration form:

12.1. At exactly 12 noon on the day of the auction, the box for receiving registration forms will be opened simultaneously at the locations mentioned in Point 11.3, and no additional registration forms will be accepted after opening. All registration forms will be removed and transferred to the processing department.

12.2. The registration forms will undergo two rounds of inspection and each inspector will sign off after each round of inspection.

Registration forms that do not comply with the prescribed format, are not filled out according to regulations (such as not recording the serial number, the registration amount is not a multiple of one hundred million dong, failing to meet the minimum registration quantity, or failing to meet the required deposit guarantee level) will be considered invalid registration forms. The processing department at the Credit Department of the State Bank in Hanoi and at the designated branches of the State Bank will fax or send via computer network the registration form back to the registering member, clearly stating the reasons for invalidity.

12.3. After processing, all valid bidding registration forms (accompanied by a summary) will be sent by fax (using a specific code) or via computer network by the designated branches of the State Bank to the Credit Department in Hanoi for centralized auction review.

In the absence of any registrations, the designated branches of the State Bank must still send a fax notification to the Credit Department.

Article 13. Auction Review Procedures:

13.1. The auction review process will be carried out according to the treasury bill auction business procedures issued by the Director of the Credit Department upon authorization from the Governor of the State Bank.

13.2. The determination of the volume and interest rate of the winning treasury bills is based on:

- The volume and interest rate bid by the members;

- The anticipated volume of treasury bills to be raised and the directed interest rate.

13.3. The volume of winning treasury bills will be calculated in ascending order of the bid interest rate within the directed interest rate range.

If the volume bid at the highest winning interest rate within the directed interest rate range exceeds the anticipated issue volume, the winning volume will be allocated to each bid form proportionally to the bid volume of each form at that interest rate, but rounded to the nearest one hundred million dong.

13.4. The interest rate applied to the winning treasury bills will be uniformly set at the highest bid interest rate among the winners.

The auction results will be confirmed by representatives authorized by the Ministry of Finance and the State Bank under the Treasury Bill Auction Committee at the auction review location.

Article 14. The selling price of the treasury bill applicable to all winning units will be calculated using the following formula:

MG

G =

Ls x T

1 +

365 x 100

Where: G = Selling price of the treasury bill

MG = Face value of the treasury bill

Ls = Winning interest rate of the treasury bill

T = Number of days of the term of the treasury bill

365 = Number of days in a year.

The amount of money that the winning unit must pay will be rounded to the nearest hundred dong.

Article 15. Announcement of the auction results:

Immediately after the auction results are known, the Treasury Bill Auction Committee will report in writing to the leadership of the Ministry of Finance and the State Bank.

On the same day, the State Bank will send the auction results directly to the winning units or by fax or through the computer system (if available) and post them at the Credit Department of the Central State Bank in Hanoi and at the designated branches of the State Bank.

Simultaneously, the State Bank will announce on mass media the following information:

- Volume of winning treasury bills.

- Price and interest rate applied to the winners of the treasury bills.

Volume of treasury bills not won.

Article 16. Payment and delivery of treasury bills:

16.1. Winning entities must pay the full amount for purchasing treasury bills to the State Bank (Trading Department or designated branch of the State Bank) within two working days after the auction date.

16.2. On the first day after the auction date, winning entities must notify the Trading Department of the State Bank or the designated branch of the State Bank regarding the amount requested for payment, while also registering the structure of the volume of treasury bills to be purchased (in the form of a number or certificate).

In the absence of receiving the payment notification, on the due date for payment, the State Bank shall deduct from the winning bidder's account at the State Bank (if available) the corresponding amount equivalent to the volume of Treasury bills won; if the winning bidder does not have an account at the State Bank, then the State Bank will deduct from the account of the member bank serving the entity.

16.3. The State Bank shall credit the deposit account of the National Treasury Bureau opened at the State Bank Branch with the full amount of money purchased for Treasury bills by the winning bidders at the selling price on the third day following the auction date;

16.4. After receiving the full payment for the purchase of Treasury bills, the State Bank shall credit the ledger account or issue Treasury bill certificates to the winning bidders; the crediting of the ledger account must be completed within two working days after the auction date, and the issuance of certificates must be completed within three days after the auction date;

16.5. One day before the maturity date of the Treasury bills, the Ministry of Finance (National Treasury Bureau) must transfer the settlement funds (according to the face value of the volume of Treasury bills won) to the Central State Bank through the deposit account of the Treasury Bureau at the State Bank Branch to settle with market participants; on the due date for payment, if the State Bank (Branch) has not received the payment transfer document from the National Treasury Bureau, it will automatically deduct from the deposit account of the National Treasury Bureau at the State Bank Branch to settle with the owners of the Treasury bills and send a notice of debt to the National Treasury Bureau;

16.6. The settlement of Treasury bills for members is carried out on the maturity date through the accounts of the members opened at the State Bank or the member banks serving them (for members without an account at the State Bank);

For Treasury bill certificates, members will pay their customers and subsequently repay to the State Bank. The State Bank will settle with the members according to the face value of the Treasury bills actually submitted to the State Bank (Branch or designated branch of the State Bank);

If the owner of the Treasury bills does not come to settle when due, the overdue period will not accrue interest;

16.7. Any breach of the payment deadline shall be subject to the following penalties:

16.7.1. For the State Bank and the Treasury: Shall bear penalty interest at 150% of the auction rate for the corresponding term, calculated based on the number of days and the amount of delayed payment;

16.7.2. For the winning bidder: If the State Bank deducts the bid bond and deposits of the winning bidder but still does not cover the amount the bidder needs to pay, the State Bank will cancel the un-settled portion of the winning bid results and confiscate the entire bid bond submitted to the State Bank;

Article 17. Responsibilities and authorities of Departments, Bureaus, and units within the State Bank:

17.1. The Credit Department is responsible for:

17.1.1. Receiving applications and issuing membership recognition certificates to entities meeting the criteria stipulated in Article 5; monitoring compliance with these conditions regularly and revoking the membership certificate if necessary;

17.1.2. Sending announcements on the issuance of Treasury bills to market members, Branches, and designated branches of the State Bank;

17.1.3. Receiving tender registration forms and organizing the tender process in accordance with the prescribed procedures and operations;

17.1.4. Notifying the tender results to the State Bank Branch and designated branches of the State Bank, as well as to the winning members to facilitate the buying and selling of Treasury bills;

17.1.5. Preparing an analysis report on the tender results to be submitted to the Governor of the State Bank, also sent to the Economic Research Department and the Accounting-Finance Department, clearly stating the following factors:

- Quantity, interest rate, and price of Treasury bills registered for purchase,

- Quantity, determined interest rate, and price of Treasury bills sold to each winning bidder, compared with previous tender rounds,

- Quantity and value of unsold Treasury bills or unaccepted purchase requests;

17.1.6. Coordinating with the Press Information Department to announce the tender results through mass media and post them at the Credit Department of the Central State Bank in Hanoi and designated branches of the State Bank;

17.2. The Accounting-Finance Department is responsible for guiding the accounting and settlement procedures for Treasury bills;

17.3. The State Bank Branch is responsible for:

17.3.1. Before the opening of the tender, notifying the Credit Department of the bid bonds of participating members;

17.3.2. Collecting the purchase price of Treasury bills from purchasing units according to the tender result announcement of the Credit Department and crediting the account of the National Treasury Bureau in accordance with Clause 16 of this Regulation. 17.3.3. Recording the off-balance sheet ledger account or issuing Treasury bill certificates to purchasing units according to the registration form and in accordance with Point 16.4 of this Regulation;

17.3.4. When the Treasury bills mature, deducting from the National Treasury Bureau's account to settle with the members who have purchased Treasury bills in accordance with Article 15 of the Joint Circular and Point 16.6 of this Regulation. Non-member units will be settled through the member bank where the unit has an account;

17.3.5. Preparing a consolidated settlement report on the settlement of Treasury bills. Treasury bill certificates must be bound into the payment voucher journal at the State Bank;

17.4. Designated branches of the State Bank are responsible for:

17.4.1. Receiving tender registration forms from market members with accounts at the branch and performing tasks according to the Treasury bill tender procedures;

17.4.2. Based on the announcement of the Credit Department and the tender results, deducting from the account of the entity mentioned above in accordance with Point 16.1 and transferring the funds to the account of the National Treasury Bureau at the State Bank Branch.

17.4.3. Record off-balance sheet treasury bill accounts or issue treasury bill certificates to the purchasing entity according to the registration form in compliance with point 16.4 of this Regulation;

17.4.4. Prepare settlement records for the payment of treasury bills and keep payment voucher logs to be submitted to the State Bank of Vietnam Trading Center.

17.5. The Treasury Issuance Department shall be responsible for:

17.5.1. Organizing the printing and safekeeping of treasury bill certificates in accordance with the regime for valuable documents;

17.5.2. Organizing the transportation, safekeeping, and delivery of treasury bill certificates to the State Bank of Vietnam Trading Center and designated branches of the State Bank of Vietnam upon orders from the Governor of the State Bank of Vietnam.

17.5.3. Maintaining ledgers and settling accounts for treasury bill certificates with the Accounting and Finance Department.

Article 18. Any supplementation or amendment to this Regulation shall be decided by the Governor of the State Bank of Vietnam.