DECISION

ON THE ISSUANCE OF THE REGULATION ON THE ORGANIZATION AND OPERATION OF THE FOREIGN CURRENCY INTER-BANK MARKET

GOVERNOR OF THE STATE BANK OF VIETNAM

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December, 1997 and the Law on credit institutions No. 02/1997/QH10 dated 12 December, 1997.
- Pursuant to the Decree No. 15 CP dated 2 March, 1993 of the Government on the assignment, authority and responsibility for State management of ministries and ministerial-level agencies.
- Pursuant to the Decree No. 63/1998/ND-CP dated 17 August, 1998 of the Government on the Foreign Exchange Control.
- Upon proposal of the Director of the Banking Operations Department of the State Bank of Vietnam.

DECIDES

Article 1.

To issue in conjunction with this Decision the "Regulation on the organisation and operation of the foreign currency inter-bank market".

Article 2.

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Article 3.

The Head of the Governor office, the Director of the Banking Operations Department, Directors and Heads of units in the State Bank, General Managers of the State Bank branches in the provinces and cities and Chairmen and Directors general (Directors) of credit institutions being members of the foreign currency inter-bank market shall be responsible for the implementation of this Decision.

FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Nguyen Van Giau

REGULATION

ON THE ORGANIZATION AND OPERATION OF THE FOREIGN CURRENCY INTER-BANK MARKET
(issued in conjunction of the Decision No.101 /1998/QD-NH13 dated March 26 1998 by the Governor of the State Bank of Vietnam)

I. GENERAL PROVISION

Article 1.

Purpose of the organisation and operation of the foreign currency interbank market

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2. The State Bank shall participate in the Market as the last buyer and seller and take any intervening measure when necessary for the implementation of the national monetary policy.

Article 2. Conditions for participating in the Market

The conditions for credit institutions to participate in the Market shall be as follows:

1. They have a foreign exchange licence;

2. They have a satisfactory track record of foreign exchange business and have not violated any current provision on foreign exchange control;

3. They are in possession of a system of machines and equipment which are on-line for smooth and safe transactions with other members of the Market and with the State Bank.

4. They have a number of well-educated staff who are knowledgeable on foreign currency transaction.

Article 3. Procedures on participation in the Market

1. Credit institutions shall file an application for the participation in the Market (in accordance with the form attached as Schedule 1) to the State Bank (the Banking Operations Department).

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Article 4. Rights and responsibilities of the member

1. Members participating in the Market shall have the right to buy and sell foreign currency in the Market in accordance with the existing provisions of the State Bank.

2. Members shall be responsible to strictly comply with the Regulation on organisation and operation of the Market, Rules on transaction and other provisions during the transaction in the Market.

3. Members shall be responsible to submit to the State Bank (the Banking Operations Department):

a. The official document assigning responsible persons to manage the activities of" the Dealing Room" of the credit institutions;

b. The internal rule on foreign exchange dealing of the credit institution;

c. The list of dealers and the transaction limit for each dealer;

d. The facilities code or number to be used in the transaction (telex, telephone, and dealing system).

e. Internal guidelines relating to the participation of credit institutions in the Market;

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II. DETAILED PROVISIONS

Article 5. Currency used in the transaction

1. Transaction in the Market shall be made between foreign currencies and VND or between foreign currencies permitted for dealing in the Market by the State Bank from time to time.

2. Considering the practical situation, Directors general ( Directors) of member credit institutions shall determine [the amount of] foreign currencies for their business among those permitted by the State Bank.

Article 6. Transaction time

The Market shall operate on all business days except for during public holiday at the following times:

- In the morning from 8.00 am to 11.00 am

- In the afternoon from 1.30 am to 3.30 pm

Article 7. Amount of foreign currency in a transaction

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Article 8. Type of transaction

Credit institutions being Market members shall be permitted to engage in spot, forward and swap transactions and other transactions in accordance with provisions of the State Bank.

Article 9. Transaction exchange rate in the Market

1. The exchange rate of transaction between the US$ and VND in the Market between members shall be agreed upon on the basis of demand for and supply of foreign currencies in accordance with the respective provision for exchange rates and within the transaction bands provided for by the Governor of the State Bank.

2. For the transaction between other convertible foreign currencies (excluding US$ ) and VND, members shall use the cross rates on the basis of the VND/US$ rate ( as provided for in paragraph 1 Article 9) and the rate of other foreign currencies to US$ in the international market on the transaction date.

3. The transaction exchange rate between foreign currencies shall be determined by the Directors General of member credit institutions with reference to the exchange rates in the international market on the transaction date.

Article 10. Means of transaction

The transaction between Market members shall take place through the VND trading system (VDS) of the Telerate Corporation, Dealing 2000 of Reuters, by telex or SWIFT network.

Article 11. Transaction principle

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2. The trading by the means of transaction shall be considered as a commitment and shall not be altered.

3. Upon commitment through the means of transaction, the parties to a transaction shall confirm with each other prior to 4 pm of the same day through one of the following means: Telex, Fax or Swift network (in the form of the attached Schedule 2). In case of a transaction with the State Bank, the above-mentioned confirmation shall be sent to the Banking Operations Department of the State Bank. In case of Fax confirmation, the original shall be sent by post on the same day.

Article 12. Sequence of transaction

1. Market members shall offer at the same time the buying and selling rates together with the foreign currency amount and shall be bound by the offered rates in the buying and selling transactions.

2. Upon the agreement on the buying and selling transaction, the dealing parties shall provide each other with the confirmation of the transaction (in the form of the attached Schedule 2).

3. The settlement between the parties shall be made by the transfer through the accounts with the State Bank, credit institutions or with offshore banks.

Article 13. Terms of payment

1. In the case of spot foreign currency transactions (SPOT), the settlement date shall be 2 working days after the date of transaction (holidays and Sundays are not counted). In case the settlement is made through accounts placed with offshore banks, Saturdays are not counted as working days.

2. In the case of forward foreign currency transactions (FORWARD), the settlement date shall be agreed upon by both parties and stated in the contract. If the value date of these transactions coincides with a holiday, the settlement date shall be the next transaction day.

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a. For foreign currency payment, the penalty shall be 150% of the one week LIBOR in the respective payment currency for the days and the amount of delayed payment.

b. For VND payment, the penalty shall be 150% of the rediscount rates of the State Bank of Vietnam for the days and the amount of delayed payment.

III. ORGANISATION, SUPERVISION AND OPERATION

Article 14. Responsibility of the Director of the Banking Operations Department

The Director of the Banking Operations Department shall be the daily operator and be responsible to the Governor for the following:

1. Organisation of the implementation of the Regulation and the Rule on Market transactions;

2. Determination of the buying and selling rates of the State Bank in transactions with members on the basis of the exchange rate announced by the State Bank;

3. Determination of the foreign currency amount to buy and sell within the limit authorised by the Governor;

4. Report to the Governor on the performance of the Market activities;

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IV. IMPLEMENTING PROVISION

Article 15.

Credit institutions which have been recognised by the State Bank as member of the foreign currency interbank market prior to the effective date of this Regulation shall not be obliged to complete procedures of application for Market membership. Their activities shall be in conformity with the provision of this Regulation.

Article 16.

Members participating in the foreign currency inter-bank market shall be committed to the provisions of this Regulation. In case of violation, depending on the seriousness, participating members shall be subject to fine or to revocation of the membership certificate.

APPENDIX 1

SOCIALIST REPUBLIC OF VIET NAM
Independence Freedom Happiness

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Date..

APPLICATION FOR MEMBERSHIP OF THE FOREIGN CURRENCY INTERBANK MARKET

To: The State Bank of Vietnam (The Banking Operations Department)

Name :

Address :

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Telex :

Telefax :

Foreign currency account Open with Bank

Account number:

Vietnamese Dong account Open with Bank

Account number:

Foreign exchange license No.:............................dated:

Permit for opening offshore account No.............dated:

Applying for membership of the foreign currency interbank market and commit:

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- We hereinafter introduce:

* Market dealers:

1- Name in full position

Signature:

2- Name in full position

Signature:

* Competent persons authorised to sign the confirmation of transactions:

1- Name in full position:

Signature

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We hereby request the State Bank of Vietnam to permit our participation in the foreign currency interbank market.

General Manager (of the Bank)
(sign and seal)

 APPENDIX 2

FORM OF CONFIRMATION OF FOREIGN CURRENCY TRANSACTION

Bank sending the confirmation of transactions:

Bank receiving the confirmation of transactions:

Code: for the amount:

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We shall transfer the payment of this amount to the account No................................

of your Bank at the Bank ..................... and request your good Bank to transfer the amount of ..................

to our account No..................................

at the Bank............................................

on.......................... at the latest

Name of the sending Bank:......................
(signature in case of fax confirmation)