RESOLUTION OF COUNCIL OF CENTRAL BANK OF THE REPUBLIC OF ARMENIA

of July 13, 2007 No. 135-N

About approval of Regulations 12 "Licensing and regulation of activities for dealer and broker purchase and sale of foreign currency"

Accepted Council of the Central bank on May 4, 2007

Assuming as a basis the subitem "d" of Article 20, Item 1 of article 49 of the Law of the Republic of Armenia "About the Central bank of the Republic of Armenia", being guided by article 16 of the Law of the Republic of Armenia "About legal acts", Council of the Central bank of the Republic of Armenia decides:

1. Approve Regulations 12 "Licensing and regulation of activities for dealer and broker purchase and sale of foreign currency" according to Appendix (is applied).

2. Declare invalid the Resolution of Council of the Central bank of the Republic of Armenia of December 17, 2002 number 437-N "About approval of Regulations 12 "Licensing and regulation of transactions on dealer purchase and sale of foreign currency"".

3. This Resolution becomes effective for the tenth day after its official publication.

Appendix

to the Resolution of Council of the Central bank of the Republic of Armenia of May 4, 2007 number 135-N

Regulations 12 Licensing and regulation of activities for dealer and broker purchase and sale of foreign currency

Section 1. General provisions and basic concepts

Chapter 1. General provisions

1. These Regulations establish:

1) procedures of licensing and regulation of activities of persons performing activities for dealer and broker purchase and sale of foreign currency (further - currency dealers brokers), their branches;

2) the criteria of professional qualification shown to employees of currency dealers brokers and procedure for their consideration;

3) procedure of transactions on dealer and broker purchase and sale of foreign currency.

Chapter 2. The concepts used in these Regulations

2. In these Regulations the following concepts are used:

1) "passport data" - series of the passport and passport number, and in the absence of the passport - data of other identity document;

2) "registration plate of public services" - registration plate of public services (number of social security) provided to person by the Republic of Armenia or number of the certificate of non receipt of registration plate of public services;

3) Central bank - Central bank of the Republic of Armenia;

4) "branch" - the legal entity, the allocated division located out of functional cash desk of person performing activities for dealer and broker purchase and sale of foreign currency performing functions of person performing activities for dealer and broker purchase and sale of foreign currency;

5) "the qualifying organization" - the organization chosen by the Central bank, performing check of professional qualification of the employee currency the dealer broker.

Section 2. Procedure for licensing of activities for dealer and broker purchase and sale of foreign currency and termination of activities

Chapter 3. Licensing of activities for dealer and broker purchase and sale of foreign currency

3. For receipt of the license for dealer and broker purchase and sale of foreign currency the licensed person submits the following documents to the Central bank:

1) the statement for receipt of the license according to Appendix 1 to these Regulations;

2) the copy of the decision of competent authority on appointment of the head of the legal entity (the chief executive or person performing such functions);

3) the reference from bank (banks) on availability on accounts poste restante or the urgent accounts at least three million dram of the Republic of Armenia;

4) copy of the certificate on state registration of the property right, free use, lease (sublease) of the room or trust management of it;

5) receipt on payment of the state fee;

6) copy of the certificate on professional qualification of the employee (employees);

7) the business program of activities currency the dealer broker approved by the supreme body of management currency the dealer broker according to Appendix 16 to these Regulations;

8) draft of internal legal acts of activities of currency dealer broker company, including:

a) at least, all internal legal acts regulating activities of currency dealer broker company which availability according to the laws or regulatory legal acts is obligatory for the operating currency dealer broker company;

b) rules of implementation of transactions on dealer and broker purchase and sale of foreign currency (including politicians of adoption of customer orders, execution of fiduciary duties and customer orders on perhaps best conditions, the conclusions of transactions on purchase and sale of foreign currency at own expense or for the customer account and performing calculations) (business behavior);

c) measures of prevention of collision of interests between the foreign exchange dealer, his heads and employees, between it and his clients;

d) rules of protection of means of clients of the foreign exchange dealer, accounting of orders, decisions on the conclusion of transactions and the concluded bargains, and also provisions of reports to clients;

e) the procedure of the conclusion of the transaction based on orders and requests submitted by clients on the Internet in real time;

e) the internal procedure establishing actions for establishment of the procedures preventing abuses in the foreign exchange market, impulses and criteria and to their technical software;

g) the procedure of document flow and exchange of information in connection with transactions on broker and dealer purchase and sale of foreign currency;

9) the reference on the legal entities affiliated with currency dealer broker company, and also on the legal entities affiliated by persons affiliated with currency dealer broker company according to Appendix 18 to these Regulations;

10) the certificate of the physical persons affiliated with currency dealer broker company, and also the physical persons affiliated with persons affiliated with currency dealer broker company, according to Appendix 19 to these Regulations;

11) the characteristic of the information technologies provided for the organization of activities, including software packages applied in commercial and settlement systems;

12) the Process description of management of functional risk which, at least, will include system of the software of financial accounting, system of the software of clients, their means, orders and transactions, and also policy of ensuring cyber security where, at least, procedures of safety of information systems, data management, regulation of access to the database, ensuring network protection and data protection of clients shall be described;

13) Samples of the agreements signed with clients;

14) the Statement that persons, stipulated in Item 5 these Regulations, are not employees currency the dealer broker;

15) the Other data required by the Central Bank, risk-takings of activities for dealer and broker purchase and sale of foreign currency, necessary for control.

4. Currency the dealer brokers for opening of branch submit the following documents to the Central bank:

1) the statement for receipt of the license of branch according to Appendix 2 to these Regulations;

2) the reference from bank (banks) on availability on accounts poste restante or the urgent accounts at least three million dram of the Republic of Armenia for currency the dealer broker and each branch;

3) copy of the certificate on state registration of the property right, free use, lease (sublease) of the room or trust management of it;

4) receipt on payment of the state fee;

5) copy of the certificate on professional qualification of the employee (employees);

6) the business program of activities of branch currency the dealer broker approved by the supreme body of management currency the dealer broker according to Appendix 17 to these Regulations;

7) the Other data required by the Central Bank, risk-takings of activities for dealer and broker purchase and sale of foreign currency, necessary for control.

5. Currency the dealer broker cannot be participants:

1) financial institutions and persons affiliated with them;

2) participants of financial institutions and persons affiliated with them;

3) heads and employees of financial institutions.

6. In sense of these Regulations of person are considered affiliated if their communication and (or) the relations correspond to provisions of article 8 of the Law of the Republic of Armenia "About banks and banking activity".

7. Currency the dealer broker cannot be employees:

1) Persons affiliated with financial institutions;

2) participants of financial institutions and persons affiliated with them;

3) heads and employees of financial institutions.

8. In case of change of the place of activities currency the dealer broker the following documents are submitted to the Central bank:

1) the statement for renewal of the license according to Appendix 3 to these Regulations;

2) copy of the certificate on state registration of the property right, free use, lease (sublease) of the room or trust management of it;

3) receipt on payment of the state fee;

4) original of the license.

9. In 30-day time after receipt of the documents specified in Items 3, 4 or 8 these Regulations, Council of the Central bank makes the decision on issue or renewal of the license or in cases, stipulated in Item 10 these Regulations, rejects the submitted application. For receipt of the certain data required by the Central bank the 30-day term specified in this Item can be suspended by the decision of Council of the Central bank, but no more once and no more than three months, thus after explanation of the necessary facts the term of consideration of the application shall not exceed the number of days caused by difference of 30-day term and days before suspension. In ten-day time from coming into force of the Resolution of Council of the Central bank on licensing to licensed person the Central bank issues to licensed person the license according to Appendix 4 to these Regulations, and also the insert of the license about the responsible person (persons) who is carrying out the works provided by the license according to Appendix 5, which is inseparable part of the license.

10. Council of the Central bank rejects the submitted application if:

1) the submitted documents are incomplete, poddelna and (or) contradict the laws or legal acts;

2) licensed person or the employee(s) by law (for the legal entity - also the charter) or the court verdict which took legal effect has no right to be engaged in dealer and broker purchase and sale of foreign currency;

3) the employee(s) has no certificate on professional qualification or in case, stipulated in Item 18 these Regulations, did not receive the certificate on qualification;

4) activities currency the dealer brokers, in reasonable opinion of the Central bank, can threaten stability of financial system of the Republic of Armenia;

5) the territory and technical equipment currency the dealer broker do not meet the requirements established by Chapter 10 of these Regulations.

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