Approved by Administrative board of National Bank of the Republic of Moldova of September 11, 1997 No. 57

The instruction about transactions in the public market of National Bank of Moldova with government securities

I. General provisions

1.1. The National Bank of Moldova performs operations in the public market according to articles 15 and 42 of the Law on National Bank of Moldova for the purpose of implementation of monetary management, market development of government securities (further GTsB), liquidity managements of banks.

1.2. Transaction in the public market - any operation in the secondary market performed between NBM and bank in accordance with the terms and procedures of this instruction.

1.3. Transactions in the public market include the purchase of GTsB, sale of GTsB and the agreement on the subsequent redemption GTsB (repo) which are carried out at the initiative of NBM with banks.

1.4. Repo operations are transactions of sale of GTsB with the subsequent redemption of the same securities in certain time or on demand at the price caused on sale date.

Date of the return repo operation is date for which the initial seller of GTsB shall redeem the same GTsB, and initial to pokupatelprodat them. In case date of the return transaction is not established by NBM, each of the parties can offer another to 11.00, that current date became date of repurchasing. Date of the return repo operation can be changed under the agreement of both parties.

NBM can be the initial buyer of GTsB (purchase repo), and also the initial seller (sale repo).

1.5. The government securities issued by the Ministry of Finance in the form of records on accounts can be subject of transactions. 

NBM will perform purchase transactions and repo of purchase of GTsB which were issued publicly. 

NBM can perform transactions of sale and repo of sale with the government securities emitted for the purpose of guaranteeing the credits issued to NBM to the state and registered on the account No. III of the Ministry of Finance as the participant of system of records on accounts.

During transaction of repo term of date of the return transaction before repayment date of GTsB cannot be less than three working days.

Government bonds according to which the interest payment date (coupons) falls on the repo transaction period are acceptable only for purchase repo operations. In this case the National Bank after receipt of percent from the Ministry of Finance lists the corresponding percent to participating banks in the repo transaction of purchase with National Bank on the same day.

1.6. Licensed participating banks of system of signing up on security accounts in NBM and the automated interbank payment system which signed with NBM the Agreement on carrying out transactions in the public market participate in transactions of NBM in the public market (appendix 1).

1.7. Transactions in the public market are performed by means of the auctions held by NBM based on the decision of Cash committee of NBM or according to the decision of the senior vice president (vice-president) of NBM.

1.8. In reasonable cases of NBM can initiate purchase/sale of GTsB, transaction of REPO of purchase/sale by means of the direct biddings with the banks corresponding to the conditions stated in Item 1.6 of these Regulations

1.9. For the purpose of identification of authorized persons with the right of carrying out transactions with securities from bank name, the bank represents to National Bank of Moldova (Department of market transactions) the power of attorney, and in case of changes in its content, without fail to the shortest possible time, will provide the new power of attorney containing the staticized information. The bank bears complete responsibility for actions of authorized persons.

1.10. Financial accounting of transactions in the public market is performed according to the chart of accounts of National Bank of Moldova and the chart of accounts of financial accounting in licensed banks of the Republic of Moldova.

II. Organization of auctions

2.1. The National Bank can hold auctions for the varying rate for all transaction types in the public market specified in Item

1.3 these Regulations, and in case of transactions of REPO of purchase - and on fixed rate.

2.2. The National Bank will announce technical elements of auction no later than day of auction for hour before holding the auction by means of the message (appendix N 2a, 2b, 2c).

In the message NBM will be specified:

- amount of the securities offered to sale/purchase in case of transactions on final sale / security purchase;

- repo rate in case of the purchase repo auction for fixed rate. In case of the sale/purchase repo auctions for the varying rate the message NBM can be three types, specifying respectively following:

- maximum amount of the repo transaction; or

- minimum/maximum rate of repo and maximum amount of the repo transaction; or

- minimum/maximum rate of repo.

2.3. Auctions are held on the basis of the applications submitted by banks to the Department of Market Transactions (DMT), constituted according to appendices 3a and 3b. The requests which are drawn up with departures from rules are rejected.

2.4. On each repayment date of GTsB offered on auction of purchase or sale and also by each date of the return repo operation of purchase (except for repo operations of purchase on fixed rate) or sales one participant can offer at most five options of the prices.

2.5. Requests are constituted on each transaction type separately, on repo operations - separately by each date, the return repo operation.

2.6. "Requests for auction are sent by bank in DRO, using system of "Interbank messages" through transport to component of the automated interbank payment system (AIPS)".

In case of impossibility of departure of the request through system of "Interbank messages" it is possible to use:

- the magnetic carrier according to the standard established in the Interbank Messages program, the version "Commercial banks" at the same time submitting the document in the original;

- paper with the signature of the head of bank and impress of a seal.

If the bank transferred applications for participation in auctions by method, other than this Item provided in the first paragraph, it furnishes written explanations for National Bank with indication of the reason.

2.7. Requests and confirmations on GTsB offered NBM for purchase repo operation (appendix N 8), DRO of National Bank of Moldova in day of holding the auction, till time specified in the message on holding the auction are accepted. Requests are registered in process of their receipt in the sheet of the received applications (appendix N 4).

If the bank submits for auction several applications, it is considered that the last application received and accepted in time, established in the message on holding the auction, withdraws earlier submitted applications.

The applications received after the established limiting time and also the requests constituted with departure from rules and with mistakes for auction are not allowed. At the same time, in the column "Note" of the Sheet of the received applications (appendix 4), is made entry "is accepted" or "rejected". The notice on acceptance or variation of the request specifying reason for rejection is transferred to participants of auction (appendix 5 and 5a). The authorized person of bank will trace receipt of the notice on registration of the request in acceptable time from departure of the request.

The deadline of submission to NBM of the request on the paper or magnetic carrier is established with 30-minute reserve to time specified in the message on holding the auction.

In case of submission to NBM of the request on the paper or magnetic carrier at the scheduled time time of receipt of the request time of its registration in the automated NBM system, without time management of submission to NBM of the paper or magnetic carrier is considered, reserve time (30 minutes) is necessary for preparation and implementation of information in the automated NBM system.

The applications received and accepted at the scheduled time cannot be withdrawn or cancelled after deadline of the receipt of requests specified in the message on holding the auction, they are firm commitments from banks.

2.8. For the purpose of determination of results of the auctions held in the conditions established by this Instruction the Auction commission in the following structure is created:

the chairman - the first deputy president of NBM;

permanent members:

- director of the department of market transactions;

- head of department of market transactions.

In case of absence of certain members of the Auction commission, its functions are performed respectively:

- the deputy president of NBM - the chairman;

- the deputy head of department, the head of department of transactions in the public market;

- the assistant department head of transactions in the public market;

- head of department of registration of securities.

III. Procedure for holding auctions for purchase/sale or on repo operations

3.1. After receipt of requests DRO checks requests for establishment of availability of GTsB offered for sale by banks and constitutes the Program of determination of results of auction of purchase (appendix 6a), sales of GTsB (appendix 6b) or the Program of determination of results of the purchase/repo repo auction of sale of GTsB (appendix 6v).

3.2. Requests for sales or purchases are selected according to the procedure of their appeal in relation to curve flat effective yield. The selected requests are satisfied at suggested price.

Requests for repo transactions (except for repo operations on fixed rate) are selected on the basis of the interest rate (repo rate) offered in requests, since the highest rate (for purchase repo) or from the smallest rate (for sale repo) to the rate established by the Auction commission. Requests are satisfied on the repo rate offered by banks.

In case two or more requests are attractive in the same measure and the amount offered NBM is insufficient for satisfaction of these requests, requests will be satisfied in proportion.

Requests for repo transactions of purchase on fixed rate can be satisfied in full or in proportion, within the planned amount.

3.3. The repo rate is the annual interest rate used for determination of the price of the redemption and is determined by the following formula:

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