Regulation on Book Entry System of Securities, approved by the DCA of the NBM, No. 250 of October 25, 2012

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1 Published on ( Print Expand Hide Regulation on Book Entry System of Securities, approved by the DCA of the NBM, No. 250 of October 25, 202 Published in the Official Monitor of the Republic of Moldova, no of.2.202, Art.547 Registered at the Ministry of Justice of the Republic of Moldova No. 902 of 3 December 202 Approved by the Decision of the Council of Administration of the National Bank of Moldova, no. 250 of REGULATION ON BOOK ENTRY SYSTEM OF SECURITIES Amended by: DCA of the NBM no. 273 of (in force on ), Official Monitor of the Republic of Moldova no of , art. 277 ; DCA of the NBM no. 239 of (in force on ), Official Monitor of the Republic of Moldova no of , art. 69. Chapter I General provisions. This Regulation establishes the general regulatory framework, organization and functioning of the Book Entry System of Securities, hereinafter BES, organized and administrated by the National Bank of Moldova (hereinafter National Bank) in accordance with the Law on the National Bank of Moldova no. 548-XIII of 2 July 995 and the Law on Public Debt, State Guarantees and Refinancing no.49-xvi of 22 December The provisions of this Regulation apply to BES participants and investors - legal entities and individuals owning the respective securities. 3. For the purposes of this Regulation, the following expressions and terms are defined as follows: a) Treasury bills state securities issued with discount and repurchased at face value upon maturity, with the circulation term of up to year (short-term); b) Certificates of the National Bank of Moldova (hereinafter NBM Certificates) securities issued by the National Bank with discount and repurchased upon maturity at face value, with the circulation term of up to year; c) ISIN code a unique code assigned to each securities issuance; d) Accounts of securities accounts opened with BES for the purpose of record - keeping of dematerialized securities; e) Intraday credit a type of credit extended by the National Bank over the operational day, in form of overdraft into bank s settlement accounts, under the collateral of securities pledged to the National Bank, for purposes of due performance of current payments; f) Overnight credit a type of credit extended overnight to banks by the National Bank, under the collateral of

2 securities pledged to the National Bank, for the purpose of covering the account shortage not paid at operational day-end, as well as for meeting temporarily the liquidity needs; g) Reporting date the date on which the participants in BES shall present to the National Bank the information on current balances of securities available in its portfolio and in clients portfolios; h) DVP Model I a securities settlement method, according to which both the transfer of money and the transfer of securities are conducted on a gross base, i.e. transaction with transaction; i) Holder the participant that has registered and keeps securities on clients account (account no. II or IV) in BES at the National Bank on the name of its clients; j) Registered holder of securities the participant whose name is introduced in BES on the reporting date; k) Primary dealer according to the definition provided for in the Regulation on placement and redemption of state securities issued in book-entry form, approved by the Decision of the Council of Administration of the National Bank of Moldova no.96 of 7 May 203 and by the Ministry of Finance of the Republic of Moldova, no.3/2-/33 of 7 May 203 (Official Monitor of the Republic of Moldova, 203, no.25-29, Article 887); l) Transfer form - a document by means of which BES participants request the transfer of ownership of securities registered with BES, by recording them in the register as in accordance with this Regulation; m) Delivery versus Payments (DVP) a principle according to which the final settlement of a transaction with securities is made via definitive (irrevocable and unconditional) transfer of securities from the seller to the buyer if and only if a definitive (irrevocable and unconditional) transfer of funds from the buyer to the seller is made; n) Free of payment (FoP) transfer of securities that is not linked to a corresponding transfer of funds; o) Deadline the moment until which transactions with securities are allowed to be settled in AIPS p.m.; p) Moment of entry of a transfer form the moment when the securities are blocked into the seller s account in BES; q) Government bonds state securities issued with discount, at face value or at a premium, with the term of one year and more, for which the issuer conducts periodical interest payments, either at a fixed or at a floating rate as in conformity with issuance conditions, and which are subject to redemption at face value upon maturity; r) REPO operations transactions whereby securities are sold with a commitment for repurchase at a future date and at a price agreed at the time of sale; s) Participant a legal entity holding at least one account of securities in BES at the National Bank and a current account with the National Bank; t) Authorized person a person from the National Bank entitled to access data and transmit instructions on accounts, transfers and other operations at the Tier I of BES or a person designated by the participant, under a power of attorney submitted to the National Bank, to conduct operations with securities at the Tier II of BES, to send to the National Bank the transfer forms and other related information; u) Owner a person holding securities registered on his/her own name at the Tier I or II of BES; v) Automated Interbank Payments System (AIPS) a system designated to conduct interbank payments in MDL on the territory of the Republic of Moldova, which consists of Real-Time Gross Settlement System (RTGS system) and the Designated-time Net Settlement System (DNS system); w) Book Entry System (BES) a depository and settlement system of securities held and managed by the National Bank in accordance with the provisions of this Regulation; x) Book Entry Security a security that is issued, recorded and for which ownership is confirmed by appropriate entries in the accounts opened with BES; y) State Securities (SS) securities issued by the Ministry of Finance of the Republic of Moldova in the form of treasury bills and/or government bonds. (Item 3 amended by the Decision of the NBM no.273 of , in force on ) 4. BES is a system acting as a depository for book entry securities issued by the Ministry of Finance of the Republic of Moldova and the National Bank of Moldova. 5. BES is holding indirectly securities, structured on two tiers: ) at Tier I of BES, organized at the National Bank, the securities are registered on behalf of each participant; 2) at Tier II of BES, organized at the licensed banks and at the central depository, the securities are registered on behalf of each client - owner of SS as a result of operations performed on the primary and secondary 2

3 markets. (Item 5 supplemented by the Decision of the NBM no.273 of , in force on ) 6. National Bank shall be responsible for the registration of ownership of the securities of BES participants, while the participants are responsible for the registration of ownership of the securities of their clients. 7. BES shall register the owners of securities starting with the date of issue of securities by the issuer. BES shall update the data when the owners are changed, following the transactions performed on the secondary market, under the principle of delivery versus payment (DvP model I). 8. Payments related to the operations with securities recorded in the BES shall be made at the National Bank through AIPS. 9. As the administrator of BES, National Bank shall set the conditions for participation in the BES, the processing and settlement procedures, manage and control the operation of the system, take necessary steps to manage and control risks in accordance with the provisions of this Regulation. Chapter II Participation in BES 0. Participants in BES may be as follows: ) licensed banks acting as primary dealers on the SS market; 2) licensed banks that do not act as primary dealers on the SS market; 3) National Bank of Moldova; 4) Ministry of Finance of the Republic of Moldova; 5) Deposits Guarantee Fund in the Banking System (hereinafter Deposits Guarantee Fund); 6) central depository. (Item 0 supplemented by the Decision of the NBM no.273 of , in force on ). To participate in BES, the eligible persons referred to in item 0 sub-item ), 2), 5) and 6) shall conclude with the National Bank, as the system administrator, a contract for participation in BES, in accordance with the template set out in Annex no. to this Regulation or the template set out in Annex no. for the central depository. In case of state securities issued to guarantee the emergency loans granted to banks by the National Bank in times of a systemic crisis or the danger of its occurrence, the Ministry of Finance shall conclude a contract with the National Bank on participation in book-entry system of securities as in accordance with the template set out in Annex no. to this Regulation. 2 (Item supplemented by the Decision of the NBM no.239 of , in force on ) (Item amended by the Decision of the NBM no.273 of , in force on ) 2. The general list of participants in BES shall be made up based on the followings: ) participants request, with the exception of Ministry of Finance, to open accounts as to keep record of securities at Tier I of BES at the National Bank, submitted in accordance with the template included in the Annex no.2 and no.2 to this Regulation; ) request of the Ministry of Finance to open accounts in BES at the National Bank as to keep record of state securities, on the name of the Ministry of Finance, issued to guarantee the emergency loans granted to banks by the National Bank in times of a systemic crisis or danger of its occurrence, which shall also contain information about the contact person (name, surname, telephone, fax); 2) contracts for participation in BES. (Item 2 supplemented by the Decision of the NBM no.239 of , in force on ) (Item 2 amended by the Decision of the NBM no.273 of , in force on ) 3. The National Bank shall assign each participant in BES a unique identification number (Annex no.3). 3

4 Chapter III Structure of BES Section. Tier I of BES 4. National Bank is the administrator of BES and is responsible for the followings: ) keeping records and registering of the securities, maintaining the accounts of securities of the BES participants; 2) final and irrevocable settlement of securities related operations; 3) registering at the maturity date the payments of face value for all types of securities deposited with BES and in case of government bonds also the interest-related payments as in accordance with the terms set in the issuance conditions of the bonds; 4) providing verification, for each issuer, of the volume of securities issued with the volume registered in the securities accounts of the participants, for each ISIN, including at the maturity date; 5) ensuring security of information and centralized data on the identity and holdings of securities of participants. 5. Depending on the services used, National Bank shall open at the Tier I of BES on behalf of the participant the following types of securities accounts: ) accounts for participants own portfolios - no. I; 2) accounts for clients portfolios of the participant, which keep aggregate records of all clients' securities of this participant - no. II. State securities and any other rights thereto recorded on behalf of clients in the accounts of participants shall not be considered as assets or liabilities of that participant; 3) pledge accounts that keep record of securities from participant's own portfolio pledged with the National Bank - no. III with the following sub-accounts: a) sub-account no. (hereinafter account no.iii.) - securities reserved for the purpose of pledging with the National Bank upon obtaining of intraday/overnight credits; b) sub-account no.2 (hereinafter account no.iii.2) - securities pledged for the purpose of guaranteeing overnight credits extended by the National Bank; c) sub-account no.3 (hereinafter account no.iii.3) - securities pledged for the purpose of guaranteeing credits extended by the National Bank; 5. On behalf of the central depository, National Bank shall open at Tier I of BES an account for keeping aggregate records of the state securities with term exceeding one year as for trading on the stock exchange - account no. IV. (Item 5 inserted by the Decision of the NBM no.273 of , in force on ) 6. National Bank may open personal accounts no. II at Tier I of BES to register SS of legal entities that have opened a settlement account with any bank- primary dealer, which shall hold SS in a volume of at least MDL 25 million on average per quarter (hereinafter personal account holders). In order to participate in BES, the person who meets the aforementioned requirements shall submit a request to the National Bank in accordance with the template of Annex no.4 and shall conclude a contract, as set out in Annex no.5 to this Regulation. 7. National Bank shall open securities account no. I for the Deposits Guarantee Fund. 8. The following information shall be registered at Tier I of BES: ) participants of BES; 2) ISIN codes of securities; 3) description of securities; 4) information about each securities issuance of the issuer. 9. The International Securities Identification Number (ISIN) and other information on each issuance of securities shall be introduced in BES on the basis of the Global Certificate of the issuer and in case of government bonds with floating rate these shall be also based on the bulletins on annual interest rate for the 4

5 calculation of coupons related to government bonds with floating rate. 20. The description of securities shall be introduced in BES according to the issuance conditions. For example: 9 days, Treasury Bills (T-bills), maturity date or government bonds (GB), type or interest rate, interest payment term, maturity date. 2. The followings shall be processed at Tier I of BES: ) operations carried out on the primary market; 2) operations carried out on the secondary market, which modify the amounts registered in the accounts no. I, II, III and no. IV opened with the National Bank; 3) operations related to the interest rate payment on government bonds; 4) operations related to the redemption of securities at maturity date. (Item 2 amended by the Decision of the NBM no.273 of , in force on ) Section 2. Tier II of BES 22. Participants of BES referred to in item 0 sub-item ) of this Regulation shall keep records so as to ensure separation of their own securities from those held on behalf of clients. For this purpose, the accounts no. I and no. III shall be used for keeping record of securities in own portfolio and the individual accounts no. II shall be used for keeping record of securities held by each client. 22. As a participant in BES at the National Bank, central depository shall register the ownership of state securities with a maturity greater than one year in the accounts of each owner separately in the central depository system. It records the change of ownership following the operations taking place on the stock market. (Item 22 inserted by the Decision of the NBM no.273 of , in force on ) 23. BES participants are required to use a software solution that shows daily, in the individual accounts of the clients, the identity of each client and its holdings. The available information shall include the followings, but not be limited to: ) ISIN code of securities; 2) description of securities; 3) date of purchase; 4) terms of interest-related payments; 5) maturity date; 6) information on securities pledged with the National Bank and separately pledged with other banks; 7) face value of held securities; 8) purchase price of held securities; 9) reference number of the buyer/seller, which is formed by the participant as in accordance with item 64 subitem ) of this Regulation; 0) state identification number (IDNO) assigned to resident legal entities or tax code assigned to non-resident legal entities; ) ID number and series, personal code in case of individuals; 2) name/name and surname of the client. As for the non-resident individuals and legal entities, this information shall be indicated in Romanian or English, using an official translation, if any; 3) office/home address, name and code of the origin country of the client, according to ISO 366 alpha-3 code (three-letter code). As for the non-resident individuals and legal entities, this information shall be indicated in Romanian or English, using an official translation, if any; 24. BES participants shall develop internal control procedures to protect the securities of the clients from loss or fraud and to ensure that these will not be pursued by participants creditors, as well as internal control mechanisms to prevent BES-related risks, which shall include: ) keeping of registrations, records and necessary accounts to be able at any moment and without delay to distinguish assets held by a client from assets held by any other client and from own assets; 5

6 2) possibility to transfer clients portfolios, with their consent, to another solvent participant in the event of worsening financial situation; 3) daily reconciliation of all individual accounts of the clients and own accounts, registered within their systems, with the accounts opened with BES at the National Bank, after receiving from the National Bank a certificate confirming the registration in the accounts (Annex no.6 and no.7); 4) implementation of adequate security measures (at physical and logical level) to ensure only authorized persons access. 25. BES participants shall keep confidential all of the information on each holder of securities, personal data of clients, operations performed and the information on balances of securities accounts. 26. Participants shall take the steps necessary to ensure proper settlement of each transaction entering the system. They shall not enter the transactions into the system if they are not certain about the availability of securities to be delivered or about the fulfilment of financial obligations relating to those transactions. 27. On the basis of any operation s related to the securities held in clients portfolios, after obtaining a certificate from the National Bank confirming the balance of the account no. II in BES at the National Bank, the participant shall send to the client a certificate confirming the balance of securities held in individual accounts opened with the participant. 28. On the basis of securities-related operations carried out between two clients from the account no. II of the same participant, the participant independently shall submit confirmations of each client s balance. 29. The relations between the participant and its clients shall be regulated by a contract concluded between the parties. 30. Control over compliance of regulatory requirements for registering, recordkeeping and keeping of electronic data on the Tier II of BES shall be ensured by the National Bank, which shall conduct onsite and offsite controls. 3. All information related to redeemed issues on each client shall be kept in an archive register of the bank at least 75 years. Chapter IV Processing of operations performed by issuers of securities Section. Registration of operations performed in the primary market 32. Sale of securities through auctions or through underwritings shall be made by a separate system that is not part of BES. 33. The results of sales of securities in the primary market shall be recorded in BES in the accounts no. I and no. II, following the receipt of payment confirmation. This information shall be entered into the system on each particular issuer based on the reports on the results of SS sale in the primary market and on the reports on the results of the NBM Certificates sale in the primary market. 34. Securities sold in the primary market shall be entered into system as follows: ) account no. I - securities purchased for participants own portfolios (account no. I - for SS and account no. I - for NBM Certificates); 2) account no. II - securities purchased for client s portfolios in total amount without breakdown by owner (account no. II for SS); 3) personal account no. II - SS purchased by personal account holders with BES. 35. Based on data of the reports on results of sales of securities in the primary market, BES shall generate for each separate issuer the followings: 6

7 ) general list of participants with the results by each issuance and as total value of total unredeemed issuances (for SS issued by the Ministry of Finance and for the NBM Certificates); 2) general list of securities issued in breakdown by each issuance (for SS issued by the Ministry of Finance and for the NBM Certificates). Section 2. Special issuances 36. The SS delivered to the National Bank as a result of conversion of loans previously granted to the State and subsequently reissued shall be registered with BES in the account no. I of the National Bank based on the Global Certificate after confirming the payment. The purchase operations by the National Bank of newly issued SS and the redemption operations by the Ministry of Finance of due SS shall be carried out on the same operational day. 37. The SS issued and delivered by the Ministry of Finance to the National Bank to cover the debit balance of the general reserve fund and/or to increase the statutory capital of the National Bank of Moldova shall be registered with BES in the account no. I of the National Bank based on the Global Certificate after the respective entries in the accounts of the National Bank. 38. The registration with BES of SS within other special issuances, carried out in accordance with the law in force, which do not involve transfer of funds, shall be made in the account no. I of the participant based on the Global Certificate of the issuer. Section 3. Payment of interests on government bonds 39. Interests on government bonds shall be paid within the terms provided for in the conditions of bonds issuance. If the interest payment date on government bonds coincides with a non-working day, the payment shall be made on the first working day thereafter, without paying any additional interest. 40. Two days prior to the interest payment date, the transfer operations of the respective SS shall be stopped. On the same date, participants of BES, with the exception of central depository, shall submit to the National Bank information on current balances of securities available in their own portfolio and in their clients portfolios - the total amount and including by each client individually (Annex no.8). (Item 40 amended by the Decision of the NBM no.273 of , in force on ) 40. Two working days prior to the interest payment date, the transfers operations of the government bonds traded on the stock exchange shall be stopped. At the same date, the central depository shall submit to the National Bank information on current balances of government bonds held by the central depository in the account no.iv in total amount, including by each owner individually (Annex no.24). (Item 40 inserted by the Decision of the NBM no.273 of , in force on ) 4. One working day before the interest payment date, BES shall generate the Register of interest payments according to the data of the system on the reporting date. 42. On the day of the payment, but only after obtaining from the Ministry of Finance the payment order for the total amount of interest to be paid, the National Bank shall transfer the corresponding amounts to the current accounts of the registered holders opened with the National Bank as in accordance with the register referred to in item The Register of interest payment on government bonds with the interest payment confirmation in the current accounts of participants shall be available in the BES for recording the relevant operations. Section 4. Redemption of securities 44. Securities shall be subject to redemption at maturity date as indicated in issuance conditions. If the redemption date of securities coincides with a non-working day, the payment shall be made on the first working day thereafter, without paying any additional interest. 7

8 45. Two working days prior to the maturity date of securities, the transfer operations shall be stopped. On the same date, the registered holders, with the exception of central depository, shall submit to the National Bank information on the balances of due securities available in their own portfolio and in their clients portfolios - in total amount and including by each client (Annex no. 8). This information shall be presented on each issuer separately. (Item 45 supplemented by the Decision of the NBM no.273 of , in force on ) 45. Two working days prior to the maturity date, the transfer operations of the respective government bonds traded on the stock exchange shall be stopped. At the same date, the central depository shall submit to the National Bank information on current balances of government bonds held by the central depository in the account no.iv in total amount, including on each owner individually (Annex no. 24). (Item 45 inserted by the Decision of the NBM no.273 of , in force on ) 46. Information obtained from participants shall be checked for compliance with the information held at Tier I of BES. 47. Total amount of securities subject to redemption at face value as on the reporting date shall coincide with the amount of initial issuance of these securities. If on the redemption date there are securities registered on account no. III.3 to guarantee loans granted by the National Bank, the amount obtained from the redemption of securities shall be transferred for the payment of loans and their interest-related payments. (Item 47 amended by the Decision of the NBM no.273 of , in force on ) 48. One working day before the maturity date, the BES shall generate for each particular issuer the Register of securities subject to redemption and simultaneously shall block the securities registered in the accounts no. I, II, III and IV subject to redemption according to this register. (Item 48 amended by the Decision of the NBM no.273 of , in force on ) 49. On the due date, but only after the receipt of the payment order in total amount for redemption from the issuer of securities, the National Bank shall transfer the corresponding amounts, according to the register referred to in item 48, to the current accounts of the registered holders opened with the National Bank. 50. The Register of securities redeemed at face value with the confirmation of receipt of payment in the current accounts of participants at the National Bank is available in BES for recording the relevant operations. 5. Redemption of SS issued in order to increase the statutory capital and/or to cover the debit balance of the reserves fund of the National Bank and registered in the account no. I of the National Bank is carried out by transferring the funds by the Ministry of Finance on the due date of SS or by issuing new SS in an amount equivalent to the SS due amount, which will not be accompanied by the transfer of funds. 52. After making all payments - redemption of securities at face value, payment of all interests and other mandatory payments - all records on these securities in BES shall be archived. 53. All information related to redeemed issues shall be kept in an archive register of the National Bank for 75 years. Chapter V Processing of operations performed in the secondary market Section. Types of transfer and blocking operations performed in the secondary market 54. Any transfer of securities performed after these are sold in the primary market shall be considered as transfer operation in the secondary market. 55. Operations with securities performed via BES in the secondary market are grouped as follows: 8

9 ) operations between Participant (account no. I) and Participant 2 (account no. I): a) transfers from the portfolio of a licensed bank (account no. I) to the portfolio of the National Bank (account no. I) followed by the redemption of the same securities by the licensed bank (REPO between National Bank and the licensed bank within open market operations); b) transfers of securities from own portfolio (account no. I) of a bank to the own portfolio (account no. I) of another bank, providing further redemption of the same securities (interbank REPO); c) open market operations conducted by the National Bank, resulting in definitive transfer of securities from the account no. I of a bank to the account no. I of the National Bank; d) transfers from own portfolio of Participant (account no. I) to own portfolio of Participant 2 (account no. I), following a sale/purchase of securities; 2) operations between Participant (account no. I) and Participant 2 (account no. II): a) transfers from own portfolio (account no. I) of one Participant to clients portfolio (account no. II) of another Participant, following a sale/purchase of securities; b) transfers of securities from clients portfolio (account no. II) of a participant to the own portfolio (account no. I) of another participant, with further redemption of the same securities within REPO operation; c) transfers of securities from own account (account no. I) of a bank to the account of clients portfolios (account no. II) of another bank in event of pledging securities to obtain a loan. If two banks conclude a credit agreement and one of these banks participant 2 accepts the securities of another bank participant as collateral, participant 2 shall duly keep record of these securities, as well as reflect them in the clients consolidated account (account no. II) opened with the National Bank. If the bank participant has obtained a loan from a bank that is not a participant in BES at the National Bank, by pledging of securities by participant, the recordkeeping of these securities and their reflection in clients total account (account no. II) opened with the National Bank may be conducted by a third bank participant 2 in BES at the National Bank; 3) operations between participant I (account no. II) and participant 2 (account no. II): a) transfers from clients portfolios of one bank (account no. II) to the clients portfolios of another bank (account no. II), following selling/buying operations; b) non-payment transfers from clients portfolios of one bank (account no. II) to the clients portfolios of another bank (account no. II), in case the bank holding SS available in its clients portfolios (account no. II in BES) fails to conduct redemption operations; c) non-payment transfers of securities from the portfolio of client of participant (account no. II) to the portfolio of the same client of participant 2 (account no. II). If the owner of the securities, who is the client of a bank that participates in BES (participant ), has submitted a request according to the template of Annex no.9 to the bank holding these securities, requesting the transfer of securities from account no. II of participant to account no. II of another bank BES participant (participant 2) on own name, the securities shall be transferred to BES at National Bank based on transfer forms submitted by participants and 2; 4) operations between participant (account no. I) and participant (account no. II): a) transfer operations from bank s portfolio (account no. I) to the portfolio of a client of the same bank (account no. II) and vice-versa following selling/buying operations; b) transfer operations from bank s portfolio (account no. I) to the portfolio of a client of the same bank (account no. II) and vice-versa following REPO operation; c) pledging of securities to a bank or financial institution non-participant in BES; 5) transfers between participant client (account no. II) and participant client 2 (account no. II): a) transfers between accounts for holding of securities opened at the participant for its clients, which shall not cause changes in the accounts of participant opened with BES at the National Bank; 6) operations at participant (accounts no. I and no. II): a) blocking operations in account no. I or account no. II of participant of securities accepted for sale. Securities shall be blocked in account no.i or no.ii of participant (seller) in case of settlement of DVP transactions at National Bank level. From the moment of blocking, the transaction becomes irrevocable and unconditional, ensuring the payment and transaction finality principle, when neither participant nor third party has the right to claim the blocked securities; b) unblocking operations of securities in account no. I or no. II of participant (seller) upon payment confirmation or if the initiated transaction is not accepted on non-payment grounds; 9

10 7) operations between bank (account no. I) and the National Bank (account no. III of the bank ): a) transfers of securities from the own portfolio of bank (account no. I) to account no. III. of bank, in case of reserves formation/supplement for purposes of providing due pledge for intraday / overnight credits or reverse operations in case of discharging the securities reserved by bank ; b) transfers of securities from account no. III. of bank to account no. III.2 of the same bank in case of overnight credit provision or reverse transfers in case of integral payment of overnight credits and related interests; c) transfers of securities from account no. III.2 to account no. III.3 conducted by BES at the National Bank, in case of non-payment in due time of overnight credits and related interest, as confirmed by the respective subdivision of the National Bank. Following the integral reimbursement of overnight credit and related interests the pledged securities shall be transferred to account no. III. of bank ; d) transfers of securities from own portfolio of bank (account no. I) to account no. III.3 of the respective bank in events of obtaining a credit from the National Bank following due conclusion of a pledge agreement. If bank received a credit from the National Bank by pledging (pawning) securities from own portfolio, the pledged securities shall be transferred back to account no. I of bank only after integral reimbursement of credit amount and related interests, as confirmed by the respective subdivision of the National Bank; 8) operations between National Bank (account no. III.3 of the respective participant) and National Bank (account no. I) in case of sale of pledge by purchasing securities by the National Bank, based on a relevant report prepared by the respective subdivision of the National Bank; 9) operations between National Bank (account no. III.3 of the respective participant) and other participants (accounts no.i and no.ii) in case of sale by the National Bank of the pledge of the respective participant in the open market, based on the report prepared by the respective subdivision of the National Bank; 0) transfers following the purchase/sale of securities from the portfolio of a personal account holder in BES at the National Bank (account no. II) to the portfolio of another personal account holder in BES at the National Bank (account no. II), which are served by the same settlement bank. Personal account holders in BES at the National Bank shall perform transactions with securities on the territory of the Republic of Moldova only through primary dealers. 56. Transfers of securities referred to in sub-item 3) letters b) and c), sub-items 4), 5), 6), 7) letters a) and c) and sub-item 0) of item 55 shall not imply money means transfers at the National Bank level. Section 2. Registration of open market operations 57. Data related to open market operations of the National Bank shall be entered into BES based on relevant reports on the results of auction/negotiations followed by further blocking of securities in the seller s account on the date of open market actions until the payment is made, confirmed by the respective subdivision of the National Bank. BES shall make the respective entries upon confirmation of payment. 58. Securities bought within REPO operations and held by licensed banks within own portfolios may be used for performance of other transactions with SS, providing that at the maturity of REPO operation, the initial SS buyer will sell the same securities to the initial seller. Initial buyers of state securities shall bear responsibility for ensuring availability of SS bought within such operations within own portfolios (account no.i in BES at the National Bank) two days prior to maturity date of REPO transactions. 59. In case of resale or redemption of securities, BES shall generate the Register of securities bought / sold within REPO operations and subject to resale/redemption. The respective Register shall be generated based on availability of securities in participants accounts no. one day before the maturity date of REPO transactions. Section 3. Transfer form 60. All types of transfers listed within sub-items ) - 4), 7) and 0) of item 55 of this Regulation, except open market operations and operations related to intraday /overnight credits, shall be conducted based on transfer forms properly completed (Annex no.0). The registration of transfers between two clients served by the same participant (operation referred to in sub- 0

11 item 5) of item 55) shall be made based on a transfer form properly completed (Annex no. ), which shall not be submitted to the National Bank. 6. According to Annex no.0, the transfer forms shall be prepared and submitted to the National Bank separately by each participant involved in the respective transaction. Transfer forms represent a basic document for the introduction of modifications in the data on securities owners and holders in BES. 62. Transfer form shall be filled in by persons authorized by the participant through a power of attorney, which shall be submitted to the National Bank. In case of changes in the content of the power of attorneys submitted to the National Bank, the participant shall present a new power of attorney within one day. Participant shall bear responsibility for the authorized persons actions. 63. Transfer form shall have the order number assigned by BES. 64. Transfer form shall contain the following data with regard to secondary market transaction s: ) reference numbers of the buyer and seller, which shall be formed by the participant as follows: identification number of the participant (BBB) + date of transaction (DD.MM.YYYY) + four digits for the order number of the transaction (YYYY). For example: BBBZZLLAAAAYYYY; 2) identification number of the participant/holder of personal account (according to Annex no.3): a) identification number and name of seller; b) identification number and name of buyer; 3) securities account number in BES (I, II or III); 4) ISIN code of securities; 5) amount of sold securities at face value: a) in figures; b) in words; 6) amount to be transferred (at purchase price); 7) settlement account number of the buyer - number of settlement account of paying bank opened with the National Bank; 8) settlement account number of the seller - number of settlement account of beneficiary bank opened with the National Bank; 9) number of balance sheet account in bank s General Ledger - balance sheet account of paying bank or beneficiary bank that is designated for reflecting the transfers of bank s own funds or its clients funds; 0) details with regard to REPO operations, transfers, pledging of securities, transactions, and some obligations of the parties. 65. If the transfer form is completed incorrectly or erroneous, the transfer operation shall not be carried out. Thus, the participant shall be informed about the errors by a notice (Annex no.2). Section 4. Processing of transfer forms at the National Bank and settlement of transactions with securities 66. The system shall verify whether the transfer forms transmitted into BES by the participants meet the requirements on their format and contain the information required for acceptance of securities transfer into BES and for the settlement of the transaction in AIPS. Messages containing errors shall be rejected by BES and each participant shall be transmitted notices stating the reasons for rejection. (Item 66 supplemented by the Decision of the NBM no.273 of , in force on ) 67. Transfer forms shall be processed in BES under the principle of double notification, meaning that both parties involved in a transaction shall transmit transfer forms into BES in standard message format, developed by the National Bank. As an exception to the principle of double notification, transfers related to selling or buying operations and REPO operations between a participant and their clients, and the registration of guarantees for intraday/overnight lending facility and for the credits granted by the National Bank may be initiated unilaterally by sending a single message.

12 68. Transfer forms that imply money means transfers at the National Bank level shall be accepted until 3:00 PM, while the transfer forms that do not imply money means transfers until 4:5 PM. Transfer forms received by BES at the National Bank after the set time shall not be accepted for processing. The time of receipt shall be considered the time of receipt of the respective document by the National Bank. (Item 68 amended by the Decision of the NBM no 273 of , in force on ) 68. Following the technical acceptance (validation), BES shall identify the transaction referred to in the transfer form and shall assign it a registration number and operation code. (Item 68 inserted by the Decision of the NBM no.273 of , in force on ) 69. After assigning the transaction a registration number, the transfer forms go through the matching procedure (comparison), within which the transfer forms that form an operation are identified and the transfer form sent by a participant is compared with that sent by its counterpart in transaction in order to ensure that the transaction details are identical in both forms of transfer. This procedure is performed by automatic verification at the system level. If the data coincide, the forms are accepted for registration of the respective transaction. 70. The buyer and seller shall be notified by a special message both in the case of acceptance of the transaction form (Annex no.3) and in the case of non-acceptance of the transaction form (Annex no.2). 7. Transfer forms for operations between account no. I and account no. II of the same bank, free of payment transfer operations upon formation/discharge of pledge and for the free of payment transfer operations between accounts no. II of different participants/holders of personal accounts shall be included in a separate register in BES Register of transfer forms received and accepted by the National Bank without payment. BES shall register these operations in the accounts of participants without payment by the National Bank and shall inform the seller and buyer by a notice about the acceptance of the transaction (Annex no.4). 72. Transfer forms for selling-buying transactions, REPO operations, transfer of pledge upon credit extension/reimbursement, which imply interbank settlements, shall be processed under the DVP principle and shall be included in BES in the Register of transfer forms received and accepted by the National Bank for payment. 73. BES shall block relevant securities in the seller s account following the receipt from the seller and buyer of the transfer forms accepted within matching procedure for the settlement under DVP principle. 74. Simultaneously, BES shall automatically generate on the name of the buyer a payment order to debit the settlement account of the buyer in AIPS at the National Bank in accordance with the data from the transfer forms of the seller and buyer (excluding forms related to interbank transfers of pledge). 75. The parties to the transaction shall assume full responsibility for the accuracy of transaction related data reflected in the transfer forms, which will be taken as a basis for issuance of payment orders by BES of the National Bank. 76. If the Deposits Guarantee Fund is one of the parties involved in selling-buying transactions, BES shall transmit the information relating to securities accepted for transactions and transfer forms related to the respective transactions to the subdivision of the National Bank responsible for the generation of the payment order. 77. Within the selling-buying transactions and interbank REPO operations, the payment order shall be assigned with the transaction code 006, transfer type URGENT (as in accordance with the Regulation on Automated Interbank Payment System), and the wording BBBZZLLAAAAYYYY for securities bought as in accordance with transfer form shall be entered under the heading Purpose of payment, starting with the first position. The wording BBBZZLLAAAAYYYY shall refer to the transaction specified by the buyer of securities and represents the buyer s reference number from the transfer form of securities. 78. In case of operations related to securities pledging/discharge of pledge upon extension/reimbursement of 2

13 interbank credits to be registered according to DVP principle, the buying bank shall generate the payment order for the total credit amount and shall send it to AIPS. The payment order shall be assigned with the transaction code 07, transfer type URGENT (as in accordance with the Regulation on Automated Interbank Payment System), and the wording for interbank credit pledged with securities, pledge specification is attached shall be entered under the heading Purpose of payment, starting with the first position. The pledge specification shall include the reference numbers from all transfer forms of the buyer related to the pledge for the respective credit (Annex no.5). BES participants shall assume the responsibility for compliance with the legal provisions applicable to pledge contracts concluded in own account or on the account of clients. 79. The payment order shall be generated in accordance with AIPS standards and shall mandatory specify the /LST / key word of the deadline set for the final settlement of the respective transaction. 80. Payment orders initiated by the National Bank under DVP principle shall be transmitted automatically to AIPS until 4:00 PM, following the acceptance of transfer forms. 8. Payment orders initiated by the National Bank under DVP principle shall have the 0 priority allocated automatically in AIPS as in accordance with the Regulation on Automated Interbank Payment System. 82. In case of operations related to securities pledging/discharge of pledge upon extension/reimbursement of interbank credits under DVP principle, the payment order and pledge specification generated by the buying bank shall be sent to AIPS until 4:00 PM. 83. The payment order with attached pledge specification shall be available in BES for authorisation. Following due verification in BES of compliance of data from the above-mentioned documents with the data from the transfer form of the respective transaction, BES shall accept (or shall not accept) the payment order and shall inform AIPS about this. 84. Following the acceptance of payment order for settlement, AIPS shall transfer money funds from the settlement account of the buyer to settlement account of the seller and BES shall be immediately informed about the performance of the respective payment. 85. In case of funds shortage, AIPS shall place the payment order in queue and shall inform BES about this. 86. Immediately after the confirmation of payment on the respective transactions, BES shall unblock the securities previously blocked in accounts no. I and no. II and shall make the relevant entries in accounts and shall modify the ownership (holder) of securities. 87. Settlement is final once the settlement accounts of funds and securities holding accounts of the participants involved were debited and credited accordingly. There is no significant difference between the moment of acceptance for settlement of the payment order for the securities and the moment of final settlement of securities. 88. The buyer and the seller shall be informed through a notice about the transaction acceptance (Annex no.4). 89. AIPS shall conduct the settlement of transactions with securities under DVP principle on the acceptance day of securities transfer form (T+0) until 4:30 PM. 90. If the settlement failed to be conducted until 4:30 PM, AIPS shall notify BES on rejection of payment transfer. Based on such notifications, BES shall unblock the securities and shall inform the seller and the buyer by a notice about the rejection of transaction (Annex no.2). 9. Parties involved in the transaction shall have the right to revoke the transfer form only until the moment of its entry into BES. To withdraw the transfer form, the participant shall submit in BES a request to revoke the securities transfer form (Annex no.6). 3

14 92. If such a request for revocation of the participant can be processed, BES shall cancel the data related to the operation indicated in the transfer form and shall send the participant a notice of confirmation of execution. If the revocation cannot be processed or if the participant has no longer the right to revoke the transfer form or if it has already been settled, BES shall send a notice to the initiator informing about the rejection of the revocation request (Annex no.7) or about the successful completion of the transaction (Annex no.4). Section 6. Interaction between AIPS and BES upon the use of intraday/overnight credit facilities 93. At the beginning of the working day, after the receipt by AIPS of notification on the initiation of Remedial operations stage, BES shall automatically generate the Register of securities available in the account no. III. in BES at the National Bank, separately by each bank and shall send to AIPS the information from this Register required for setting the limits of intraday/overnight credits. 94. During the operational day, banks shall have the right to complete and/or withdraw securities reserved in the accounts no.iii.. To register the changes in the respective securities accounts, BES shall automatically request AIPS to confirm the possibility to discharge or supplement the securities reserved in the account III. of the respective bank and to change the limit of intraday/overnight credit (Annexes no.8 and no.9) and if accepted shall make the respective registrations, generating a new register. 95. Securities from the Register available at the beginning of the Overnight operations stage of AIPS shall be used both to guarantee overnight credits rearranged by the National Bank from intraday credits and for overnight credits extended upon bank s request. BES shall select the securities to be pledged with the National Bank based on the following principle: firstly, securities with shorter maturities shall be accepted, in case of securities with maturities identical but with different ISIN, securities with larger volumes shall be accepted. 96. Register of securities available in account no.iii. shall serve as a real time confirmation for BES of securities pledging or discharge of pledge. 97. Register of granted overnight credits available in BES shall be used to monitor the procedure for granting and reimbursement of overnight credit. Chapter V Processing of operations with government bonds held by central depository 97. The following types of operations may be performed in order to trade government bonds on the stock exchange through account no. IV opened with BES for the central depository: ) free of payment transfer operations, from own portfolio (account no. I) of participant to account no. IV of central depository; 2) free of payment transfer operations, from the portfolio of clients of participant (account no. II) to account no. IV of central depository Transfers of state securities referred to in item 97 shall be processed based on transfer forms transmitted into BES by both parties involved in transaction. Based on these forms, government bonds reflected in account no. IV of central depository with BES shall be registered in the accounts of each owner of government bonds in the system of keeping the register of the central depository. In order to trade on OTC market through primary dealers the government bonds recorded in the account no. IV of the central depository, it is necessary to perform in BES the same operations but in opposite direction In the case where government bonds are traded on the stock exchange, the transfers between two clients that are served by the central depository shall be registered by completing the transfer order, in the manner established by the rules of the central depository, which shall not be submitted to the National Bank. Transactions with state securities are settled by the central depository under a [T+0] settlement cycle based on 4