OPERATING PROCEDURE FOR PURCHASE AND SALE OF FINANCIAL INSTRUMENTS

Transcription

1 Securities Department October 2014 OPERATING PROCEDURE FOR PURCHASE AND SALE OF FINANCIAL INSTRUMENTS Str 1 / 16

2 The Management Board of OTP Banka d.d. Hrvatska, at Domovinskog rata 3, Zadar, (hereinafter: Credit Institution), hereby adopts: OPERATING PROCEDURE FOR PURCHASE AND SALE OF FINANCIAL INSTRUMENTS 1. PURPOSE This Procedure shall define activities, obligations, competences and responsibilities of employees dealing with the purchase and sale of financial instruments, accounting processing and payment of financial instruments. 2. SCOPE The Procedure is intended for employees in the Securities Department (hereinafter referred to as: SD) and employees in the Financial Markets Back Office Section (hereinafter referred to as: FMBOS), who post purchases and sales of financial instruments and effect payments based on the order with conditions submitted to them by the SD, as well as for all employees of the Credit Institution for information purposes for customers and possible client identification. 3. RESPONSIBILITIES AND COMPETENCES Securities Department shall be responsible for: Trading at a regulated market (the Zagreb Stock Exchange, ), trading in a multilateral system (multilateral trading platform), availing of services provided by other trading mediators, Identification of domestic or foreign natural persons or legal entities, Preparation and giving the order for purchase or sale of financial instruments, Entry of orders in the Order book, Keeping of the Order book, Submission of the order for purchase or sale at a regulated market or another trading venue, Change or cancellation of orders at the request of the Principal, Recording of daily realised transactions and entry into the IT system for trading support (Hyperion), Allocation of daily realised transactions according to sequence in the Order book, Control of calculation per each transaction, Opening of investor s account with the Central Depository & Clearing Company Inc. (hereinafter: the CDCC) for customer, Allocation of PIN for the customer with the CDCC, Submission of Request for registration of financial instrument/s in the ownership position of the Credit Institution, Transfer of financial instrument/s to a free position, Allocation of bought and sold financial instruments, Monitoring of allocated and incompletely allocated financial instruments, Str 2 / 16

3 Sending the Request for change or cancellation of transaction/s, Monitoring of balance from mutual relationship with the CDCC, offsetting and settlement of monetary funds, Monitoring the settlement of financial instruments, Monitoring the obligation and claims towards CDCC, Monitoring of balance and obligations per guarantee fund, Monitoring of daily contributions to the guarantee fund, Monitoring of refused payments of the CDCC due to coverage of daily risk, Contractual cross-entry, Monitoring and coordination of contractual and individual settlement of financial instruments Monitoring of balance of ownership position/s, registered with a member, Monitoring and settlement of obligation/s based on membership fee and commission to the CDCC, Monitoring and settlement of obligation/s based on membership fee and commission towards a regulated market and other trading venues, Sending of information and printouts of documents at the request of the Regulator and Trading Supervision of the Stock Exchange. The SD submits to the FMBOS documentation as regards the financial flow, that is, the documentation on changes that need to be recorded in the mandated operations base: Form 1a - Conditions for entry of purchase of financial instruments, Form 3 - Conditions for entry of sale of financial instruments, Calculation of performed purchase or sale of financial instruments on the day of settlement, Order for payment to the CDCC. The SD gives the order to the FMBOS to effect payment to HSVP swift message MT 103. The FMBOS must carry out the Order not later than 11:00 a.m. If the Order cannot be realised or if there is a possibility that it may not be realised until 11:00 a.m., the FMBOS is obliged to carry out the direct transfer until a.m. (Order HSVP/DT). The order for payment to customers contains: Customer list and tax payer number, Amount, Number of current/giro-account to which payment is effected, Reference number. The SD submits the documentation necessary for input and change of data in VK base of the Accounting Department: Form 2-SB and Form 8-SB. Str 3 / 16

4 Financial Markets Back Office Section is responsible for accounting records of all financial changes initiated in the SD pursuant to the mentioned documentation submitted by an employee of the SD. The FMBOS is obliged to approve the Swift payments from the CDCC through HSVP and incoming payment messages MT xx on the same day in favour of account for specific purposes of the SD not later than 13:30 in order to carry out payments to end users. Accounting Department is responsible for input and change of register data in VK base pursuant to documentation submitted by the employee of the SD. In case brokerage services are requested by legal entities who are not clients of the Credit Institution they will be advised to open the account with OTP banka and instructed to contact the Corporate Banking Division/MSE segment of the Retail Banking Division where, for the purpose of account opening or only for FATCA 1 purposes, they are to fill in the documentation necessary for opening of the corporate customer account and for establishing the FATCA customer status. If the customer contacts a branch other than the head office of the Credit Institution, the data gathering and the recording of the documentation is carried out by the employees of the Corporate Banking Division/MSE segment of the Retail Banking Division in the relevant branch. In case brokerage service are requested by a natural person who is not a client of the Credit Institution, he/she will be advised to open the account with OTP banka, and should he/she refuse to accept the suggestion, he/she will be offered to fill in the documentation used by the Retail Banking Division for opening of a customer account and for establishing the FATCA customer status along with the existing documentation prescribed by the Capital Markets Act and Ordinances of the Regulatory Body. The completed Questionnaires for opening of a customer account used by the Retail Banking Division and the Questionnaire for establishing the FATCA customer status are delivered on the same day to the employee of the Retail Banking Division authorised for recording of customers in the IT system by the employee of the Securities Department. If the customer contacts a branch other than the head office of the Credit Institution, the data gathering and the recording of the documentation is carried out by the employees of the Retail Banking Division in the relevant branch. 1 FATCA (Foreign Account Tax Compliance Act) is a US law on fulfilment of tax liabilities relating to the accounts held in foreign financial institutions for the purpose of preventing tax evasion by US taxpayers through use of accounts in foreign financial institutions. The Croatian Government entered into an agreement to facilitate the implementation of FATCA with the US Government further to which they will exchange information with the US tax administration (IRS-Internal Revenue Service) and deliver information on US taxpayers who hold accounts and financial assets in foreign financial institutions. This act is available on Str 4 / 16

5 In case brokerage services are requested by a natural person who is not a client of the Credit Institution and for whom the due diligence is to be conducted (data collected through the questionnaire further to the regulations on the prevention of money laundering and terrorism financing need to be updated), the employee of the Securities Department will check with the Retail Banking Division whether the FATCA status has been established for the client. If the FATCA status has not been determined for the client, he/she will be instructed to go to the branch where he/she should fill in the documentation required for establishing the relevant status. If the client contacts a branch other than the head office of the Credit Institution, the employees of the Retail Banking Division in the relevant branch shall gather and record data for the establishment of the FATCA status. For FATCA purposes, MSE customers with one owner (small businesses, independent professionals etc. with only one owner) are handled as natural persons in the Retail Banking Division. 4. PROCEDURE FOR PURCHASE OF FINANCIAL INSTRUMENTS The procedure for purchase of financial instruments is the following: Financial instruments may be purchased by domestic and foreign natural persons and legal entities. In order to buy a financial instrument, domestic and foreign natural persons and legal entities must open an investor s account with the CDCC. If they do not hold an account with the CDCC, before initiating any activities the customer s identity must be proved and the process of opening of account may begin. If the Customer (domestic and foreign natural persons and legal entities) wishes to purchase financial instruments, he/she shall familiarise themselves with the General Terms and Conditions, policies, bylaws, the Price list, available at our web site and on the premises of the SD, whereas these documents shall typically be displayed on a visible and accessible place. When the Customer holds an investor s account with the CDCC and is carrying out the order in the Credit Institution for the first time, he/she must prove his/her identity: By presenting ID card, if a domestic natural person, By presenting the passport, if a foreign natural person or by presenting the ID if the individual is from the EU, By presenting the copy of the decision of a commercial court on registration in the court registry, copy of Notification of classification of companies according to line of business, copy of the signature card and identification card of the authorised person, if a domestic legal entity. Str 5 / 16

6 By presenting the copy of the decision of a commercial court on registration, and the original translation by a court interpreter into Croatian, copy of the agreement on opening of non-resident account, copy of the signature specimen card and personal identification document (passport or by checking the ID if the individual is from the EU,) of the authorised person, if a foreign legal entity. Before giving the first Order to purchase financial instruments, the Principal and the Credit Institution (agent) shall enter into a Brokerage Services Agreement, defining the classification of the Customer in accordance with the Capital Market Act and the Ordinance on Client Classification of the Croatian Financial Services Supervisory Agency and the Procedure for customer classification into small and professional investors (internal document of the SD). After identification, the Customer gives the order that will be entered into the Order book. The following must be filled in: Information about the Principal, Number of his/her account as investor, Number of current/giro-account and the Credit Institution that holds the account, Type of financial instruments to be bought, full name and ticker (abbreviated name of the financial instrument/s), Number of pieces to be bought and the highest price at which the Principal wishes to buy the financial instruments. Financial instruments can be bought at a lower unit price than the price stated in the order. The first Order is given by the Principal in writing and signed personally or by the Principal s proxy, representative or custodian by presenting the appropriate documentation or by the authorised person of the SD. When the customer is located in a remote part of the Credit Institution or its outlets, he/she is instructed to go to the nearest branch office of the Credit Institution to make contact with the authorised employee of the SD and arrange conditions of the financial instruments purchase. Once the conditions have been agreed, the SD sends by fax the signed order to that remote part of the organisation. The order is signed by the customer as the Principal in the presence of a Credit Institution s employee. The employee signs and stamps the order on the bottom of the page (only when giving the first order) thus verifying the identity of the Principal. Such signed order is returned by fax to the SD to be executed. When the customer is in a place where we don t have our branch office, he/she is obliged to submit by fax the copy of identification card and current account card only when giving the order for the first time. Based on such documents, the customer is checked by the CDCC in order to verify whether he/she holds an account with the CDCC. If there is an Str 6 / 16

7 opened account, the order will be prepared, sent to the customer by fax to be signed, and submitted upon receipt on a regulated market and other trading venues. Until the moment of execution of the purchase order, the Principal is entitled and may cancel the order and make modifications as regards the quantity or price. When giving the first Order, the Principal will be offered the possibility of using other communication channels (phone, mail, Internet) for giving future orders. If the Principal decides on such an option, the authorised employee of the SD will assign him/her PIN number (exclusively to the holder of the investor account). PIN is created by the authorised employee of the SD and consists of 7 alphanumeric signs (three numeric, one letter, three numeric). It is stored in electric form in the SD and is made available only to authorised employees of the SD. Its purpose is to identify the customer when giving orders by phone. If the customer requests a new PIN, the authorised employee of the SD will identify the customer, cancel the previous PIN and assign him/her a new PIN. When the Customer gives the Order by phone, the system (answering machine) informs him/her that the conversation is being recorded. If the authorised employee of the SD does not know the customer personally, the customer shall prove his/her identity by PIN and give the Order for purchase (name of the financial instrument to be bought - ticker, quantity and maximal purchase price). Phone conversations are recorded in the IT Department and appropriately stored. The head of the Financial Market Division and the director of the Securities Department are authorised at any time to listen to the recordings for internal and control purposes as well as audits, as are all other persons authorised or empowered for this purpose by the Management Board of the Credit Institution. If the customer has registered financial instruments with the Credit Institution, the market value of which exceeds the market value of the order for purchase of financial instruments, the payment for bought financial instruments is carried out after the effected order or after the delivered calculation at request of the authorised employee of the SD. When the customer gives the order for the first time and doesn t have the registered financial instruments with the Credit Institution or the market value of the registered financial instruments is lower than the market value of financial instruments to be bought, the customer shall pay the coverage for the purchase of financial instruments plus the related commission on special account with the Credit institution No HR code HR69 and reference number OIB, after which the order is submitted at the stock exchange or another regulated market. For each order for purchase of financial instruments exceeding HRK 1,000, (HRK one million), the customer shall make a deposit on the specific separate account account for Str 7 / 16

8 purchase of financial instruments, on the day of giving the order for the purchase, whereby the deposit amount must at least equal the amount stated in the order plus the related costs- the commission. After the order is effected, the bought financial instruments are allocated i.e. posted in favour of the account of the Principal and the calculation is performed. The calculation is submitted to the Principal, who is obliged to effect the payment under calculation at the request of the authorised employee of the SD within 2 business days from the day of transactions, if the customer failed to perform the payment before opening the order. The Principal is not obliged to effect the payment, if there is the coverage for the executed order on the account of the Principal investor in the Credit Institution or if he/she had the order for sale, so offsetting is done, whereby the sale amount exceeds the amount of obligation for coverage of the order. 5. PROCEDURE FOR SALE OF FINANCIAL INSTRUMENTS The procedure for sale of financial instruments is the following: The owners of financial instruments may be domestic and foreign natural persons and legal entities. If a domestic or foreign natural person or legal entity wants to sell a financial instrument, such person s identity must be proved: The identity of a domestic natural person is proved by checking his/her ID card, The identity of a foreign natural person is proved by checking his/her passport or by checking the ID if the individual is from the EU, The identity of a domestic legal entity is proved by showing the copy of the decision of the commercial court on registration in the court registry, copy of Notification of classification of companies according to line of business, copy of the signature card and identification card of the authorised person acting as Principal on behalf of the domestic legal entity, The identity of a foreign legal entity is proved by presenting the copy of the decision of the commercial court, the original translation by a court interpreter into Croatian, copy of the signature specimen form and personal identification document (passport or by checking the ID if the individual is from the EU,) of the Principal. Apart from that, the foreign legal entity is obliged to give evidence on open non-resident account, when giving the order. If the Customer wishes to sell financial instrument/ instruments, he/she shall be familiarised with the General Terms and Conditions, policies, bylaws, instructions, the Price list available at our web site and by displaying such documents, which typically shall be made available on a visible and accessible place, on the premises of the SD. The customer must Str 8 / 16

9 be informed about current demand and offer prices of the financial instruments to be sold. The final lowest unit price, at which the financial instruments can be sold, will be set by the customer. Before giving the first Order to sell financial instruments, the Principal and the Credit Institution (agent) shall enter into a Brokerage Services Agreement, defining the classification of the Customer in accordance with the Capital Market Act, the Ordinance on Client Classification of the Croatian Financial Services Supervisory Agency and the Procedure for customer classification into small and professional investors (internal document of the SD). The financial instruments to be sold by the customer must be registered in the ownership position of the Credit Institution. If the financial instruments are not registered in the ownership position of the Credit Institution, the employee of the SD sends to the CDCC the Request for change of registration of the ownership position via . The Request must contain the number of the investor, the financial instrument and the amount of the securities. By archiving the mentioned data, the number of the Request is obtained and given to the customer. Then the customer should dial the number 01/ of the CDCC and confirm the Request by PIN, following the instructions of the answering machine. In so doing, the Customer gave the order to the CDCC to register the financial instruments into the ownership position of the Credit Institution. After having received the confirmation of the Request for registration of financial instruments into the ownership position of the Credit Institution by , the Order for sale is printed, into which the following information is included: Information about the Principal, Number of his/her account as investor, Number of current/giro-account and the Credit Institution that holds the account, Type of the financial instrument to be sold, full name of the financial instrument and ticker (abbreviated name of the financial instrument), Number of pieces to be sold and the lowest price at which the Principal wishes to sell the financial instrument. The financial instrument can be sold at higher unit price than the price in the order. The Order shall have its ordinal number, date and time of entry in the Order book. The first Order for sale is given by the Principal in writing and signed personally or by the Principal s proxy, representative or custodian by showing the appropriate documentation or by the authorised person of the SD. When the customer is located in a remote part of the Credit Institution or its outlets, once the conditions for the sale have been agreed with the authorised employee of the SD, the employee sends by fax the signed order to that remote Str 9 / 16

10 part of the organisation. The order is signed by the customer as the Principal in the presence of a Credit Institution s employee. The employee signs and stamps the order on the bottom of the page (only when giving the first order) thus verifying the identity of the Customer. Such signed order is returned by fax to the SD to be executed. When the customer is in a place where we don t have our branch office, he/she is obliged to submit by fax the copy of the identification card and the current account card only when giving the order for the first time. Based on such documents, the customer is checked by comparison of his/her information stated on the ID card and the information in the database of the CDCC. Once the customer has been identified, the order is prepared, sent to the customer to be signed by fax, and submitted upon receipt on a regulated market i.e. other trading venues. When giving the first Order, the Principal will be offered the possibility of using other communication channels (phone, mail, Internet) for giving future orders. If the Principal decides on such possibility, the authorised employee of the SD will assign him/her PIN (exclusively to the holder of the investor account). PIN is created by the authorised employee of the SD and consists of 7 alphanumeric signs (three numeric, one letter, three numeric). It is stored in electric form in the SD and is available only to authorised employees in the SD. Its purpose is to identify the customer when giving orders by phone. If the customer requests a new PIN, the authorised employee of the SD will identify the customer, cancel the previous PIN and assign him/her a new PIN. When the Customer gives the Order by phone, the system (answering machine) informs him/her that the conversation is being recorded. If the authorised employee of the SD does not know the customer personally, the customer shall prove his/her identity by PIN and give the Order for purchase (name of the financial instrument to be sold - ticker, quantity and maximal sale price). Phone conversations are recorded in the IT Department and appropriately stored. The head of the Financial Market Division and the director of the Securities Department are authorised at any time to listen to the recordings for internal and control purposes as well as audits, as are all other persons authorised or empowered for this purpose by the Management Board of the Credit Institution. Until the moment of execution of the sale order, the Principal is entitled and may cancel the order and make modifications in quantity or price. After the order is realised, the sold financial instruments are allocated i.e. posted by debiting the Principal s account. The calculation of sale is done and submitted to the Principal. Str 10 / 16

11 The payment of cash funds is carried out on the second day from the realisation of the transaction, on the Principal s account. If the Principal also placed an Order for purchase of financial instruments that was realised on the day of the sale, the offsetting must be done and potential difference must be paid to the Customer. The Customer can also give an order that the funds from the sale of the financial instruments be kept on his/her investor s account as coverage for opened orders to purchase financial instruments or for orders the opening of which is planned. If the order is not realised for any reason and the customer wants his financial instruments, which are registered in the ownership position of the Credit Institution, to be returned to the free position, the SD sends to the CDCC via the Request for transfer of financial instruments to the unregistered- free position. 6. BOOK RECORDS 6.1. Documentation necessary for entry The basis for preparation of documentation necessary for posting is the Scheme of entry of purchase and sale of securities, which constitutes an integral part hereof. On the next business day after realising the transactions, the SD shall deliver to the FMBOS the Conditions for purchase of financial instruments on the Form 1a and the Conditions for sale of financial instruments on the Form 3. The following information shall be filled in: Name of purchaser/seller, tax payer number Amount of purchase/sale of financial instruments, Type of product (summarised description of the transaction). The SD shall submit the documentation necessary to enter and change register data in VK base to the Accounting Department on the following forms: Form 2-SB and Form 8-SB Register data are entered into the central IT system - URBIS. Opening and change of register data is carried out in accordance with the Instruction on the manner of keeping register data and address details of customers on forms, which are an integral part of that Instruction. Str 11 / 16

12 When buying/selling financial instruments, we use the following accounts and General Ledger accounts necessary for posting of transactions: GENERAL LEDGER ACCOUNT Claims for the purchased securities from the transaction day 9609 until the settlement day analytics per buyer 9909 Counter-item for account 9609 Liabilities for the sold securities from the transaction day until the 9990 settlement day analytics per buyer 9690 Counter-item for account 9609 Source: Posting scheme of brokerage transactions in the mandate operations base as of 13/06/2014 of the Accounting Department. The GL accounts may be broken down additionally in line with the Posting scheme of brokerage transactions in the mandate operations base. The manner of forming analytic records is described in detail in the Posting scheme of brokerage transactions. 6.2 Posting scheme Posting of the purchase of financial instruments Balance sheet of mandate operations Forms Debit balance Credit balance Conditions of posting the purchase of financial instruments (Form 1a) Calculation of purchase of financial instruments Statement of account buyer s payment for the purchase securities Statement of account payment to SKDD for the purchased securities Source: Posting scheme of brokerage transactions in the mandate operations base as of 13/06/2014 of the Accounting Department. Balance sheet of the credit institution Posting commission/fee debiting the CA Debiting Crediting Str 12 / 16

13 - commission from the purchase of fin.i / The commission is registered as income on the settlement day or based on the Calculation of purchase of financial instruments delivered by the employee in the Securities Department to the clerk in FMBOS The sale of financial instruments Balance sheet of mandate operations of the Credit institution Form Debit balance Credit balance Conditions of posting the purchase of financial instruments (form 3) Calculation of sale of fi Statement of account payment to SKDD for the purchased securities Statement of account payment to the client for the sold securities Source: Posting scheme of brokerage transactions in the mandate operations base as of 13/06/2014 of the Accounting Department. Balance sheet of the Credit Institution Posting commission/fee as income in favour of current account Debiting Crediting - Commission from sale of financial instruments / Posting commission as income is done on the day of settlement, i.e. on the basis of the Calculation of sale of financial instruments, which the employee of the SD delivers to the clerk of the FMBOS. 7. PAYMENT AND COLLECTION TOWARD CDCC AND CUSTOMERS The SD has account for specific purposes HR , which is used for collection and payment toward the CDCC and customers. The funds on account 13 are posted in a such a way that the balance and the owner are known at all times. If purchase and sale transactions are carried out on the same day, the offsetting is done in the CDCC. If the value of the purchase shown in the domestic currency exceeds the value of the sale, Str 13 / 16

14 we have an obligation to the CDCC that must be settled within two business days from the date of transaction. If the value of the sale exceeds the purchase value, the CDCC is obliged to effect payment in favour of the Credit Institution on the second business day from the date of transactions. In the event of purchase and lack of funds on the customer s account, the customer shall effect the payment. When selling financial instruments, the customer can determine that the Credit Institution credit the funds to his/her current/giro-account or to keep the funds on his/her account of the Principal. Opening of current accounts and entry of purchase and sale in the mandate operations base shall be carried out in the FMBOS. 8. GUARANTEE FUND The guarantee fund is kept with the CDCC for the purpose of providing necessary funds for ensuring settlement to members, authorised Credit Institutions and investment companies, if one of the members temporarily or permanently fails to meet the contractual obligation: transfer of financial instruments and/or payment of bought financial instruments. The guarantee fund is interest-bearing, and is kept as an interest-earning deposit. All member participants must pay the calculated amount of contribution into the guarantee fund. The lowest amount of a member s contribution to the guarantee fund is determined by the CDCC. The amount of contribution of the guarantee fund is set depending on changes in the quantity and the value of concluded deals on the market. The amount of contribution of members into the guarantee fund shall be calculated by the CDCC based on specially defined methodology. At least 10% of the total amount of calculated contribution of the member into the guarantee fund must be paid in cash on the specific account of the guarantee fund. The member can also decide to pay the entire amount of the guarantee fund in cash. If the member decides to cover a part or mostly 90% of mandatory guarantee fund with a guarantee of a Credit Institution, such a guarantee must be issued by a different Credit Institution with the clause to make payment on first demand and waving the objection. At the beginning of the current quarter, within 5 days from the expiry of the accounting period at the latest, the CDCC calculates the contributions to the guarantee fund for the previous quarter, whereas the CDCC informs members in writing about the new calculation of the guarantee fund on the 6 th day from the expiry of the accounting period, at the latest. If the CDCC establishes in the calculation for the next quarter that the calculated contribution of a Member should exceed the current contribution of a Member to the guarantee fund, the member Str 14 / 16

15 shall pay the additional amount of monetary funds within 3 business days from the receipt of a written notification of the CDCC or deliver a Credit Institution s guarantee (up to 90% of the amount at the most) to the CDCC within 10 business days. If the CDCC establishes in the calculation for the next quarter that the calculated contribution of a Member should be lower than the current contribution of a Member to the guarantee fund, the CDCC shall make a refund the overpaid monetary contribution at the written request of the member within two business days. In addition to quarterly calculation of the guarantee fund, the CDCC shall make daily calculation of the member s assumed cap of the guarantee fund. When the daily calculation for the member amounts to or exceeds 120% of their contribution to the guarantee fund, the CDCC shall request the member to effect a payment of additional contribution into the guarantee fund. The member shall pay a part of the additional contribution in cash in favour of the guarantee fund within three business days from the day he/she received the notification. The additional contribution into the guarantee fund cannot amount to less than HRK 5, If the member fails to make payment in cash within three business days or fails to submit to the CDCC an irrevocable Credit Institution s guarantee within 10 business days, the CDCC shall suspend the member. If it is established during the daily calculation that more funds are needed in the guarantee fund than it was paid in, the CDCC may retain the funds it must pay to the member. These funds are kept for the coverage of daily movements of the settlement cap and are retained until the risk is reduced within the assumed settlement limit of the calculated guarantee fund for that calculation period. The CDCC shall use the funds of the guarantee fund or the guarantee of a Credit institution as coverage settlement of Member s outstanding obligations. Overview of enclosures hereto: Scheme of entry of purchase and sale of securities prepared by the Accounting Department Form 1a - Conditions for entry of purchase of financial instruments Form 3 - Conditions for entry of sale of financial instruments Calculation of purchase and sale of financial instruments basis for closing customers accounts for purchase and sale of financial instruments and for entry of commission on the balance sheet of the Credit Institution Order for payment Form 2-SB Form 8-SB List of products types Amendments to the applicable regulations Str 15 / 16

16 In the event of amendments to the regulations further to which this Procedure has been adopted, the Credit Institution shall make amendments hereto. In case the provisions herein collide with the applicable regulations (statutory and secondary), such regulations shall directly apply until the relevant amendments have been made. The Operating Procedure shall enter into force on 06 th Procedure adopted in Jun 2014., shall cease to have effect. October whereas the Operating Done in Zadar, 06 th October Str 16 / 16