Instruction No. 0056/DGCC/DCH/16 Establishing a Bilateral Foreign Exchange Auction Market

[Image of the Republic of Guinea coat of arms]

Conakry, January 4, 2016

REPUBLIC OF GUINEE

CENTRAL BANK

INSTRUCTION NO. 0056/DGCC/DCH/16

ESTABLISHING A BILATERAL FOREIGN EXCHANGE AUCTION MARKET

THE GOVERNOR

Having regard to Law No. L/2000/006/AN of March 28, 2000 regulating financial relations related to transactions between the Republic of Guinea and abroad;

Having regard to Law No. 2006/010/AN of October 24, 2007 on the fight against money laundering in the Republic of Guinea;

Having regard to Law No. L/2014/016/AN of July 2, 2014 establishing the Statute of the BCRG;

Having regard to Decree No. L/2010/010/PRG/SGG of December 27, 2010 appointing the Governor of the Central Bank;

Having regard to Instruction No. 112/DGAEM/RCH/00 of September 11, 2000 establishing the regime for financial relations related to transactions between the Republic of Guinea and abroad;

Having regard to the recommendations of the IMF technical assistance mission dated December 10, 2015.

DECIDES

Article 1: Object

A bilateral foreign exchange auction market is established at the Central Bank of the Republic of Guinea (BCRG), on which foreign exchange purchase and sale operations are traded.

Article 2: Participants

The BCRG and commercial banks operating in the country are authorized to participate in bilateral foreign exchange auction operations.

Article 3: Currency of Transactions

Offers (for purchase and sale) admitted to the bilateral foreign exchange auction market are expressed exclusively in United States dollars (US$).

Article 4: Access Conditions

Banks must ensure the availability of funds (in US$ and/or GNF) in their accounts at the BCRG for the proper settlement of transactions and must have submitted their previous day's foreign exchange position status to the BCRG prudential authorities with a copy to the Foreign Exchange Department.

Article 5: Frequency of Auctions

Bilateral foreign exchange auctions will be organized on Tuesdays and Fridays according to the following schedule:

• Publication of call for bids: by 4:00 PM on day J-1 at the latest
• Transmission of submissions: by 8:30 AM on day J at the latest
• Tallying of submissions: from 8:30 AM on day J
• Publication of results: by 9:30 AM on day J at the latest

To facilitate market operations, the BCRG may add ad-hoc bilateral auctions to the regular schedule.

Article 6: Publication of Call for Bids (Annex I):

The BCRG communicates, on the business day preceding the intended operation date, a public notice via press and any other means (letter, email) to all eligible participants for bilateral foreign exchange auction sessions, the characteristics of this operation.

The announcement message provides the following information:

• auction number,

• date and time of the auction,

• type of call for bids: bilateral with variable rates,

• deadline for submission of offers and the value date of the operation,

• maximum number of offers per participant,

• minimum amount per offer and multiples thereof,

• exchange rate format.

The call for bids as well as the auction results are announced via press.

The BCRG reserves the right to announce other information.

Article 7: Transmission of Offers (Annex II)

Banks' purchase and/or sale submissions must be sent to the General Credit and Foreign Exchange Department (Foreign Exchange Department) no later than the date and time in Conakry indicated on the session announcement notice.

After the submission deadline, no submission can be withdrawn or modified.

Offers may also be submitted by other means, duly signed letter or email (to be confirmed by a duly signed letter within 24 hours). Each participant indicates the amount it wishes to buy or sell as well as the proposed exchange rate for each offer.

The offers are received and centralized by the Foreign Exchange Department.

Article 8: Auction Process and Method

The Foreign Exchange Department's Market Service tallies the offers, ensuring compliance of submissions with this instruction. It determines the marginal auction rate according to the multiple-rate competitive auction method (each accepted offer is executed at the proposed rate).

Article 9: Publication of Results (Annex III)

Immediately after the auction session, results are notified to participating banks, each concerning itself. The aggregated session results will be published simultaneously on the BCRG website.

A confirmation message for foreign exchange purchase and/or sale is sent to each selected bank.

Article 10: Settlement of Transactions

The BCRG acts as counterparty to all transactions concluded during the auction session.

Upon receipt of results, banks send duly signed confirmation forms (purchase and/or sale) to the BCRG so that entries are settled by the Treasury Service of the Foreign Exchange Department.

Article 11: Sanctions

A bank that fails to honor its obligations arising from the bilateral foreign exchange auction market incurs sanctions as defined in regulatory texts, supplemented by a suspension of 1 to 4 sessions.

Article 12: Reservation of Rights

The BCRG reserves the right to cancel a session or reject frivolous offers.

Article 13: Market Turnover Clause

In exceptional cases, the BCRG may pre-announce that the auction will be a unilateral auction where the BCRG sells US$. Under these circumstances, a single participant may not obtain more than 20 percent of the amount sold by the BCRG.

Article 14: Final Provisions

This instruction takes effect from its signature date and repeals and replaces all prior contrary provisions.

[Stamp and signature of the Central Bank of the Republic of Guinea]

Louncény NABE

BANQUE CENTRALE DE LA RÉPUBLIQUE DE GUINÉE.

Annex I: Bilateral Foreign Exchange Auction Session Announcement

In accordance with INSTRUCTION NO. 0056/16 on the bilateral foreign exchange auction market, the BCRG announces the following auction for simultaneous US$ purchases and sales on ..., 2015.

Auction Number	YYYYMMDD#
Minimum volume per purchase or sale offer	US$ 50,000
Increment subject to minimum respect	US$ 5,000
Deadline for submission of offers	dd/mm/yyyy hh: 00 at the latest
Settlement date (value date)	dd/mm/yyyy (submission date +X)
Maximum number of sale offers per participant	5
Maximum number of purchase offers per participant	5
Exchange rate format	Number of GNF per US$, whole value

The specific conditions are as follows:

Form: Offers must be submitted using the format provided by the BCRG. An incomplete, incorrect, or improperly formatted offer may be rejected at the BCRG's discretion.

Place: Offers must be presented directly to the Foreign Exchange Department of the BCRG.

Price (US$/GNF): For each offer, must be rounded to 1 GNF.

Annex II: FORM FOR SUBMITTING OFFERS (purchase/sale of US$ against GNF)

Bank	Full Name
		Amount (US$)	Price (1 US$= X GNF)
Purchase of US Dollars (Commercial bank buys US$ and BCRG sells US$)	1.<br>2.<br>3.<br>4.<br>5.	1.<br>2.<br>3.<br>4.<br>5.
Sale of US Dollars (Commercial bank sells US$ and BCRG buys US$)	1.<br>2.<br>3.<br>4.<br>5.	1.<br>2.<br>3.<br>4.<br>5.
Submission Date
Signature of authorized persons

Annex III: Publication of Bilateral Auction Results (Number)

US$ Purchase Proposals (Commercial bank buys US$)

	Received	Accepted
Number
Volume (US$ amount)
Rate range (US$/GNF)
Weighted average (US$/GNF)
Purchase allocation at marginal price (%)

US$ Sale Proposals (Commercial bank sells US$)

	Received	Accepted
Number
Volume (US$ amount)
Rate range (US$/GNF)
Weighted average (US$/GNF)
Sale allocation at marginal price (%)

The marginal auction rate is: US$/GNF XXXX.

The BCRG purchased XXX US$ in the auction.

The BCRG sold XXX US$ in the auction.

Signature ____________________ Date: ____________