Instruction No. 19/2019 of November 6 on Foreign Currency Exchange Policy – Purchase and Sale Auctions – Organization and Operating Procedures

CONTINUED INSTRUCTION NO. 19/2019 Page 1 of 5 INSTRUCTION NO. 19/2019 of November 6 SUBJECT: FOREIGN CURRENCY EXCHANGE POLICY

• Foreign Currency Purchase and Sale Auctions
• Organization and Operating Procedures Whereas it is necessary to adjust the organization and operating procedures for foreign currency purchase and sale auctions conducted by the Banco Nacional de Angola; In exercise of the powers conferred upon me by the combined provisions of Article 3.º of Law No. 16/10, dated July 15 - Law of the Banco Nacional de Angola, and Article 70.º of Law No. 12/15, dated June 17 - Framework Law for Banking Financial Institutions, and in exercise of the power conferred upon me by Article 51.º of Law No. 16/10, dated July 15 - Law of the Banco Nacional de Angola. I DETERMINE:

1. Object and Scope This Instruction establishes the rules and procedures that Banking Financial Institutions must observe in foreign currency purchase and sale auction sessions conducted by the Banco Nacional de Angola.
2. Method of Conducting Foreign Currency Sale or Purchase 2.1 The sale or purchase of foreign currency by the Banco Nacional de Angola (Banco Nacional de Angola) is conducted through auctions carried out electronically, in the Foreign Exchange Market Management System – SGMC, in accordance with the conditions and procedures referred to in this Instruction. 2.2 The Banco Nacional de Angola and Banking Financial Institutions authorized by it participate in the auctions. 2.3 The frequency of the auctions is determined by the Banco Nacional de Angola. CONTINUED INSTRUCTION NO. 19/2019 Page 2 of 5
3. Access Conditions for Foreign Currency Sale Sessions of the Banco Nacional de Angola 3.1 In participating in each foreign currency auction session, Banking Financial Institutions must previously ensure compliance with the legislation and regulations applicable to banking activity, in particular regarding: a) The mandatory reserve level required in national currency; b) The foreign exchange position limit; c) Compliance with the minimum regulatory solvency ratio limit; d) The existence of internal control systems and procedures that ensure compliance with legal and regulatory provisions on foreign currency commercialization, including those related to anti-money laundering and counter-terrorist financing. 3.2 Banking Financial Institutions that fail to meet the above requirements or present significant deficiencies in their internal control systems shall be sanctioned under current regulations, including the suspension of participation in future auctions.
4. Procedures for Conducting Auctions 4.1 Foreign Currency SPOT Sale Auctions 4.1.1 The amount available for each auction and the denomination of foreign currency are communicated by the Banco Nacional de Angola, through the SGMC or other available and adequate communication means for this purpose. 4.1.2 Banking Financial Institutions must submit their proposals in the SGMC within a maximum period of 30 (thirty) minutes after the auction opens, indicating the amounts and respective exchange rates. 4.1.3 Each Banking Financial Institution may submit up to 4 (four) proposals with different exchange rates, provided that the value of each proposal is not less than USD 1,000,000.00 (One Million United States Dollars) or the equivalent in another foreign currency, in accordance with the currency announced for the session. 4.2 Purchase Auctions 4.2.1 The amount and denomination of foreign currency that the Banco Nacional de Angola intends to purchase through an auction are communicated via the SGMC or other available and adequate communication means for this purpose. 4.2.2 Banking Financial Institutions must submit their foreign currency sale proposals in the SGMC, indicating the amount and respective exchange rate.
5. Criteria for Selecting Submitted Proposals 5.1. The proposals from Banking Financial Institutions for the purchase of foreign currency from the Banco Nacional de Angola are selected in descending order of exchange rate, starting with the proposal offering the highest exchange rate, until the total available amount is exhausted. 5.2. The proposals for selling foreign currency to the Banco Nacional de Angola are selected in ascending order, starting with the proposal offering the lowest exchange rate, until the total amount available from Banking Financial Institutions or sought by the Banco Nacional de Angola is exhausted. 5.3. Whenever proposals with equal exchange rates are submitted, and it is not possible to satisfy the total requests, the available amount shall be apportioned proportionally to the amount of the submitted proposal. 5.4. The total amount of proposals submitted by each participating Banking Financial Institution in the auction session shall be limited to 25% of the offer placed by the Banco Nacional de Angola. 5.5. The Banco Nacional de Angola reserves the right to exclude proposals deemed speculative or outside the context of market equilibrium, stability, and dynamism. 5.6. After the closure of the proposal submission period, the Banco Nacional de Angola communicates the auction result through the SGMC and/or other available and adequate communication means for this purpose.
6. Procedures for Settlement of Operations and Restrictions 6.1 The settlement of foreign currency purchase and sale operations is conducted up to D+0, unless otherwise indicated by the Banco Nacional de Angola. 6.2 Access to rediscount operations for the purpose of settling foreign currency acquired in auction sessions is not permitted. 6.3 Whenever there is an absence or insufficiency of funds to settle the operations provided for in this Instruction, the following sanctions are applied concurrently to the non-compliant Banking Financial Institution: a) Cancellation of the purchased value without coverage; b) Monetary fine; c) Interdiction from participating in the 3 (Three) subsequent auction sessions.
7. Other Modalities and Purposes of Sale 7.1 The Banco Nacional de Angola may conduct extraordinary foreign currency purchase and sale sessions of an intervention nature, defining specific participation criteria. 7.2 To cover operations ordered by a sovereign body, or whenever the supply of essential goods and services is at stake, the BNA may adopt alternative foreign currency sale modalities.
8. Doubts and Omissions Doubts and omissions arising from the interpretation and application of this Instruction are resolved by the Banco Nacional de Angola.
9. Revocation Instruction No. 19/2018, dated December 3, is hereby revoked, along with any regulation that contradicts the provisions of this Instruction.
10. Entry into Force This Instruction enters into force from the date of its publication. PUBLISH. Luanda, November 6, 2019. THE GOVERNOR JOSÉ DE LIMA MASSANO