BANK OF ANGOLA

NOTICE NO. 13/2011

Of 24 October

GOVERNOR'S OFFICE

SUBJECT: MONETARY POLICY

• CODE OF CONDUCT FOR MARKETS

Considering that the Bank of Angola aims to carry out activities intended to satisfy collective market needs, placed at its service by law;

Attending to the fact that in the exercise of the aforementioned activities, a reference behavior is required from all participants;

Considering the need to define a code of conduct for interbank markets;

In the exercise of the competence attributed by Article 51 of Law No. 16/10, of 15 July - Law of the Bank of Angola;

I DETERMINE:

Article 1.

(Institution of the Code of Conduct)

The Code of Conduct for the Monetary and Foreign Exchange Interbank Markets is hereby established, hereinafter referred to as the Code of Conduct, and its regulation is approved.

Article 2.

(Object)

The Code of Conduct aims to regulate:

a) The relationships between participants in interbank markets, in accordance with principles of ethics and professional deontology, in the exercise of their functions or outside them.

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GOVERNOR'S OFFICE

b) The operational practices of the markets, contributing to raising the professionalism standards of those who operate in them and the efficiency of the markets themselves.

Article 3.

(Scope)

This Code of Conduct is applicable to all managers, operators, and other participants in financial transactions carried out by financial institutions participating in the monetary and foreign exchange markets.

Article 4.

(Obligation)

Subscription to the Adhesion Term, annexed to the Code of Conduct, constitutes a condition for participation in interbank markets.

Article 5.

(Internal Disclosure and Application)

The Code of Conduct must be mandatorily disclosed internally by financial institutions participating in the monetary and foreign exchange markets and applied by their trading rooms.

Article 6.

(Validity)

This Notice enters into force on November 1, 2011.

PUBLISH

Luanda, October 24, 2011

THE GOVERNOR

JOSÉ DE LIMA MASSANO

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BANK OF ANGOLA

GOVERNOR'S OFFICE

CODE OF CONDUCT FOR INTERBANK MARKETS

This Code of Conduct for the Interbank Monetary Market (IMM) and the Interbank Foreign Exchange Market (IFEM) is hereby established, hereinafter referred to as the Code of Conduct for Interbank Markets, or simply the Code, agreed upon by the respective signatories under the following terms:

Chapter I

General Provisions

Article 1

(Objective)

1. The present Code of Conduct for interbank markets aims to regulate:

a) The relationships between participants in interbank markets and all workers who are directly or indirectly involved in the negotiation, transaction, and management of financial products, in accordance with principles of ethics and professional deontology, in the exercise of their functions or outside them.

b) The operational practices of the markets, contributing to raising the professionalism standards of those who operate in them and the efficiency of the markets themselves.

2. The adoption of this Code aims to cultivate and consolidate a sound, transparent, diligent, honest, and competent environment, capable of providing for the formation of prices and the management of market liquidity in an efficient and effective manner, as well as consolidating the climate of trust in daily relations between market operators.

Article 2

(Scope)

1. This Code of Conduct applies to all managers, operators, and other workers involved in the negotiation and execution of operations in Interbank Markets, as well as financial operations with the exterior, carried out by participating financial institutions.

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3. This Code is applicable to such markets, without prejudice to other legal or regulatory provisions, to which managers, operators, and other workers, agents, external auditors, and other persons providing services to them are obliged by virtue of the exercise of their functions.

Article 3

(Definitions)

For the purposes of this Code, the following are understood:

a) Managers: all those who, belonging to financial institutions authorized to operate in Interbank Markets, hold leadership positions in one of the areas of these markets or in both, or in financial operations with the exterior;

b) Operators: all those who, belonging to financial institutions authorized to operate in Interbank Markets, participate in these markets as dealers, back office technicians, or middle office technicians.

c) Participating Institutions: Entities that carry out operations in interbank markets.

Chapter II

(Responsibility of Participants in Operations)

Article 4

(Responsibility of Managers)

1. Managers must issue clear instructions, establishing the limits of the responsibilities of Operators.

2. The instructions referred to in the previous number must, among others, include:

a) Full names of persons authorized to carry out operations and their levels of intervention;

b) Verification or checking procedures, confirmation or approval, and settlement;

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c) Instruments and currencies to be traded;

d) Risk limits per open positions, per counterparties, and losses;

e) Establishment of internal control mechanisms to allow compliance with time limits - registration and settlement limits of operations and the functioning of interbank markets;

f) Operational limits regarding transaction counterparties, in order to guarantee their strict observance during the course of operations;

g) Procedures for continuous monitoring of liquidity to ensure the normal course of operations;

h) General procedures for product negotiation and report preparation;

i) Database on negotiations carried out with market counterparties, including amounts, terms, currency, value date, maturity date, interest rates or operation prices, as well as other information considered of a relevant nature;

j) Other relevant procedures for managing transactions.

3. Managers must also ensure that "dealers" and other operators provided for in this Code:

a) Have knowledge of the legislation applicable to the operations and transactions they carry out, as well as internal norms pertinent to their functions and governing their conduct;

b) Have knowledge of markets and awareness of their own responsibility in the exercise of their functions and of the Institutions they represent;

c) Have permission, preparation, and necessary knowledge to operate in the Angolan interbank market in order to avoid operational errors;

d) Act within high ethical and deontological standards.

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BANK OF ANGOLA

GOVERNOR'S OFFICE

Article 5

(Responsibility of Operators)

1. Operators must base their conduct on strict observance of high standards of integrity and honesty, and must, in particular, abstain from:

a) Adopting behaviors that affect the credibility of the markets, ensuring that their conduct is characterized by rigor, propriety, and absolute transparency;

b) Committing any acts that lead to a situation of unfair competition, notably by seeking to circumvent the observance of legal and regulatory provisions applicable to the activities they exercise;

c) Using procedures that may create artificial conditions in the markets, namely:

(i) Price manipulation;
(ii) Execution and subsequent cancellation of operations without technical and/or operational justification; (iii) Participation competitive of other institutions; (iv) Participation in operations that institutions do not have the conditions to close.

2. In carrying out a transaction, dealers must, in particular, ensure:

a) The identity of the institution or individual with whom they are negotiating, in order to avoid counterparty risk;

b) Total clarity and understanding regarding the object of the negotiation; the accuracy of any claims or confirmations regarding, or relevant to, a specific transaction;

c) That all essential aspects for the conclusion of a transaction are revealed to the counterparty before the business is concluded, except if such revelations contain confidential information.

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GOVERNOR'S OFFICE

Chapter III

General Conduct Rules

Article 6

(Professionalism)

Market managers and operators must, in the performance of their functions:

a) Act with competence, dedicating their effort to the tasks entrusted to them, seeking, in a continuous manner, to improve their knowledge, with a view to the constant improvement of their technical and professional capabilities, as well as the maximization of their results;

b) Use available resources effectively and resort to the most appropriate technical processes necessary to bring their activity to a successful conclusion;

c) Communicate appropriately and with the necessary promptness, all useful information, within the scope of the negotiation in which they are involved, as well as collaborate with counterparties in the spirit of developing an integrated and operational Interbank Market.

d) Employees of Participating Institutions must attend to all market participants with courtesy, promptness, and efficiency. Any doubt regarding the convenience of attending to any request must be submitted to the hierarchical superior.

e) There shall be no preferential or special treatment for any market participant; all procedures must obey the ethical and operational guidelines of the trading rooms.

f) The relationship with all market institutions, financial or otherwise, should be guided by professionalism.

g) Employees should not make statements, comments, or insinuations that could affect the image of third parties.

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Article 7

(Honesty, Integrity, and Impartiality)

Market managers and operators must:

a. Proceed with honesty, diligence, and care in the interest of the institutions they represent and their clients, and with respect for the integrity of the market;

b. Abstain from receiving or granting any form of reciprocity, gain, or personal advantage from a financial institution, broker, or client in general, leveraging their professional relationship;

c. Abstain from invoking their functions in places unrelated to the institution they represent when such invocation is contrary to the interests of the same;

d. Seek to have personal general knowledge of their counterparties, in order to allow operations to be carried out with them;

e. Abstain from treating matters related to their institutions outside the workplace, unless they are of common interest;

f. Abstain from making public statements on behalf of the institution when not authorized or qualified to do so;

g. Abstain from using the former position of Manager or Operator to conduct business;

h. Abstain from using their quality or position to obtain personal benefits and/or for their spouse or relatives up to the second degree, or in-law in the first degree.

Article 8

(Confidentiality and Loyalty)

1. Market managers and operators must show total loyalty to the institutions they represent, for the preservation and reputation of the market, obliging themselves to keep secret the facts of which they have knowledge in the exercise of their functions, under the terms established by Law and this provision.

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GOVERNOR'S OFFICE

2. Market managers and operators must not reveal or use information about facts or elements regarding operations carried out to persons outside the same, except in cases required by law or by the supervisory authority, or when the protected party consents to the revelation, or when it concerns hierarchical superiors, or persons whose revelation is strictly necessary for the execution of a given operation, and within the just limits in which such revelation is shown to be necessary.

3. No manager and/or market operator may visit the trading room of another participating institution without express authorization from the respective directorates.

4. Managers must ensure that all operators are aware of the confidentiality requirements arising from their professional activity.

5. All performance evaluations must be guided by merit, in order to provide equal access to existing professional development opportunities, according to the skills, competencies, and contributions of each professional.

Article 9

(Prohibitions)

1. Managers and Operators must not present themselves at the workplace under the influence of narcotics or any other substance that may alter their psychic state, making them vulnerable to committing errors or fraud.

2. Managers or the hierarchical superior, in the case of the latter, must take the measures deemed necessary to correct the situation referred to in the previous number.

3. Managers and Operators must not participate in games of chance or others that put the Institution they represent at risk, within or outside the Country.

4. Managers and Operators must not practice any type of discrimination based on race, sex, age, ancestry, language, political, ideological, or religious convictions, social condition, or economic situation.

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GOVERNOR'S OFFICE

Article 10

(Security of the Trading Room)

Trading rooms must be equipped with security systems that guarantee access control and other conditions necessary for their correct functioning.

Chapter IV

Business Conduct Rules

Section I

General Business Conduct Rules

Article 11

(Back Office Location and Separation of Functions)

1. Trading rooms and the Back Office must be separated and in different physical spaces.

2. Participating Institutions must equip themselves with a well-defined organizational and functional structure, with a clear separation of functions and establishment of reporting and risk management control mechanisms between the Front Office (negotiation) and the Back Office (processing and settlement of transactions), as well as between those areas and the analysis area (Middle Office), when it exists.

Article 12

(Recordings)

1. Participating Institutions must record telephone conversations, through telephone lines designated for carrying out operations between "dealers", or, in their absence or impossibility, proceed to register them by another suitable equivalent means, for the resolution of any divergences arising from negotiation between counterparties.

2. The records referred to in the previous number must be kept for a minimum period of three months, while those relating to any disputed transaction must be kept until its final solution, if the period exceeds three months.

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GOVERNOR'S OFFICE

3. Participating institutions must ensure that records are kept in strictly controlled and reserved access locations, to guarantee their conservation and integrity, through a body different from the negotiation body, thereby guaranteeing the segregation of functions.

Article 13

(Identification of Market Operators)

1. Managers of each Participating Institution must inform, through a letter addressed to the Bank of Angola Department of Asset Markets and to banking institution counterparties, the name and contact of each operator for the purposes of carrying out interbank operations.

2. Managers of each Institution must also inform any observed changes related to the aforementioned point, as soon as they become aware of them.

Article 14

(Money Laundering)

Participating Institutions must proceed to identify their clients and take adequate measures to prevent the use of financial instruments for "money laundering" purposes, observing the norms provided for in the legislation on the matter.

Article 15

(Duty to Communicate)

1. All operators assigned to the market have the obligation to communicate to their hierarchical superiors about matters related to their activities as well as about any transaction suspected of being illicit or irregular.

2. Operators will assume the responsibilities arising from the fact of not having acted with prudence, in cases where they should have made any communication under the terms of No. 1 of this article.

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BANK OF ANGOLA

GOVERNOR'S OFFICE

Article 16

(Fraud)

1. Trading room operators must observe increased vigilance, in particular, regarding telephone calls received on telephone lines distinct from those designated for carrying out operations, in order to avoid situations of fraud, in accordance with Article 7.

2. Operators must observe absolute rigor before instructing any payments in favor of third parties, observing the principles of segregation of functions.

Article 17

(Market Terminology)

1. Managers must ensure that their operators master the terminology in use in the market, in order to avoid ambiguities and lack of clarity in the conduct of transactions.

2. The designations referred to in the previous point are those contained in the Manual of Norms and Procedures of the Asset Markets Management System (MNP-SIGMA).

Section II

Special Business Conduct Rules in MNP-SIGMA

Article 18

(Foreign Exchange Market Quotations)

1. Participants in the IFEM must simultaneously disclose price quotations for purchase and sale for the currencies that the Bank of Angola defines in specific regulation.

2. Quotations may be firm or indicative.

3. In establishing the exchange rate to be applied in operations with the public, Market participants must observe the rules determined by the Bank of Angola.

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GOVERNOR'S OFFICE

4. Whenever the quotation referred to in number 1 is announced as firm, the proponent obliges themselves to practice the said quotation for the counterparty involved in the business.

Article 19

(Transaction at Non-Current Prices in the Foreign Exchange Market)

Participants in the Foreign Exchange Market must abstain from adopting practices in transactions capable of concealing loss or gain, the perpetuation of fraud, or extension of unauthorized credit.

Article 20

(Conclusion of a Transaction in the IFEM)

1. Whenever a price and any other business/transaction market conditions are agreed upon, dealers must consider themselves bound to such agreed prices, terms, or conditions.

2. If the quoted prices are qualified as indicative or subject to negotiation of business/transaction conditions, dealers must consider themselves fully bound.

3. Verbal agreements, made under the terms of the previous number, bind the parties to the specific conditions agreed upon.

4. In case of divergence between the verbal agreement and the written confirmation, what was agreed upon in writing shall prevail.

Article 21

(Payment and Settlement Instruction in the IFEM)

1. To facilitate the immediate settlement of transactions, instructions must be transmitted in the shortest possible time, and for this purpose, the use between parties of standardized payment instructions is recommended, with a view to facilitating a significant reduction in incidents and divergences emerging from erroneous fund settlement.

2. Any changes to the original transaction instructions must be immediately communicated to the counterparty by dealers, following the pattern and formality of the initial instruction.

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BANK OF ANGOLA

GOVERNOR'S OFFICE

Article 22

(Confirmation Procedures in the IFEM)

1. Confirmations must be carried out between trading rooms so that any errors in transactions are identified and promptly corrected with rigor. The creation, verification, and approval of confirmations must be carried out by different and equally accredited persons.

2. After a transaction is effected, confirmations must be sent as quickly as possible, preferably electronically, to the counterparty's "back-office" or to another indicated area.

3. All confirmations must be immediately verified upon receipt, in order to undertake the appropriate actions to rectify any difference.

4. If the counterparty's confirmation is considered incorrect, the counterparty must be informed immediately, in writing or electronically, and a new confirmation requested.

5. The format of the confirmation must contain the following information:

a) Date of operation execution; b) Transacted amount; c) Currency; d) Exchange rate of the transaction; e) Value date; f) Correspondent (SWIFT code and respective account number); g) Nature of the operation (purchase or sale); h) Other information considered important.

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GOVERNOR'S OFFICE

Section III

Special Business Conduct Rules in the IMM

Article 23

(IMM Interest Rates)

1. In defining interest rates, IMM participants must observe the rules determined by the Bank of Angola, the norms provided for in the Manual of Norms and Procedures of the Asset Markets Management System (MNP-SIGMA), as well as good practices in matters of markets and act with competence and responsibility, effectively using the knowledge they possess on various aspects that contribute to the formation of their expectations.

2. Operators must, without prejudice to the aforementioned in the previous number, ensure that such rates reflect the real situation of their liquidity, as well as the general trading conditions underlying the operation.

3. Operators must abstain from collusion practices or other types of coordination prejudicial to good market practices in the process of determining interest rates.

Article 24

(Conclusion of an IMM Business)

1. The operation is considered "closed" only when the parties agree on the essential conditions of the business, namely, interest rate, amount, term, and modality.

2. Considered as "agreement" of the essential conditions of the business is the definitive acceptance of the terms of the offer of one of the contracting parties and their respective instructions for the same, as provided for in the MNP-SIGMA, through the respective messages of the operations.

Article 25

(Confirmation Procedures in the IMM)

1. After negotiation, it is recommended that operators rigorously confirm, in writing or electronically, the conditions of the business.

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2. The other procedures regarding confirmations provided for in the Manual of Norms and Procedures of the Asset Markets Management System (MNP-SIGMA) must also be applied.

3. During the period in which businesses take place, Participating Institutions must maintain on duty at their respective workplaces operators with indispensable profiles to proceed, in case of need, to