Instruction No. 03/CRCT/2010 on Accounting - Securities Accounts of Account Keepers

BANQUE DES ETATS DE L'AFRIQUE CENTRALE

Direction Générale des Etudes, Finances et Relations Internationales

Direction du Crédit, des Marchés de Capitaux et du Contrôle Bancaire

Cellule de Règlement et de Conservation des Titres

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INSTRUCTION No. 03/CRCT/2010 ON ACCOUNTING - SECURITIES ACCOUNTS OF ACCOUNT KEEPERS

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TABLE OF CONTENTS

I – GENERAL PRINCIPLES ………………………………………… 4
II – SECURITIES ACCOUNTING PLAN FOR ACCOUNT KEEPERS ………… 6
II.1 – SECURITIES ACCOUNT IDENTIFIER ………………………… 6
II.2 – CLASSIFICATION OF ACCOUNTS ……………………………… 6
II.3 – CONTENT AND OPERATION OF ACCOUNTS ……………… 7
II.4 – ACCOUNTING DOCUMENTS ISSUED BY THE SVT ……………… 18
III – ENTRY INTO FORCE ………………………………………… 19

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The Board of Supervisors,

Having regard to Regulation No. 03/08/CEMAC/UMAC/CM of 6 October 2008 on Free-Subscription Public Securities issued by the member States of the Economic and Monetary Community of Central Africa (CEMAC);

Having regard to the General Regulation on the organization and functioning of the Securities Settlement and Custody Cell (CRCT) of 23 December 2010;

Considering the Convention on the participation of Treasury Securities Specialists (SVT) in Treasury securities auctions organized by the Bank of Central African States (BEAC);

Considering the obligation to register securities in accounts prescribed by Regulation No. 03/08/CEMAC/UMAC/CM of 6 October 2008 cited above;

Considering the need to define and clarify the accounting rules for securities by account keepers;

Meeting in its inaugural session on 23 December 2010, in Yaoundé, Republic of Cameroon;

Has adopted the following Instruction:

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I – GENERAL PRINCIPLES

This Instruction establishes the general principles of securities accounting and the mandatory minimum accounting nomenclature for all SVT account keepers – securities, in accordance with the provisions of Regulation 03/08/CEMAC/UMAC/CM on Free-Subscription Public Securities issued by CEMAC member States and the accounting systems specific to securities account keepers.

Securities accounting is a double-entry physical accounting system, maintained value by value and per client. It enables:

• to determine at any time the status of securities accounts held by the account keeper for proprietary account or for third-party account;
• to ensure daily that the total of securities accounts for proprietary account and for third-party account correspond exactly to the total of its holdings at the CRCT, subject to reconciliation entries.

Its application does not exempt account keepers from complying with the provisions issued by the Central African Banking Commission (COBAC), notably the Accounting Plan for Credit Institutions, and subsequent Regulations and Instructions.

This Instruction applies to the BEAC, regarding the securities it holds for proprietary account, within the framework of monetary policy operations.

Securities accounting, as an element of the account keepers' information system, is a physical accounting system distinct from their corporate accounting. Each account keeper shall detail its securities accounting to the level of detail required by its accounting organization, provided it is described in an accounting plan accompanied by a Procedures Manual. This securities accounting must present its own balances in terms of journals and trial balances. To this end, it includes a minimum chart of accounts, an operations journal, a general ledger, and a balance sheet.

In application of Article 3 of Regulation No. 03/08/CEMAC/UMAC/CM, free-subscription public securities are dematerialized upon creation and must be registered in an account with an SVT. Ownership of these securities results from their registration in an account with an SVT, account keeper (Art. 20 of the CEMAC Regulation).

Under Regulation No. 03/08/CEMAC/UMAC/CM on Free-Subscription Public Securities issued by CEMAC member States, account keepers must apply the following accounting principles:

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1. The obligation to register securities in accounts

SVTs must mandatory register acquired securities to the credit of a securities account.

2. Segregation (distinction) between proprietary securities and client securities

A distinction must be made between securities belonging to SVTs and those held for clients, in accordance with Article 19 of Regulation No. 03/08/CEMAC/UMAC/CM.

Regarding client securities, SVTs must distinguish securities held for the account of each of their clients, non-SVT credit institutions.

3. Identification of the account holder

SVTs are required to open a securities account for each client for whom they hold securities. For each client, as many accounts are opened as there are security lines held.

4. Exclusive transfer of securities by account-to-account transfer

Registered securities are transferred solely by account-to-account transfer, upon signed instructions from the account holder or their duly authorized representative (Art. 24 of the CEMAC Regulation).

5. Registration of pledged or mortgaged securities on a specific account

The account keeper must transfer to a special account opened in the holder's name the pledged securities and immediately inform the CRCT (Art. 28 of the CEMAC Regulation).

Securities pledged in accordance with the CEMAC Regulation must be recorded in a specific account opened in the client's name.

6. Specific provisions for repo operations

Securities admitted to repo are transferred in full ownership during the repo period. Only securities owned outright by credit institutions or over which they have free disposal may be used for BEAC refinancing operations (Art. 31 of Regulation No. 03/08/CEMAC/UMAC/CM).

Securities that do not give rise to a repayment during the repo period are admitted to repo (Art. 31 of R03/08/CEMAC/UMAC/CM).

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During the repo period, the securities concerned cease to be the property of the selling SVT. In its accounting, its CRCT holdings account and the securities account are modified accordingly.

The CRCT transfers ownership of the securities to the buyer on the settlement/delivery date.

II – SECURITIES ACCOUNTING PLAN FOR ACCOUNT KEEPERS

The securities accounting plan for SVT account keepers enables the processing of all operations and transactions concerning securities (Treasury Bills and Treasury Bonds assimilated) issued by member States.

II.1 – SECURITIES ACCOUNT IDENTIFIER

The securities account is identified by an account number indicating the nature and status of the securities.

II.2 – CLASSIFICATION OF ACCOUNTS

Accounts are divided into four (4) classes of accounts to process all transactions and operations concerning free-subscription public securities.

Class 1 CRCT Holdings Accounts

• 11 Treasury Bills
• 12 Treasury Bonds

Class 2 Proprietary Securities Accounts

• 21 Ordinary securities
• 22 Securities in ordinary repo
• 23 Pledged securities
• 24 Mortgaged securities
• 25 Securities encumbered with other charges
• 26 Securities to be sold
• 29 Matured securities unredeemed

Class 3 Third-Party Securities Accounts

• 31 Ordinary securities
• 32 Securities in ordinary repo
• 33 Pledged securities
• 34 Mortgaged securities
• 35 Securities encumbered with other charges
• 36 Securities to be sold
• 37 Securities in free disposal
• 39 Matured securities unredeemed

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For securities accounts belonging to non-SVT credit institutions, the identifiers of credit institutions provided in the RTGS are associated with the root codes listed above.

The CRCT is required to communicate these identifiers to SVT account keepers.

Class 4 Reconciliation Accounts

• 41 Securities to be received
• 42 Securities to be delivered – sale
• 43 Securities to be delivered – repo
• 44 Securities to be delivered – exchange
• 45 Securities to be delivered – loan
• 46 Transferred securities
• 47 Seized securities
• 48 Other reconciliation accounts

II.3 – CONTENT AND OPERATION OF ACCOUNTS

Class 1 CRCT Holdings Accounts

Content
CRCT holdings accounts, naturally debit, record in accordance with auction minutes and operation confirmations (purchase/sale, loan/borrowing, exchange, or repo of securities), all securities held by SVTs with the CRCT.

The balance of the account, debit or zero, for each security line corresponds to the balance of the affiliated account opened in the CRCT's books.

Subdivisions
Class 1 is subdivided into two-character accounts to distinguish the different acquired values and their maturity.

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Treasury Bills and Treasury Bonds

Code	Denomination
11	Treasury Bills
12	Treasury Bonds

Functioning
CRCT holdings accounts are posted during:

• issuance of securities;
• sales of securities;
• purchases/sales of securities;
• exchanges of securities;
• loans/borrowings of securities;
• repos of securities;
• transfers of securities;
• repayments of securities;
• reconciliations.

CRCT holdings accounts are:

Debited by credit

Credited by debit

• during the issuance of securities, by the credit of the "securities to be received" account;<br>• during the transfer of securities received from the CRCT (notably from a collective procedure for clearing the liabilities of an SVT) by the credit of the "transferred securities" account;<br>• during the receipt of securities in repo by the credit of the "proprietary securities" account or the "third-party securities" account;

• during repayments, by the debit of the "ordinary proprietary securities" account or the "ordinary third-party securities" account;<br>• in case of non-repayment, by the debit of the "matured securities unredeemed" account;<br>• in case of transfer by the CRCT to another SVT (notably from a collective procedure for clearing liabilities) by the debit of the "third-party securities" account;

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Control Elements
The cumulative balance of CRCT holdings accounts in SVT books must correspond to the cumulative balance of proprietary securities accounts and third-party securities accounts.

The accounting of issued securities is conditioned by the satisfactory result of the following controls:

• auction minutes from the Money Market Service;
• notification of securities delivery received from CRCT;
• notification of securities repayment received from CRCT;
• notification of securities transfer received from CRCT;
• repo matching order;
• loan/borrowing matching order;
• purchase/sale matching order;

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Class 2 Proprietary Securities Accounts

Content
Proprietary securities accounts record, value by value, securities held by SVTs for their own account.

Subdivisions
Class 2 is subdivided into two-character accounts to distinguish the different categories of proprietary securities held by account keepers.

Treasury Bills and Treasury Bonds
21 Ordinary securities
22 Securities in ordinary repo
23 Pledged securities
24 Mortgaged securities
25 Securities encumbered with other charges
26 Securities to be sold
29 Matured securities unredeemed

Functioning
Proprietary securities accounts are posted during:

• delivery of issued securities;
• repayments or non-repayments of securities;
• exchanges of securities;

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Debited by credit:
• of the "CRCT holdings" account during securities repayments;
• of the "matured securities unredeemed" account;
• of the "CRCT holdings" account during securities sales;
• of the "CRCT holdings" account during the return of securities received in repo;
• of the "mortgaged securities" account during the creation of the mortgage;
• of the "CRCT holdings" account during loan operations;
• of the "CRCT holdings" account at the end of the borrowing operation;
• of the "seized securities" account;
• of appropriate accounts in case of reconciliation entries.

Credited by debit:
• of the "securities to be received" account upon notification of securities delivery by the CRCT;
• of the "CRCT holdings" account during securities purchases;
• of the "CRCT holdings" account during securities borrowings;
• of the "CRCT holdings" account at the end of loan operations;
• of the "transferred securities" account during transfers of securities received from the CRCT;
• of the "CRCT holdings" account during repo operations;
• of the "mortgaged securities" account during the release of the mortgage;
• of the "seized securities" account during the release of the seizure;
• of appropriate accounts in case of reconciliation entries.

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Control Elements
The accounting of securities in the name of holders is conditioned by the satisfactory result of the following controls:

• individual results of the securities auction session, received from the Service in charge of auctions of the National Directorate of the BEAC;
• notification of securities delivery received from CRCT;
• notification of securities repayment or non-repayment received from CRCT;
• notification of securities transfer received from CRCT;
• securities purchase/sale agreement;
• pledge creation certificate;
• seizure notification;
• pledge release certificate;
• mortgage creation certificate;
• mortgage release certificate;
• seizure release certificate;
• securities loan/borrowing agreement;
• repo matching order;
• loan/borrowing matching order;
• purchase/sale matching order;
• confirmation notice of the securities repo operation;
• confirmation notice of the securities loan operation.

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Class 3 Third-Party Securities Accounts

Content
Third-party securities accounts record, value by value, securities held by SVTs on behalf of holders:

• non-SVT credit institutions;
• other holders.

Subdivisions
Class 3 is subdivided into two-character accounts to distinguish the categories of third-party securities held by account keepers.

Treasury Bills and Treasury Bonds
31 Ordinary securities
32 Securities in ordinary repo
33 Pledged securities
34 Mortgaged securities
35 Securities encumbered with other charges
36 Securities to be sold
37 Securities in free disposal
39 Matured securities unredeemed

Functioning
Holder accounts are posted during:

• delivery of securities;
• repayments or non-repayments of securities;
• exchanges of securities;

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Debited by credit:
• of the "CRCT holdings" account during securities repayments;
• of the "matured securities unredeemed" account;
• of the "CRCT holdings" account during securities sales;
• of the "CRCT holdings" account during the return of securities received in repo;
• of the "mortgaged securities" account during the creation of the mortgage;
• of the "CRCT holdings" account during loan operations;
• of the "CRCT holdings" account at the end of the borrowing operation;
• of the "seized securities" account;
• of appropriate accounts in case of reconciliation entries.

Credited by debit:
• of the "securities to be received" account upon notification of securities delivery by the CRCT;
• of the "CRCT holdings" account during securities purchases;
• of the "CRCT holdings" account during securities borrowings;
• of the "CRCT holdings" account at the end of loan operations;
• of the "transferred securities" account during transfers of securities received from the CRCT;
• of the "CRCT holdings" account during repo operations;
• of the "mortgaged securities" account during the release of the mortgage;
• of the "seized securities" account during the release of the seizure;
• of appropriate accounts in case of reconciliation entries.

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Control Elements
The accounting of securities in the name of holders is conditioned by the satisfactory result of the following controls:

• individual results of the securities auction session, received from the Service in charge of auctions of the National Directorate of the BEAC;
• notification of securities delivery received from CRCT;
• notification of securities repayment or non-repayment received from CRCT;
• notification of securities transfer received from CRCT;
• securities purchase/sale agreement;
• pledge creation certificate;
• seizure notification;
• pledge release certificate;
• mortgage creation certificate;
• mortgage release certificate;
• seizure release certificate;
• securities loan/borrowing agreement;
• repo matching order;
• loan/borrowing matching order;
• purchase/sale matching order;
• confirmation notice of the securities repo operation;
• confirmation notice of the securities loan operation.

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Class 4 Reconciliation Accounts

Content
Reconciliation accounts essentially record:

• transferred securities received from CRCT, notably following a collective procedure for clearing the liabilities of SVTs (Art. 35 of Regulation No. 03/08/CEMAC/UMAC/CM);
• securities to be delivered;
• securities to be received;
• disputed securities.

Subdivisions
Class 4 is subdivided into two-character accounts to record the different operations provided for.

Treasury Bills and Treasury Bonds
41 Securities to be received
42 Securities to be delivered – sale
43 Securities to be delivered – repo
44 Securities to be delivered – exchange
45 Securities to be delivered – loan
46 Transferred securities
47 Seized securities
48 Other reconciliation accounts

Functioning
Class 4 accounts are posted during:

• transfer of securities, following a collective procedure for clearing the liabilities of an SVT;
• non-repayments of securities at maturity;
• pending operations (securities to be delivered or received);
• identification of various disputes regarding securities;
• reconciliation entries by the SVT.

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Class 4 accounts are:

Debited by credit:

Credited by debit:

• of the "proprietary securities" account or the "third-party securities" account during securities delivery;<br>• of the "CRCT holdings" account or the "third-party securities" account, after final decision of the securities owner during collective procedures for clearing the liabilities of an SVT;<br>• of the "third-party securities" account upon confirmation of the end of the dispute;<br>• of appropriate accounts in case of reconciliation entries.

• of the "CRCT holdings" account during the issuance of securities;<br>• of the "CRCT holdings" account during the transfer of securities following a collective procedure for clearing the liabilities of an SVT;<br>• of the "third-party securities" account in case of dispute;<br>• of appropriate accounts in case of reconciliation entries by the SVT.

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Control Elements
Reconciliation accounts are controlled based on the following documents:

• CRCT notification of securities transfer, received notably within the framework of a collective procedure for clearing the liabilities of an SVT;
• CRCT notification of non-repayment of securities at maturity;
• confirmation of cash settlement of repayments;
• notification by CRCT of the securities owner's decision;
• seizure notification;
• seizure release certificate;
• securities delivery notification;
• any other probative document.

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II.4 – ACCOUNTING DOCUMENTS ISSUED BY THE SVT

II.4.1 – Documents issued
The main accounting documents issued by the SVT are:

1 – Operations Journal
The operations journal chronologically records, operation by operation, all events relating to securities.

2 – Account Statement
The securities account statement indicates, for a given period, the previous balance, debit and/or credit movements, and the resulting new balance. The account keeper communicates to securities account holders, according to the agreed periodicity, the accounting statement of their operations.

3 – Operations Trial Balance
The account keeper issues, as necessary, a trial balance of operations recorded in securities accounting. This trial balance may be:

• global;
• by security category;
• by issuing Treasury;
• by holder.

4 – Securities Balance Sheet
The account keeper issues, at least once a year, a securities balance sheet.

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5 – Segregation of Holdings
The account keeper must produce, daily, a document presenting the segregation between proprietary securities and securities held for the client portfolio.

II.4.2 – Transmission of documents to CRCT
The account keeper is required to transmit to the CRCT:

• daily, the segregation of its CRCT holdings, between securities held: • for proprietary account; • for the account of non-SVT credit institutions; • for the account of other clients;
• monthly, the detailed trial balance of operations;
• annually, the trial balance of the last month of the year and the securities balance sheet.

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III – ENTRY INTO FORCE
This Instruction enters into force as of the date of its signature.

Done at Yaoundé, 23 DECEMBER 2010

The Governor, The President of the Board of Supervisors,

Lucas ABAGA NCHAMA