Circular No. 01/EMO/2021, of 15 April - Determination of the Foreign Exchange Market Quota for OTC Derivatives Transactions — BM — MZ

Bank of Mozambique
Administration

MONETARY STABILITY DEPARTMENT
CIRCULAR NO. 01/EMO/2021

Maputo, 15 April 2021

SUBJECT: DETERMINATION OF THE FOREIGN EXCHANGE MARKET QUOTA FOR OTC DERIVATIVES TRANSACTIONS

In order to establish the Foreign Exchange Market quota that financial counterparties must observe when entering into OTC derivatives, in accordance with the first part of paragraph 7 of Article 7 of the Regulation on Financial Derivatives of the Over-the-Counter Market Not Cleared by a Central Counterparty, approved by Notice No. 1/GBM/2021 of 16 March, the Bank of Mozambique determines:

A. Contracting Condition

To enter into OTC derivatives, the financial counterparty must hold at least 2% of the Foreign Exchange Market quota.
The Foreign Exchange Market quota corresponds to the quotient between the sum of operations of each financial counterparty and the sum of all foreign exchange (spot) market operations conducted by banks with the public in a given month, converted into United States Dollars (USD).
The month referred to in the preceding paragraph corresponds to the month preceding the transaction.

B. Transaction Limits

The financial counterparty may conduct OTC derivatives transactions up to the limit of its Foreign Exchange Market quota.

OTC derivatives transactions conducted by the financial counterparty in a given month with a single counterparty must not exceed 50% of its Foreign Exchange Market quota.

C. Disclosure of Foreign Exchange Market Quotas

The Bank of Mozambique makes information regarding the Foreign Exchange Market quotas available to financial counterparties through the Meticalnet SAP platform.

D. Final Provisions

Any doubts arising from the interpretation and application of this Circular shall be clarified by the Markets and Reserves Management Department of the Bank of Mozambique.
This Circular enters into force on 16 April 2021.

BANK OF MOZAMBIQUE
Monetary Stability Department
Silvina de Abreu
Silvina de Abreu
Administrator

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Issued under

GBM Notice No. 1 dated 2021-03-16Not in RegAlert
“in accordance with the first part of paragraph 7 of Article 7 of the Regulation on Financial Derivatives of the Over-the-Counter Market Not Cleared by a Central Counterparty, approved by Notice No. 1/GBM/2021 of 16 March”