General Conditions for Outright Open Market Operations

In the Name of Allah, the Most Gracious, the Most Merciful

[Logo of the Central Bank of Jordan]

No: 4/ 6402 Date: 17 Rajab 1433 AH Corresponding to: 07 June 2012 AD

Memorandum to Licensed Banks No. (33 /2012)

Subject: General Conditions for Outright Open Market Operations Outright Open Market Operations

Following our Memorandum No. (29/2012) dated 2012/05/29, and based on the Central Bank of Jordan's commitment to developing monetary policy tools aimed at influencing the level of local liquidity, the Central Bank of Jordan will begin activating outright open market operations. This involves entering the market as a seller or buyer of government securities and government-guaranteed securities to withdraw or inject liquidity as market conditions require, according to the general conditions listed below:

1. These operations are executed in the secondary market at the initiative of the Central Bank and via auction method (interest rate auction / quantity auction), as announced by the Central Bank of Jordan.

2. Banks will be informed of the specific conditions for outright open market operations auctions, including interest rates and/or the amount of money to be withdrawn or injected, via fax, Reuters screen, the Central Bank's website, or any other suitable means that ensure the information reaches all banks.

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CENTRAL BANK OF JORDAN البنك المركزي الأردني

3. Banks wishing to participate in the auction must submit one or more bids according to the specific conditions communicated to banks upon the auction announcement. The nominal value of each sell/buy request must not be less than one million Dinars or its multiples.

4. In the case of an interest rate auction, the Central Bank will sell based on accepting offers with the highest submitted price or buy based on accepting offers with the lowest submitted price. In the case of a quantity auction, allocation will be made according to the volume of offers received from participating banks.

5. The Central Bank announces the upper limit for bank participation as a percentage of the value offered in the auction.

6. The Central Bank announces the results on the same working day the auction is held and notifies participating banks of these results in writing or by any other means that ensure the information reaches the banks.

7. The Central Bank announces the issuances intended for sale or purchase and their maturities in the specific conditions announced at the time. In the case of a quantity auction, the Central Bank will include in its announcement the acceptable yield rates for each maturity.

8. In the case of an interest rate auction, the Central Bank will announce the weighted average yield to maturity for each maturity after the auction closes, as a reference yield in both the primary and secondary markets.

9. Banks wishing to participate in the auction submit on the basis of the Clean Price, while settlement is based on the Full Price, which represents the submitted sell/buy price plus the accrued interest from the date of the last interest payment until the settlement date.

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CENTRAL BANK OF JORDAN البنك المركزي الأردني

10. The ownership record of bonds at the Central Bank of Jordan is affected against the entry of the sell/buy value of these bonds into the account/for the account of the licensed bank at the Central Bank of Jordan on a Delivery versus Payment (DVP) basis.

11. Offers received from participating banks in the auction during the specified period on the day of the auction announcement are accepted. Offers received before or after the specified time are not accepted under any circumstances. Offers are sent to the Central Bank of Jordan on the fax numbers specified on the day of the auction announcement or by any other means specified by the Central Bank.

12. The Central Bank has the right to increase or decrease the value offered in the auction, as well as the right to reject any offers or cancel the entire auction and re-offer it without providing reasons.

These instructions are effective from the date of issuance, and any other instructions conflicting with them are repealed.

Governor Dr. Ziad Frieze

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