BANQUE DES ETATS DE L'AFRIQUE CENTRALE

General Directorate of Studies,
Finances and International Relations

Directorate of Credit, Capital Markets and Banking Supervision

Settlement and Securities Conservation Cell

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INSTRUCTION N°02/CRCT/2010

RELATIVE TO

ACCOUNTING - SECURITIES OF THE SETTLEMENT AND SECURITIES CONSERVATION CELL

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TABLE OF CONTENTS

PREAMBLE................................................... ERROR! BOOKMARK NOT DEFINED.
I – GENERAL PRINCIPLES........................................... 4
II – CHART OF ACCOUNTS OF THE CRCT .................................. 7
II.1 – IDENTIFIER OF AN ACCOUNT AT THE CRCT ....................... 7
II.2 – CLASSIFICATION OF ACCOUNTS ACCORDING TO THE NATURE OF
ACCOUNTS ................................................... 8
II.3 – CONTENT AND OPERATION OF ACCOUNTS ................... 9
II.4 – ACCOUNTING DOCUMENTS ISSUED BY THE CRCT ................. 16
III – DETERMINATION OF THE SECURITY CODE ................................ 17
IV – DETERMINATION OF THE ISSUER CODE.............................. 17
V – DEFINITION OF THE AFFILIATE CODE ................................... 18
VI – DEFINITION OF THE HOLDER CODE............................... 18
VII – DATE OF ENTRY INTO FORCE ................................... 18

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The Supervisory Board,

Having regard to Regulation N°03/08/CEMAC/UMAC/CM relating to Public Securities with Free Subscription issued by the Member States of CEMAC of October 6, 2008; Having regard to the General Regulation relating to the organization and operation of the Settlement and Securities Conservation Cell (CRCT) of December 23, 2010; Considering the Convention relating to the participation of Treasury Securities Specialists (SVT) in the auctions of Treasury securities organized by the Bank of Central African States (BEAC); Considering the need to define and clarify the rules for the accounting of securities by the CRCT; Meeting in its inaugural session on December 23, 2010, in Yaoundé, Republic of Cameroon,

Adopts the Instruction whose text follows:

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I – GENERAL PRINCIPLES

This Instruction defines the principles and rules for the accounting by the CRCT of public securities issued via auctions organized by the BEAC, as well as the associated chart of accounts.

The CRCT is the central depository of public securities with free subscription and, for this purpose, ensures the codification, conservation, circulation, and administration of said securities. Its accounting system is thus inspired by the accounting systems specific to securities depository organizations.

The accounting of the CRCT is a securities accounting, maintained value by value, according to the principle of double-entry bookkeeping. It is a physical accounting, essentially based on operations of conservation, delivery, and management of securities. Cash settlement is ensured by the BEAC in its capacity as Settlement Bank.

Entries are recorded subject to the existence of provisions based on formal information received:

• from the BEAC (notably the minutes of auctions);
• from the SVT (notably instructions relating to operations on the secondary market).

The entries of the CRCT are charged simultaneously, according to the operations, on securities and cash accounts. The charge is irrevocable.

The accounting year of the CRCT begins on January 1st and ends on December 31st.

Public securities with free subscription are dematerialized upon their creation and registered in accounts with an SVT account keeper in accordance with Article 3 of Regulation 03/08/CEMAC/UMAC/CM relating to Public Securities with Free Subscription issued by the Member States of CEMAC. The CRCT, as central depository, guarantees the integrity of the securities accounting system. The securities accounting designed for this purpose is in conformity, in particular, with the provisions of the aforementioned CEMAC Regulation (Articles 15, 17, and 18) as well as those of the General Regulation of the CRCT (Articles 15 and 16).

The accounting system for public securities with free subscription is composed of two levels of accounting closely linked. The first level is located in the accounting of account keepers. The second level corresponds to the accounting of the CRCT, which is accountable for the total amount of issuances.

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Centralization of Issuances at a Single Point

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CRCT
Central Depository
↑
(Second Level)
AFFILIATES AFFILIATES
Account Keepers
↑
(First Level)
Investors Investors
```

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In accordance with Article 16.1 of its General Regulation, the CRCT ensures daily that the number of securities issued is equal to the holdings of all its affiliates. The diagram below presents the accounting balances that ensure the integrity and security of the system.

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CENTRAL DEPOSITORY (CRCT) ACCOUNT KEEPERS (SVT) ACCOUNT TOTAL ACCOUNTS ISSUANCE OF HOLDERS = = TOTAL ACCOUNTS HOLDINGS OF AFFILIATES AT THE CRCT ```

The proper functioning of the CRCT's securities accounting is subject to the application of the following general principles:

• the correspondence between the number of securities registered in an issuance account and the exact counterparty appearing in the credit of the affiliates' accounts^1. Indeed, the CRCT is globally accountable for the total amount of issuances of each value issued by the Member States, for which it ensures conservation;
• the recording of entries in a double-entry accounting system and value by value;
• the allocation of SVT holdings, account keepers, in securities for own account and in securities for client account in application of the principle of segregation of holdings^2.

In their accounting, account keepers must ensure that the accounts reflecting their holdings at the CRCT correspond exactly to the securities registered in their books in the name of the holders (Art. 19 of Regulation 03/08/CEMAC/UMAC/CM relating to Public Securities with Free Subscription issued by the Member States of CEMAC). The holders in question are the SVT and their clients.

The diagram below illustrates this correspondence:

^1 Art. 18 of Regulation 03/08/CEMAC/UMAC/CM relating to Public Securities with Free Subscription issued by the Member States of CEMAC). ^2 Art. 17 of Regulation 03/08/CEMAC/UMAC/CM relating to Public Securities with Free Subscription issued by the Member States of CEMAC.

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II – CHART OF ACCOUNTS OF THE CRCT

The chart of accounts of the CRCT establishes the rules for accounting for all operations and transactions concerning Treasury bills and bonds assimilated issued by the Member States of CEMAC.

II.1 – IDENTIFIER OF AN ACCOUNT AT THE CRCT

Any securities account opened in the books of the CRCT is identified by the combination of four (4) elements out of the following five (5):

• the account nature code: a two (2) digit numeric code allowing to distinguish the different statuses of securities;
• the security code or Unique Identification Code (UIC): a twelve (12) alphanumeric character code identifying each line of issued securities;
• the issuer code for the issuance account: a four (4) digit numeric code designating the different issuing Treasuries;
• the affiliate code for the accounts of affiliates and regularization accounts: a four (4) character code identifying the affiliates to the CRCT;
• the holder code: a four (4) digit numeric code allowing the CRCT to identify the owner of the security in respect of the principle of segregation of holdings.

The combination is made in the following order:
Account Nature/Security Code/Issuer Code or Affiliate Code/Holder Code

Example of an issuance account: 91.CM11000001X.1001.0000

• Account Nature: 91 (issuance account: Assimilated Treasury Bills);
• Security Code: CM11000001X (1st issuance of Cameroonian Treasury Bills for 13 weeks);
• Issuer Code: 1001 (Cameroonian Treasury);
• Holder Code: 0000 (indifferentiated holdings).

Example of an affiliate account: 11.CM11000001X.8101.8101

• Account Nature: 11 (ordinary securities accounts);
• Security Code: CM11000001X (1st issuance of Cameroonian Treasury Bills for 13 weeks);
• Affiliate Code: 8101 (AfriLand First Bank);
• Holder Code: 8101.

II.2 – CLASSIFICATION OF ACCOUNTS ACCORDING TO THE NATURE OF ACCOUNTS

The securities accounting of the CRCT is maintained value by value and is organized around the notion of account nature. Accounts are divided into three classes to handle all transactions and operations on securities.

Class 9 (outside class): Issuance Accounts

• 91 Treasury Bills
• 92 Treasury Bonds
• 99 Unredeemed Securities

Class 1: Accounts of Affiliates

• 11 Ordinary Securities
• 12 Securities in Ordinary Repo
• 13 Pledged Securities
• 14 Secured Securities
• 15 Securities Encumbered with Other Charges
• 17 Client Securities Seized
• 19 Matured Securities Unredeemed

Class 2: Regularization Accounts

• 21 Securities to be Delivered Issued
• 22 Securities to be Delivered Sold
• 23 Securities to be Delivered in Repo
• 24 Securities to be Delivered Exchanged
• 25 Securities to be Delivered Lent
• 26 Securities to be Transferred
• 27 Seized Securities
• 28 Other Regularization Accounts

II.3 – CONTENT AND OPERATION OF ACCOUNTS

Class 9: Issuance Accounts

Content

Issuance accounts are debited by nature. They record, in accordance with auction minutes, all securities admitted to CRCT operations, issued by Treasuries and other issuers.

Subdivisions

Class 9 is subdivided into accounts of two (2) characters each, allowing to distinguish the different values issued, namely Treasury bills and bonds.

Treasury Bills or Bonds
91 – Treasury Bills
92 – Treasury Bonds

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Operation

Issuance accounts are debited/credited during the issuance and redemption of securities or for regularizations carried out by the CRCT. They are mandatory concatenated with the security code, issuer code, and holder code "0000" in the following order: account nature/security code/issuer code/holder code.

Issuance accounts are:

Debited by:	Credited by:
• at the time of issuance of securities, by the credit of the account "21-securities to be delivered issued";; • during regularization entries carried out by the CRCT.	• during redemptions, by the debit of the affiliates' accounts (Class 1) corresponding to the redeemed securities;; • in case of non-redemption, by the debit of the account "99-unredeemed securities";; • during regularization entries carried out by the CRCT.

Accounts for unredeemed securities are:

Debited by:	Credited by:
• by the credit of issuance accounts for matured and unredeemed securities;; • during regularization entries carried out by the CRCT.	• by the debit of the account "matured, unredeemed securities";; • during regularization entries carried out by the CRCT.

Control Elements

The accounting of issued securities is subject to the satisfactory result of the control of the following elements:

• characteristics of issued securities (category of securities, maturity, rate);
• security code;
• auction status validated by the Treasury;
• auction minutes.

The accounting of redemption operations is conditioned by the effective settlement by the issuing Treasury. In case of insufficient provision, no security is redeemed. The entire line of securities maturing and not redeemed is downgraded and accounted for as unredeemed securities.

Plausibility controls are carried out based on:

• characteristics of issued securities (category of securities, maturity, rate);
• security codes;
• auction statuses validated by the Treasury;
• notifications from the Settlement Bank via SYGMA (Automated Large Value Payment System);
• reconciliations with accounts for securities to be delivered issued, accounts of affiliates, or accounts for matured unredeemed securities.

At any time, subject to regularization, the balance of the issuance account must correspond to the total of the balances of the affiliates' accounts. This account cannot be debited/credited by orders originating from SVTs.

Class 1: Accounts of Affiliates

Content

Affiliate accounts record value by value, for each issuing Treasury, the securities held by affiliates for their own account or that of their clients.

Subdivisions

Class 1 is subdivided into accounts of two (2) characters allowing to distinguish the different statuses of securities held by affiliates, including the BEAC.

Treasury Bills or Bonds
11 Ordinary Securities
12 Securities in Ordinary Repo

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Operation

Affiliate accounts, credited by nature, are debited/credited during:

• issuance of securities;
• redemptions or non-redemptions of securities;
• exchanges of securities;
• lending/borrowing of securities;
• purchases/sales of securities;
• repo operations;
• pledge operations;
• mortgage operations;
• transfers of securities;
• regularization operations;
• seizures of securities;
• segregation of holdings.

Affiliate accounts are mandatory concatenated with the security code, affiliate code, and holder code in the following order: account nature/security code/affiliate code/holder code.

Affiliate accounts are:

Debited by the credit of:	Credited by the debit of:
• the issuance account at the time of redemption;	• the account for securities to be delivered issued during settlement delivery;

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Debited by the credit of:

Credited by the debit of:

• the account for matured and unredeemed securities in case of non-redemption;; • the account for securities to be delivered sold on the matching date;; • the account for securities to be delivered exchanged at the time of execution of the operation;; • the account for securities to be delivered lent at the time of execution of the operation;; • the account for securities to be delivered in repo on the execution date of the operation;; • the account for securities in ordinary repo on the execution date of the operation;; • the account for secured securities on the date of notification;; • the account for pledged securities on the date of notification;; • the account for seized securities on the date of notification;; • the account for securities to be transferred;; • appropriate accounts in case of regularization entries carried out by the CRCT.

• the account for securities to be delivered sold at the time of purchase from another SVT;; • the account for securities to be delivered exchanged on the agreed date for the exchange;; • the account for securities to be delivered lent, on the agreed date to perform the lending operation;; • the account for securities to be delivered in repo on the agreed date to perform the repo-delivery operation;; • the account for securities in ordinary repo on the date of settlement of the repo;; • the account for secured securities on the date of notification of the end of the pledge;; • the account for pledged securities on the date of notification of the end of the mortgage operation;; • the account for seized securities on the date of notification of the end of the seizure;; • the account for securities to be transferred;; • appropriate accounts in case of regularization entries carried out by the CRCT.

Control Elements

The control of the accounting of the attribution of issued securities in the accounts of affiliates is carried out based on:

• characteristics of issued securities (category of securities, maturity, rate);
• security codes;
• auction statuses validated by the Treasury;
• confirmation of cash settlement.

Redemptions are recorded after effective settlement by the issuing Treasury. Otherwise, no security is redeemed and the entire set of securities concerned is transferred to the account for matured unredeemed securities, pending final settlement.

The control of other operations is carried out based on:

• matching orders;
• settlement confirmations;
• pledge notification;
• mortgage notification;
• seizure notification;
• certificate of end of pledge;
• certificate of end of mortgage;
• certificate of end of seizure.

Class 2: Regularization Accounts

Content

Regularization accounts essentially record:

• securities pending allocation (issued, sold, lent, exchanged, in repo);
• securities to be transferred following a collective liquidation procedure;
• disputed securities (seized securities).

Subdivisions

Class 2 is subdivided into accounts of two (2) characters allowing to record the different planned operations.

Treasury Bills or Bonds
21 Securities to be Delivered Issued
22 Securities to be Delivered Sold
23 Securities to be Delivered in Repo
24 Securities to be Delivered Exchanged
25 Securities to be Delivered Lent
26 Securities to be Transferred
27 Seized Securities
28 Other Regularization Accounts

Operation

Accounts in Class 2 are debited/credited:

• during new issuances;
• during exchanges, lending/borrowing, purchases/sales, taking in repo;
• at the time of transfers of securities following, notably, a collective liquidation procedure of the liability;
• in case of operations on disputed securities.

Accounts in Class 2 are mandatory concatenated with the security code, affiliate code, and holder code in the following order: account nature/security code/affiliate code/holder code.

Accounts in Class 2 are:

Debited by:	Credited by:
• the credit of the affiliate account;; • the credit of appropriate accounts in case of regularization entries carried out by the CRCT.	• the debit of the issuance account;; • the debit of the affiliate account;; • by the debit of appropriate accounts in case of regularization entries carried out by the CRCT.

Control Elements

Regularization accounts are controlled based on:

• characteristics of issued securities (category of securities, maturity, rate);
• security codes;
• auction statuses validated by the Treasury;
• confirmation of cash settlement, of the price during issuances or transactions between SVTs;
• matching orders.

II.4 – ACCOUNTING DOCUMENTS ISSUED BY THE CRCT

The main accounting documents issued by the CRCT are:

1 – Account Statement

The CRCT communicates daily to its affiliates the accounting statement of their operations. It also sends them a monthly summary statement summarizing the status of their accounts during the previous month (Art. 16.4 al.I of the General Regulation of the CRCT).

The securities account statement indicates the initial balance, debit and credit movements, as well as the resulting new balance.

Furthermore, Article 16.4 al 2 of the aforementioned General Regulation provides that: "Recipients of accounting statements must verify the conformity of the entries appearing on these statements with those recorded in their accounting. Any apparent anomaly or omission must be reported to the CRCT for regularization within seven (7) days following the receipt of the statements".

2 – Trial Balance of Operations

The CRCT issues, as necessary, a trial balance of operations recorded in securities accounting.

This trial balance can be:

• global;
• by category of securities (bills, bonds, or TCN);
• by issuing Treasury;
• by affiliate.

3 – Balance Sheet of Securities Accounting

The CRCT must establish at least once a year, at the end of its accounting year, the balance sheet of securities accounting.

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III – DETERMINATION OF THE SECURITY CODE

The security code is a twelve (12) alphanumeric character code whose first two alphabetic characters designate the country of the issuing Treasury. This code also allows distinguishing between the different values issued by a Treasury (See Instruction relating to the codification of securities.)

IV – DETERMINATION OF THE ISSUER CODE

The issuer code is a four (4) digit numeric code allowing to identify the different issuing Treasuries.

The following codes are attributed to the different issuing Treasuries:

• 1001: Treasury of Cameroon;
• 2001: Treasury of Chad;
• 3001: Treasury of CAR (Central African Republic);

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V – DEFINITION OF THE AFFILIATE CODE

The affiliate code (Annex 1) is a four (4) digit numeric code allowing to distinguish the affiliates to the CRCT. These characters correspond to the third-party code attributed to banks and financial establishments in BEAC accounting and reused by the Automated Large Value Payment System (SYGMA).

VI – DEFINITION OF THE HOLDER CODE

The holder code (Annex 2) is a four (4) digit numeric code allowing the CRCT to identify the categories of holders (owners) of securities in respect of the principle of segregation of holdings.

For securities held for own account, these characters correspond to the affiliate codes. Holders of credit institutions that are not SVTs are individually identified by a code whose principle is the same as that of SVTs.

Other holders are identified by a code designating the group to which they belong (insurance, pension fund, individuals, etc.).

VII – DATE OF ENTRY INTO FORCE

This Instruction enters into force as of the date of its signature.

Made in Yaoundé, 23 DEC. 2010

The Governor,
President of the Supervisory Board,

Lucas ABAGA NCHAMA