BANKY FOIBEN'I MADAGASIKARA

MONETARY OPERATIONS DEPARTMENT

Instruction No. 003-DOM/24 amending and complementing certain provisions of Instruction No. 006-DOM/19 of 25 October 2019 on money market instruments

The Second Vice-Governor of the Central Bank of Madagascar,

Having regard to Law No. 2016-004 of 29 July 2016, supplemented by Law No. 2016-057 of 2 February 2017 on the Statutes of the Central Bank of Madagascar ;

Having regard to Decree No. 2022-632 of 4 May 2022 on the appointment of the two (2) Vice-Governors of the Central Bank of Madagascar ;

Having regard to Instruction No. 006-DOM/19 of 25 October 2019 on money market instruments.

DECIDES

Article 1: Subject Matter

This Instruction aims to amend and complement certain provisions of Instruction No. 006-DOM/19 on money market instruments in its Articles 5, 6, 7, and 11.

Article 2: Article 5 of Instruction No. 006-DOM/19 on money market instruments, in paragraphs 5.1.1 and 5.2.2, is amended as follows :

« Article 5 (new): Main operations

5.1. Main liquidity injection operations

5.1.1. Main liquidity injection operations consist of liquidity injections backed by collateral as provided for in Article 4. They are executed using a standard tender process, which in principle takes place weekly and has a maturity of seven (7) days.

(...)

5.2. Main liquidity withdrawal operations

5.2.1. Main liquidity withdrawal operations consist of liquidity withdrawals. They are executed using a standard tender process, which in principle takes place weekly and has a maturity of seven (7) days.

(...) »

Article 3: Article 6 of Instruction No. 006-DOM/19 on money market instruments, in paragraphs 6.1.1, 6.1.2, 6.2.1, and 6.2.2, is amended as follows :

« Article 6 (new): Fine-tuning operations

(...)

6.1. Fine-tuning liquidity injection operations

6.1.1. Fine-tuning liquidity injection operations with a maturity of one (1) to six (6) days consist of liquidity injections backed by eligible liquidity collateral, in order to correct liquidity imbalances during the reserve-building period. The frequency and maturity of these operations are not standardized. Their maturity must coincide with that of the ongoing main operation.

6.1.2. The Central Bank of Madagascar (BFM) carries out fine-tuning liquidity injection operations using bilateral procedures or rapid tenders. In the bilateral procedure, participation in fine-tuning operations is reserved for a limited number of eligible participants previously selected and directly contacted by the BFM. The operations are not announced to all eligible participants. Furthermore, results are communicated only to the concerned participants.

(...)

6.2. Fine-tuning liquidity withdrawal operations

6.2.1. Fine-tuning liquidity withdrawal operations with a maturity of one (1) to six (6) days consist of liquidity withdrawals in order to correct liquidity imbalances during the reserve-building period. The frequency and maturity of these operations are not standardized. Their maturity must coincide with that of the ongoing main operation.

6.2.2. The Central Bank of Madagascar (BFM) carries out fine-tuning liquidity withdrawal operations using bilateral procedures or rapid tenders. In the bilateral procedure, participation in fine-tuning operations is reserved for a limited number of eligible participants previously selected and directly contacted by the BFM. The operations are not announced to all eligible participants. Furthermore, results are communicated only to the concerned participants.

(...) »

Article 4: Article 7 of Instruction No. 006-DOM/19 on money market instruments, in paragraphs 7.1.1 and 7.2.2, is amended as follows :

« Article 7 (new): Longer-term operations

(...)

7.1 Longer-term liquidity injection operations

7.1.1 The BFM may carry out longer-term liquidity injection operations backed by eligible collateral from its portfolio with a maturity of more than seven (7) days. They are executed using standard tender procedures.

(...)

7.2 Longer-term liquidity withdrawal operations

7.2.1 The BFM may carry out longer-term liquidity withdrawal operations with a maturity of more than seven (7) days, consisting of liquidity withdrawals. They are executed using standard tender procedures.

(...) »

Article 5: Article 11 of Instruction No. 006-DOM/19 of 25 October 2019 on money market instruments is amended and supplemented as follows :

« Article 11 (new): Provisions applicable to tenders

11.1 Provisions common to tenders

11.1.1. If the Platform for Monetary and Interbank Operations (POMI), as provided for by Instruction No. 004-DOM/19 of 3 May 2019, is not operational, the procedures set out in Annex I to that Instruction shall be followed. Failing that, the following provisions shall apply, in accordance with Article 13 of the aforementioned Instruction.

11.1.2. The BFM announces the launch of a tender by any means leaving a written record. To this end, the following are disseminated to participants :

• the amount to be withdrawn or injected. This amount is announced for indicative purposes; the BFM reserves the right to modify the awarded amount ;
• the settlement date and the maturity date of the operation ;
• the deadline date and time for receipt of bids.

11.1.3. Participants must indicate in their submissions :

• the submitted amount
• the proposed rate
  In case of injection :
• the type, reference, and maturity
• the number and amount of securities placed under repurchase agreements

11.1.4. The maximum number of bids allowed is limited to five (5) per eligible participant.

11.1.5. Submissions to tenders are irrevocable.

11.1.6. When disseminating results, the BFM communicates by any means leaving a written record to each eligible participant :

• the total amount of bids or requests received ;
• the range of proposed rates ;
• the number of bidders ;
• the total amount of liquidity withdrawals or injections ;
• the range of accepted rates ;
• the amount of liquidity withdrawals or injections granted to the credit institution ;
• the percentage of bids or requests fulfilled for the marginal tranche ;
• the weighted average rate of fulfilled bids or requests.

11.1.7. Results are communicated on the same day as the adjudication. The accounts of eligible participants whose proposals are accepted are, as applicable, debited or credited by the BFM with the awarded amount on the settlement date.

11.2 Provisions specific to standard tenders

11.2.1. The standard tender procedure implies that the value date of the operation is scheduled, in principle, for the day following the announcement.

11.2.2 Submissions from eligible participants must reach the BFM, by any means leaving a written record, on the day following the launch or on a pre-indicated date in case of a public holiday, before 10:00 a.m., and must be prepared according to the models in Annexes I, III, and IV or VII to this Instruction.

11.2.3. When the maturity falls on a public holiday, the settlement date is postponed to the next business day.

11.3 Provisions specific to rapid tenders

11.3.1. The rapid tender procedure implies that the value date of the operation is the same day as the announcement date.

11.3.2 Submissions from eligible participants must reach the BFM, by any means leaving a written record, before 2:00 p.m., and must be prepared according to the models in Annex II or VII to this Instruction. »

Article 6 :

The other provisions of Instruction No. 006-DOM/19 of 25 October 2019 on money market instruments remain unchanged.

Article 7 :

This Instruction enters into force as of 7 February 2024.

Antananarivo, 02 FEB. 2024

[Signature/Seal]

THE SECOND VICE-GOVERNOR
AUBIN AURORE BELALAHY