Rules for Registration of Collateral in the Form of Government Securities Placed through the National Bank of the Kyrgyz Republic for Interbank Credit Operations

		Approved by resolution of the Board of the National Bank of the Kyrgyz Republic dated June 30, 2010 No. 52/1

RULES for registration of collateral in the form of securities placed through the National Bank of the Kyrgyz Republic for interbank credit operations

(As amended by resolutions of the Board of the National Bank of the Kyrgyz Republic dated October 30, 2014 No. 47/10, June 23, 2017 No. 2017-P-15/26-3, May 23, 2018 No. 2018-P-15/18-1)

1. General provisions

1. (Repealed by resolution of the Board of the National Bank of the Kyrgyz Republic dated June 23, 2017 No. 2017-P-15/26-3)

2. These Rules have been developed for the purpose of streamlining the process of registration of pledge agreements at the National Bank of the Kyrgyz Republic (hereinafter - the National Bank), the subject of pledge of which are government securities of the Government of the Kyrgyz Republic and notes of the National Bank (hereinafter - S), placed through the National Bank and recorded in the depository at the National Bank for interbank credit operations, as well as actions in relation to the pledged property in cases of performance or non-performance of the obligation secured by the pledge.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

2. Terms used in these Rules

Securities placed through the National Bank - government securities issued by the Ministry of Finance of the Kyrgyz Republic on behalf of the Government of the Kyrgyz Republic and notes of the National Bank.

Depository - the National Bank, which carries out depository accounting and safekeeping of S, registration of transfer and confirmation of ownership rights to S.

Depo account - a record (or a set of records) created for each S for the purpose of their accounting and safekeeping.

Pledge sub-account of the "depo" account (pledge sub-account) - a section of the "depo" account of a Direct participant in the depository intended for accounting of pledge encumbrances on rights to S based on law or agreement.

Investment sub-account of the "depo" account (investment sub-account) - a section of the "depo" account of a Direct participant in the depository in respect of which no restrictions are established on transfers of S.

General sub-account of the "depo" account (general sub-account) - a section of the "depo" account of a Direct participant in the depository for aggregate accounting of S belonging to its clients - owners of S. Transfers of S from this sub-account may be made only on the instruction of the owners of S.

Direct participant - a commercial bank licensed by the National Bank, having a correspondent/current account with the National Bank, the Social Fund of the Kyrgyz Republic, the State Accumulative Pension Fund under the Social Fund of the Kyrgyz Republic, JSC "Central Depository" and the Deposit Protection Agency of the Kyrgyz Republic, which have concluded with the National Bank a corresponding agreement on work in the market of S placed through the National Bank.

Authorized person - a person possessing the relevant powers confirmed by an official letter, power of attorney or notification.

Pledge manager - a direct participant, not being the Pledgor, acting on the basis of an agency agreement as the pledge manager on behalf of the Pledgee who does not have a depo account in the Depository.

(Paragraph repealed by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

3. Procedure for registration of pledge agreements

3. Pledge agreements concluded between Direct participants having depo accounts in the Depository are submitted to the National Bank and registered with the National Bank when the transaction is concluded outside the Automated Trading System (hereinafter - ATS).

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

4. The creditor (hereinafter - the Pledgee) may not demand the exercise of its rights provided by legislation under a pledge agreement not registered with the National Bank in accordance with these Rules.

5. In order to minimize risks, pledge agreements are registered with the National Bank before the transfer of funds to the account of the Borrower (hereinafter - the Pledgor).

6. For registration of a pledge agreement with the National Bank, the Pledgor shall submit the following documents:

• the pledge agreement in 3 original copies, signed by authorized persons of the Pledgor and the Pledgee, and certified by their seals;

• a copy of the obligation (credit agreement, agreement) secured by the pledge;

• the agency agreement between the Pledgee and the Pledge manager, in the cases specified in paragraph 14 of these Rules;

• the Pledgor's instruction to transfer the pledged S from the investment to the pledge sub-account in the Depository (Appendix 1);

• confirmation of payment for registration of pledge agreements with the National Bank.

7. The pledge agreement must contain the mandatory provisions, the list of which is specified in the Model pledge agreement (Appendix 2).

8. If the Pledgor submits to the National Bank a complete package of documents duly executed no later than 17:00, the National Bank registers the pledge agreements on the day of their submission. If the Pledgor submits documents after 17:00, the National Bank registers the pledge agreements on the next business day.

(As amended by resolutions of the Board of the National Bank of the Kyrgyz Republic dated June 23, 2017 No. 2017-P-15/26-3, May 23, 2018 No. 2018-P-15/18-1)

9. The National Bank verifies in the submitted pledge agreements the presence of the S specified therein on the depo accounts of the Pledgor in the Depository. Registration of the pledge agreement is carried out in the ATS, the operation of the ATS is regulated by a resolution of the Board. A record of the date and number of their registration, certified by the signature of the Depository controller, is entered into the pledge agreement. One copy of the pledge agreement remains with the National Bank, the second and third copies are transferred to the Pledgee and the Pledgor, respectively.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

10. The National Bank may refuse registration of pledge agreements in cases where:

• the concluded agreements do not comply with the requirements provided by these Rules;

• the depo accounts of the Pledgor in the Depository do not contain the S specified in the pledge agreements and the Pledgor's instruction;

• an incomplete package of documents is provided or the documents are not duly executed.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

11. Full or partial release of S held in pledge is carried out by the National Bank upon notification of the Pledgee submitted by it in the established form (Appendix 3) no later than 17:00. If the Pledgee submits the notification after 17:00, the National Bank carries out the release of S on the next business day.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

12. Replacement of S held in pledge with S of other issues is carried out by the National Bank on the basis of new pledge agreements between the Pledgor and the Pledgee, with their registration in the procedure established by these Rules. Additional pledge of securities and/or their partial release to an existing pledge agreement is carried out on the basis of an Additional agreement to the Pledge agreement (Appendix 5).

At the same time, replacement of pledged S with S of a new issue on the day of their issuance is not carried out.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

13. For registration of pledge agreements with the National Bank, a fee of 300 som is established.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

4. Certain features of registration of pledge agreements

14. If the Pledgee (legal entity - resident/non-resident) does not have a depo account in the Depository, the National Bank registers the pledge agreement provided that the Pledgee has concluded with one of the Primary dealers (not being the Pledgor) an agency agreement under which the latter agrees to act as the Pledge manager. The agency agreement must provide that the Pledgee delegates to the Pledge manager the right to sign on its behalf documents related to pledge operations in accordance with these Rules.

The original copy of the agency agreement signed between the Pledgee and the Pledge manager is submitted to the National Bank simultaneously with the documents specified in paragraph 6 of these Rules.

14-1. In the case of conclusion by banks of agreements (agreements) on the provision of credit lines (credits), tranches within the framework of intergovernmental agreements, international interbank associations, registration of a pledge agreement of S in the Depository without the participation of the Pledge manager is allowed.

Full or partial release of S held in pledge in the above case is carried out by the National Bank upon notification of the Pledgee submitted by it in the established form (Appendix 3). At the same time, the notification of the Pledgee is provided in the official language or with a translation into the official language certified by a notary.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated October 30, 2014 No. 47/10)

15. Voluntary transfer of securities held in the pledge sub-account of the Pledgor to the investment sub-account of the Pledgee, or to the general sub-account of the Pledge manager in the Depository in repayment of obligations may be carried out by the National Bank upon the instruction of the Pledgee or the Pledge manager agreed with the Pledgor (Appendix 4), on the day of its receipt.

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

16. In case of non-performance by the Pledgor of the obligation to the Pledgee, foreclosure may be levied on the pledged S in judicial or extrajudicial procedure.

17. Foreclosure by the Pledgee on the pledged S in judicial procedure is carried out in accordance with the legislation of the Kyrgyz Republic by submitting a court decision that has entered into force on satisfaction of the Pledgee's claim, on the basis of which the National Bank on the day of its submission transfers the pledged S to the investment sub-account of the Pledgee or to the general sub-account of the Pledge manager in the Depository.

18. Foreclosure by the Pledgee on the pledged S in extrajudicial procedure is carried out in accordance with the Law of the Kyrgyz Republic "On Pledge" on the basis of a notarized agreement between the Pledgee and the Pledgor on the procedure for foreclosure on the subject of pledge in extrajudicial procedure. In this case, the Pledgee submits to the National Bank the agreement on the procedure for foreclosure on the subject of pledge in extrajudicial procedure with the notary's executive inscription establishing the Pledgee's right to foreclose on the subject of pledge in extrajudicial procedure. The National Bank, on the basis of the documents submitted by the Pledgee, transfers the pledged S to the investment sub-account of the Pledgee or to the general sub-account of the Pledge manager in the Depository on the day of their submission.

19. Upon the occurrence of maturity dates of S that are in the pledge sub-account of the Pledgor due to: (1) ongoing judicial or extrajudicial proceedings; (2) the fact that the Pledgor and/or the Pledgee or the Pledge manager have not taken actions in relation to the pledge, the National Bank transfers their nominal value from the account of the Central Treasury under the Ministry of Finance of the Kyrgyz Republic to the correspondent account of the bank specified in the pledge agreement.

		Appendix 1 to the Rules for registration of collateral in the form of S placed through the National Bank of the Kyrgyz Republic

		National Bank of the Kyrgyz Republic
		Department ______

INSTRUCTION(*) of the Pledgor

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

In accordance with the pledge agreement with ______ (name of the Pledgee) dated "_" ______ 20 No. _____ I request to transfer ______ (specify type of S) of the following issues from the investment to the pledge sub-account in the depository.

Registration number of S	Quantity of S (pcs.)	Nominal value (currency)
Total:

M.P.

______ (position) ______ (signature) ______ (full name)

Date of operation ______

(*) Executed on the letterhead of the Pledgee.

		Appendix 2 to the Rules for registration of collateral in the form of S placed through the National Bank of the Kyrgyz Republic

MODEL AGREEMENT on pledge

(As amended by resolutions of the Board of the National Bank of the Kyrgyz Republic dated October 30, 2014 No. 47/10, May 23, 2018 No. 2018-P-15/18-1)

______, hereinafter referred to as the Pledgor, acting on the basis of ______, represented by ______, on the one hand, and ______, hereinafter referred to as the Pledgee, acting on the basis of ______, represented by ______, on the other hand, when mentioned together "the Parties", have agreed as follows:

1. To secure the performance of the obligation under ______ dated "_" ______ 20 the Pledgor pledges to the Pledgee the securities owned by it by right of ownership (hereinafter - S) of the following issue(s) in the following volume(s):

Registration number of S	Quantity of S (pcs.)	Nominal value (currency)
Total:

2. In case of early full or partial performance by the Pledgor of the obligation secured by the pledge, ______ (specify the Pledgee/Pledge manager) undertakes to timely notify the National Bank of the Kyrgyz Republic of the full or partial release of the pledged S.

3. The Pledgee appoints (name of bank) as the Pledge manager, as a representative for the exercise of its rights of the Pledgee to the S pledged in accordance with this agreement(1).

4. In case of the occurrence of the moment of non-performance of the obligation secured by the pledge, the Pledgee has the right to demand the transfer of the pledged S to its investment sub-account (or the general sub-account of the Pledge manager) in the depository at the National Bank of the Kyrgyz Republic.

5. If disagreements arise between the Parties regarding the performance of the obligation secured by the pledge, and it is impossible to reach agreement on the rights to the S pledged in accordance with this agreement, the Parties shall apply to judicial bodies for their resolution.

Before the settlement of disagreements and/or submission to the National Bank of the Kyrgyz Republic of a decision of a judicial body, the pledged S continue to be in the pledge sub-account of the Pledgor in the depository at the National Bank of the Kyrgyz Republic.

6. Upon the occurrence of maturity dates of S held in the pledge sub-account of the Pledgor in the Depository due to: (1) ongoing judicial or extrajudicial proceedings, (2) the fact that the Pledgor and/or the Pledgee or the Pledge manager have not taken actions in relation to the pledge, the Parties have authorized the National Bank of the Kyrgyz Republic to transfer their nominal value from the account of the Central Treasury under the Ministry of Finance of the Kyrgyz Republic to the correspondent account of the bank (name of bank) at the National Bank of the Kyrgyz Republic.

7. The Parties have agreed that the fees for registration of this Agreement with the National Bank of the Kyrgyz Republic shall be paid by ______ (specify the Pledgor/Pledgee)

8. The Parties have agreed on the possibility of replacing the pledged S with S of other issues belonging to the Pledgor, and that in this case the Parties shall execute a new pledge agreement with registration and payment of the registration fee with the National Bank of the Kyrgyz Republic.

9. This agreement is drawn up in 3 original copies having equal legal force(2). One copy of the pledge agreement remains with the National Bank, the second and third copies are transferred to the Pledgee and the Pledgor, respectively.

Details of the parties:

For the Pledgor		For the Pledgee
______		______
______		______
______		______

Registered with the National Bank of the Kyrgyz Republic

"" ______ 20 No. _____

______ (position) ______ (signature) ______ (full name)

(1) this paragraph is included in the pledge agreement if necessary.

(2) The Parties may provide in this agreement other additional provisions in accordance with the legislation of the Kyrgyz Republic and the agreement of the parties.

		Appendix 3 to the Rules for registration of collateral in the form of S placed through the National Bank of the Kyrgyz Republic

		National Bank of the Kyrgyz Republic
		Department ______

NOTIFICATION(*)
(to the pledge agreement No. _____ dated "" ______ 20)

______ (name of the Pledgee) requests the release from pledge of ______ (specify type of S), pledged by ______ (name of the Pledgor) in connection with (______).(specify reason)

Registration number of S	Quantity of S (pcs.)	Maturity date of S
Total:

M.P.

______ (position) ______ (signature) ______ (full name)

______ (date)

(*) Executed on the letterhead of the Pledgee.

		Appendix 4 to the Rules for registration of collateral in the form of S placed through the National Bank of the Kyrgyz Republic

		National Bank of the Kyrgyz Republic
		Department ______

INSTRUCTION(*)

---

(name of the Pledgee/Pledge manager)

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

In accordance with the agreement between ______ (name of the Pledgor) and ______ (name of the Pledgee), registered with the National Bank of the Kyrgyz Republic "" ______ 20 No. _____ and in connection with ______ (specify reason) in the capacity of the Pledgee, I request to transfer ______ (specify type of S) from the pledge sub-account of ______ (name of the Pledgor) to the investment sub-account of ______ (name of the Pledgee) or the general sub-account of ______ (name of the Pledge manager) in the Depository, the following S pledged by the said agreement:

Registration number of S	Quantity of S (pcs.)	Nominal value (currency)
Total:

M.P.

______ (position) ______ (signature) ______ (full name)

______ (date)

Agreed: (Pledgor)

M.P.

______ (position) ______ (signature) ______ (full name)

______ (date)

(*) Executed on the letterhead of the Pledgee.

		Appendix 5 to the Rules for registration of collateral in the form of securities placed through the National Bank of the Kyrgyz Republic

MODEL ADDITIONAL AGREEMENT No. ______ to the Pledge agreement dated ______

(As amended by resolution of the Board of the National Bank of the Kyrgyz Republic dated May 23, 2018 No. 2018-P-15/18-1)

Bishkek city		dated _____ ______ _______

National Bank of the Kyrgyz Republic, hereinafter referred to as the "National Bank" or the "Pledgee", represented by ______, acting on the basis of ______ and Order of the National Bank dated ______, on the one hand, and ______, hereinafter referred to as the "Bank" or the "Pledgor", represented by ______, acting on the basis of the Charter, on the other hand, hereinafter jointly referred to as the "Parties", in connection with ______ under the Credit Agreement dated ______ have concluded this Supplementary Agreement (hereinafter - the Supplementary Agreement) to the Pledge Agreement dated ______ (hereinafter - the Pledge Agreement) as follows:

1. Clause 1 of the Pledge Agreement shall be restated as follows:

"1. To secure the fulfillment of the Pledgor's obligations under the Credit Agreement, the Pledgor transfers to the Pledgee as collateral the securities listed below (hereinafter - Securities) with a total nominal value of ______ (Amount in words) soms, of the following issues and in the following amounts:

No.	Registration number	Date of issue of the Securities	Date of maturity of the Securities	Quantity of Securities (units)	Nominal price of 1 Security (currency)	Nominal value of the Securities (currency)
1
2
3
	Total:

2. The remaining terms of the Pledge Agreement remain unchanged.

3. This Supplementary Agreement is an integral part of the Pledge Agreement.

4. This Supplementary Agreement is drawn up in 3 (three) copies, having equal legal force: 1 (one) copy - for storage at the Bank, 1 (one) copy - for submission to the relevant authorized bodies for registration, 1 (one) copy - for storage at the National Bank.

LEGAL ADDRESSES, DETAILS AND SIGNATURES OF THE PARTIES
National Bank:	Bank:
Signatory	Signatory
______ M.P.	______ M.P.