14 February 2003: Summary of the charter for conducting relationships between the SVTs and the Agency France Tresor

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The French Treasury has specific relationships with a limited number of institutions, the “spécialistes en valeurs du Tresor”, the SVT (Primary Dealers) for the purpose of the management of its debt and treasury.

Relationships between the SVTs and the Agency France Tresor

The SVT are the preferred counterparties of the Agency France Tresor and the “Caisse de la Dette Publique” (CDP) for all their market activities. They advise and assist the AFT on its debt issuing and management policy, and more generally on any question regarding the smooth functioning of the markets.

The SVT mainly commit themselves to ensuring the smooth process and fine result of the auctions. They take part in all auctions so as to get, as a minimum and on average over a period of 12 moving months, 2% of the volumes auctioned.

Moreover, the SVT, thanks to their market making activities, back up the market liquidity for all French Treasuries. On the “grey” and secondary markets of these Treasuries, every SVT takes part for a significant part (from this point of view, 2% seems a reasonable order of magnitude for a minimum market share), and ensures a quite balanced coverage of the whole range of products issued by the AFT, as well as the repo market. In order to ensure market transparency, the SVT permanently show bid and ask prices on the main French Treasuries, for each market compartment. They develop the liquidity of these Treasuries on the different electronic quotation systems.

The SVT contribute daily to the information of the Agency on market evolutions and the volume of operations they dealt. They impart the AFT with all analysis and research from their teams on all questions of usage for a good understanding of the market or regarding the State signature. The SVT ensure a frequent dialogue between the AFT and their economist and strategist teams. Each of them has an economist whose main location is Paris. The Agency is at the disposal of the SVT to explain and comment on French economic policy and, more generally, on European policy in domains related to its remit.

The SVT, within the framework of AMTE, must update the Code of good behavior setting forth the professional ethics rules related to their activity, by which they naturally abide. Moreover, the SVT commit themselves to deliver, to the best of their capacity under any circumstances, their counterparties in French Treasuries. Also, the Agency may approach the compliance officer for the group so as to ensure that the implementation of this charter is fully met.

The SVT aim at developing the placement of French Treasuries towards a large and diversified pool of investors. In particular, the Agency and the SVT naturally tend to organize common actions so as to promote French Treasuries (conferences, investor meetings...).

Means and organization of each SVT

The front, middle and back office activities as well as the distribution and economic and strategic research activities are included in the SVT perimeter. The SVT label is given to the group as a whole.

For operational reasons, the SVT must have a permanent office in Paris where all or part of the means necessary for the SVT activity are located. This institution can be of French law or the subsidiary of an institution located in the European Economic Area. The frequent information of the Agency is an important pre-requisite for the definition of its strategy and the success of its operations. The maintenance of the quality and relevancy of this information requires a frequent physical contact between the different teams of the SVT perimeter and the members of the Agency so as to ensure a good knowledge and a high level of mutual confidence. The presence in Paris of true specialists on these different topics is an irreplaceable mean to create and efficiently maintain this level of confidence. Thus, the general presence of the institution in Paris constitutes an important evaluation item of its dedication towards the AFT and its long-term capacity to satisfy it.

When some components of the SVT team (traders, analysts, sales persons, syndication) are not located in Paris, the Agency may require their physical presence at technical meetings organized within the framework of the SVT activity, especially related to auctions and syndications.

The SVT team activity (trading, sales, economic and research analysis, back-office) is directed or coordinated by an Head of SVT who stands for his or her institution by the chief executive of the Agency. Among his or her tasks is to ensure the respect of the SVT charter. Moreover, a permanent representative by the AFT in Paris is in charge of direct and frequent contacts between the AFT members and the different actors of his or her institution (traders, sales, research and economic analysis departments, back and middle offices...).

Follow-up, evaluation and selection of the SVTs

The SVT evaluation is based on the taking into account of all missions related to each SVT's activity: participation in auctions, presence on the secondary market and qualitative aspect of the relation (information, advising, quality of research and of promotion of French Treasuries,...). The combination of these three factors leads to a ranking of the SVT. The AFT publishes an abstract of this ranking at the end of each year. A yearly meeting takes place between the AFT and the persons in charge of capital markets at the group level to examine the institution's rate of activity in its capacity as a SVT.

The SVT are selected for a three-year period by the Head of the Treasury, in his capacity as Chairman of the AFT, based on the opinion of a selection committee he or she forms, and after agreement by the Minister. During the three-year term, new members may join the SVTs if they display sufficient commitment. Conversly, in case of failure to abide by the SVT charter, the AFT reserves the right, after previous warning of the institution involved, to take all measures it will consider necessary, up to and including proposing the Head of the Treasury to rescind the belonging of the institution to the SVT group.