Upozornění: Text přílohy byl získán strojově a nemusí přesně odpovídat originálu. Zejména u strojově nečitelných smluv, kde jsme použili OCR. originál smlouvy stáhnete odsud
PRIMARY DEALER AGREEMENT
FOR CZECH GOVERNMENT SECURITIES
THIS AGREEMENT is made on aáiáV" for the purpose of fulfilling the
function of the Primaiy Dealer (herein subsequently referred to as the "Agreement")
BY AND BETWEEN
(l) THE CZECH REPUBLIC acting through the Ministry of Finance,
with its seat at Letenská 525/15, 118 10 Praha l
Identification Number: 00006947, Tax Identification Number: CZ00006947
represented by
(hereinafťer referred to as the "Ministry of Finance")
and
(2) UniCredit Bank Czech Republic and Slovakia, a.s.,
Having its registered oMce at Zeletavska 1525/1, 140 92 Praha 4 - Michle
Incorporated in the Coln|nercia] Register kept by Municipal Court in Prague, Section B, file 3608,
Identification Number: 64948242 Tax Identification Number: CZ699001820,
represented by
(hereinaňer referred to as the "Primary Dealer l")
and
(3) UniCredit SpA,
Having its registered office at Tower A, Piazza Gae Auknti 3, 20154 Milano, Italy
Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking
Group, with. cod, 02008.1; Cod. ABJ 02008.1 Coinpanies Register,
Tax Code, VAT No and Company Register of Milan-Monza-Brianza-Lodi: 00348170101
represented by
(hereinafter referred to as the "Primary Dealer 2")
(Each of Primary Dealer l and Primary Dealer 2 is hereinafťer jointly or individualy, as the case
may be, referred to as "Primary Dealer")
The Czech Republi¢ - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
WHEREAS
(A) Based on the statutory regulations valid in the Czech Republic, the Czech Republic acting
l) through the Ministiy of Finance issues Czech Government Securities.
2) It is in the best interest of the Czech Republic that the priniary inarket placing of the Czech
Government Securities is diversely and adequately dispersed among end-investors, that its
bonds are traded on secondary markets characterised by high liquidity and transparency and that
the status of the Czech sovereign debt is maintained at the highest level of quality in the primary
and secondary market.
3) With a view to support issuance, purchase, trading and promotion of Czech Government
Securities and of its debt and cash management it is desirable that the Ministry of Finance has
appointed certain institutions to become P]imaly Dealers in Czech Government Securities,
(B)
l) The institutions mentioned above as the parties to this Agreement have been assigned the status
of the Primary Dealer in Czech Government Securities with a view to enhancing the placing of
Czech Govemtnent Securities, to ensuring their liquidity on the secondary market, and to
promoting the Czech sovereign debt on the international market and across investor community.
THE PARTIES HAVE AGREED AS FOLLOWS
1. THE SCOPE OF THE AGREEMENT AND DEFINITIONS
The scope of the Agreement is to regulate the relationship between the Ministry of Finance and
the Prin1aly Dealers regarding issuance, purchase, trading and promotion of Czech Government
Securities and Ministry of Finance's debt and cash managanent process.
The Agreement determines the principles governing the activities of the Priinaty Dealers and
the Ministry of Finance and it sets in particular:
l) Privileges and obligations of the Primary DeaĹers,
2) Privi]eges and obligations of the Ministiy of Finance,
3) Selection criteria for the Primary Dealers,
4) Evaluation of the Primary Dealers' perfonnance,
S) Organization of the Primaiy Dealer Committee.
The following terms in this Agreement shall mean:
"APEI": Aggregate Performance Evaluation Index as deňned in Annex l of the Agreement.
"Auction": A public offering of Czech Governínent Securities executed in compliance with the Auction
Rules.
"Auction Rules": Rulesfor the Priniary Sale ofGovernmenl Securities Organizedby the Czech National
Bank, which came into effect on 28 June 2022, as amended or replaced fřom time to time by the Ministry
of Finance in consent with the Primary Dealer Group and the Czech National Bank, as published on the
website of the Czech National Bank and the Ministry of Finance.
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"Buy-Backs": Transactions in which the Ministry of Finance repurchases a particular Czech
Governinent Security in the secondary market for cash by way of a buy-back auction or a fixed-price
repurchase tender offer.
"CDCP": The Central Securities Depository Prague (Centrální depozitář cenných papírů, as.),
registered office at Prague ], Rybná 14, Postal Code: 110 00, identification number: 250%489, entered
into the Commercial Register kept by the Municipa| Court in Prague, Section B, Insert 4308.
"Competitive Parť': The Auction part in which each Primary Dealer, Recognized Dealer and the
Ministry of Finance inay submit bids at competitive prices in colnp|iance with tlie Auction Rules.
"Crisis Act": The Act No, 240/2000 Coll., on Crisis Management and on the Amendnient of Certain
Acts (Crisis ACt).
"Czech Government Bonds": Securities issued by the Czech Republic acting through the Ministry of
Finance on the domestic or foreign market with the original maturity longer than l year.
"Czech Government Securities": All of the Czech Government Bonds and all of the short tem
goveminent securities with the original maturity shorter than 1 year, which are in particular Treasuiy
Bills, issued by the Czech Republic acting through the Ministry of Finance.
"Designated Electronic Trading System" or "DETS", as the case may be: The electronic trading
platform or the electronic trading platforms designated by the Ministry of Finance for trading of Czech
Government Bonds based on the decision by the Primary Dealers on selection of electronic trading
platform(s) from a list of electronic trading platforins fulfilling the selection criteria set jointly by
the Ministry of Finance and the Primary Dealer Group as deňned in Section 4 of the Agreement.
"DETS Committee": The committee formed by the participants of the DETS as defined by relevant
document issued in connection with DETŠ inception.
"EMTN": The Czech Republic's Euro Medium Tem Nóte Programme originally established on 23
May 2008, as amended, replaced, or supplemented from time to time, or newly established.
"Evaluation Period": Each of calendar quarters.
"Exchanges": Transactions in which the Ministíy of Finance offers to exchange one or multiple
different Czech Government' Securities (generally repurchased at a fixed price) in a predetermined hedge
ratio for another one or multiple different Czecli Government Securities (issued or sold) in the secondary
market by a way of a switch auction or a fixed-price tender offer.
"Government Asset Funds": Portfolio assets actively managed and invested by the Debt and Financial
Assets Management Depaitment of the Ministry of Finance.
"Lending Facility": Transactions in which the Ministry of Finance provides lending of Czech
Governement Securities and the borrower provides the Ministry of Finance with collateral in the form
of cash or securities.
"Market Competitive Spread": Maximum obligatoty quoted bid/offer spread as deňned in Annex
VI of the Agreement.
"Minimum Quoting Volume": The volume of Czech Government Bonds each member of the Primary
Dealer Group shall quote in accord with Quoting Obligations.
"Non-competitive Part": The Auction pm in which each Priínary Dealer, the Ministry of FÍnance and
in the case of Czech Govemment Securities denominated in euro, also Recognized Dealer may submit
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
bids at an average price of the Competitive Part in compliance with this Agreement and the Auction
Rules.
"Performance Evaluation": Primary Dealers assessment made based on APEI calculated for four
consecutive Evaluation Periods.
"Primaiy Dealer Committee": The committee formed by the Primary Dealer Group, the Czech
National Bank and the Ministry of Finance in accordance with Section 9 of the Agreement.
.
"Primary Dealer Group" or "Primary Dealers", as the case inay be: A group of institutions that have
entered into a Primaiy Dealer Agreement for Czech Government Securities with the Czech Republic.
"Private Placements": Transactions in the fonn of non-public offering of Czech Govennnent Securities
directly to a limited number of pre-sekcted investors and institutions.
"Quoting Obligations": Coinmitment of the Primary Dealers to send quotes, i.e, post prices of
the SQOB on the DETS as defined in this Agreement.
"Recognized Dealer Group" or "Recognized Dealers", as the case may be: A group of institutions that
have entered into a Recognized Dealer Agreement for Czech Government Securities with the Czech
Republic, including institutions that have been recognized by the Ministry of Finance on the basis of
specifically set conditions as dealers exclusively in Czech Government Securities denominated in euro.
"Repurchase Agreement": Transactions in the form of collateralised loans, including a contractual
arrangement between the Ministry of Finance and another counterparty, whereby one agrees to sell a
security at a specified price with a commimient to buy the security back at a later date for another
specified price.
"Secondary Market Trading": Any intra-dealer or customer trading of Czech Government Bonds by
the Primary Dealers, except for the intra-dealer trading on the DETSS.
"SQOB": The Czech Government Bonds subject to Quoting Obligations on DETSs.
"Tap Issuance": Transactions in which the Ministry of Finance seňs a particular Czech Goveminent
Security in the secondary market for cash by way of an auction or a fixed-price tender offer.
"Trading Day": A day on which contracts can be executed on the DETSS as defined by relevant DETS.
2. THE OBLIGATIONS OF THE PRIMARY DEALERS
2.1 The Primary Dealer is obliged to participate in the Auctions of Czech Government Bonds
organized by the Czech National Bank on behalf of the Ministry of Finance and submit bids of
investors except in case of force majeure.
2.2 The Priinary Dealer is obliged to purchase (in aggregate) not less than 3% of the total adjusted
face value of Czech Government Bonds sold in Auctions, includingNon-competitive Parts, within
four consecutive Evaluation Periods provided that the Primary Dealer acts as a member of the
Primaiy Dealer Group during all four consecutive Evaluation Periods, otherwise such a rule shall
be used accordingly. The total adjusted face value takes into account different weights for
currencies in which Czech Government Bonds are denominated.
2,3 If the Primary Dealer does not act as a member of the Primary Dealer Group during all four
consecutive Evaluation Periods, he is obliged to purchase not less than 3% of the total adjusted
face value of Czech Govemment Bonds sold in Auctions, including Non-competitive Parts, within
a period starting the day he was selected as a member of the Primary Dealer Group and ending
30 October. After that period ends, conditions pursuant to article 2.2 are applied.
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2.4 The Primary Dealer is obliged to be system participant and act as a market maker at least on one
of the chosen DETS, act in accordance with its tnarket rules and financial market regulations,
comply with the Quoting Obligations, and to contribute on best effort basis to the liquidity of the
Secondary Market Trading of the Czech Government Bonds.
2.5 If the Primaiy Dealer fails to comply with the obligation referred to in articles 2.2 (or 2.3 as
the case inay be) and 2.4 the Ministry of Finance shall bring that fact to the attention of the
Primáty Dealer. This warning is not subject of any publicity to other members of the Priinary
Dealer Group. If the Primary Dealer achieves particular obligation within next Evaluation Period,
the warning is automatically cancelled. If not, the second waniing is sent to the Primary Dealer.
Ifthe envisaged compliance is nôt realised within next Evaluation Period, the Ministry of Finance
has the right to terminate this Agreement with immediate effect. The Ministry of Finance shall
inforin the Pritnary Dealer without delay.
2.6 The Primary Dealer is obliged to be an active counterparty to the Ministty of Finance's debt
issuance activities.
2.7 The Primary Dealer is obliged to actively assist the Ministry of Finance in the BLly-Backs or
Exchanges in line with the request of the Ministry of Finance sent to the Primary Dealer,
especially by providing price guidance and infortnation on the offered terms of the Buy-Backs or
Exchanges to the bond holders.
2.8 The Primary Dealer is obliged to display a good code of conduct in the clearing and settlement of
the trades with Czech Government Securities as well as in other operations concluded with the
Ministry of Finance, with a view to minimising failed transactions.
2.9 The Primaiy Dealer is obliged to report to the Ministry of Finance as specified in the Section 7 of
the Agreement.
2.10 The Primaty Dealer is obliged to observe and follow all of the applicable laws, statutes and
regulations imposing any and all of the selling restrictions for sale of the Czech Goveminent
Securities in any country where they are placed or sold by the Primaiy Dealer.
2.] l The Priniary Dealer is not allowed to negatively coinment on activities of the Ministiy of Finance
based on unsubstantiated information or speculation. The Primary Dealer is also obliged to
actively promote the Czech Government Securities market by adequate analysis, research and
publications and seek placement of Czech Governinent Securities with end investors.
2.12 The Primary Dealer is obliged to allocate and maintain sufficient resources in terms of huinan
resources, financial situation and organisation of its syndicate desk, trading and sales forces to
support efficient primary and secondary market for Czech Government Securities.
2.13 The Primary Dealer is obliged to maintain the highest standards in the financial business practice
consistent with the Ministry of Finance's objective to achieve orderly, efficient and liquid Czech
Government Securities market.
2.14 It should be understood by all Primary Dealers recognised by the Ministry of Finance, that they
act and participate in the market at their own risk and that the Ministry of Finance shall not be
responsible in any manner for the decisions of any participant in the market and in particular for
any losses, direct or indirecl arising in relation to any transaction entered into by such
participants.
2.15 The Primary Dealer shall treat all nonpublic information received from the Mi]listly of Finance
and in particular information relating to transactions and outstanding positions confidentidly. The
Primary Dealer shall not share this confidential infomation with any third party unless required
to do sq by applicable law, a court order or by this document.
2.16 Tlie Pi'imary Dealer is obliged to actively participate in Repurchase Agreements, including cross-
currency Repurchase Agreements, and operate as an active counterparty to the Ministry of
Finance.
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The Czech F!epub]ic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
3. THE PRIVILEGES OF THE PRIMARY DEALERS
3.1 The Primary Dealer has the exclusive right to čany and use the title of »Pri/nan/ Dealer in Czech
Government Securiiies".
3.2 The Primary Dealer is entitled to submission of bids at the Auctions including participation in the
Non-competitive Parts.
3.3 The Primary Dealer has the exclusive right to participate in the Non-competitive Parts for Czech
Government Securities denominated in CZK in accordance with the rules defined in the Auction
Rules.
3.4 The Primary Dealer has the exclusive' right to directly participate in the syndicated Czech
Government Bond public offerings issued under the Czech law and right to participate in the
syndicated Czech Government Bond public offerings issued under other law as long as it is
selected by the Ministiy of Finance based on the Performance Evaluation of Primaiy Dealers as
defined in the Section 6 of the Agreement and other objective criteria afTinning Primary Dealer's
capacity and credentials on particular market including Primary Dealer's standing in league table
on the relevant market based on data provided by Dealogic Limited, when applicable. The basic
terms for any of such transaction are stipulated in the ,,Termsfor Minist'y ofFinance Syndicated
Public O¶erings" as defined in the Annex JV of the Agreement.
3.5 The Primary Dealer has the right to submit Qffers for private placement transactions as set out by
the Ministry of Finance as stipulated in the ,,Terms for Ministry ofFinance Private Placements"
as defined in the Annex V of the Agreement.
3.6 The Primary Dealer or an applicant to become a new member of the Primary Dealer Group has
the right to participate in Tap Issuance, Buy-Backs or Exchanges as stipulated in the ,,Terms,for
Ministry ofFinance Tap Issuances, Buy-Backs and Eíchanges" as defined in the Annex [j of the
Agreement.
3.7 The Primary Dealer with whom the Ministry of Finance may enter into an Global Master
Repurchase Agreemenť, Global Master Securities Lending Agreeinent? or Master Agreement for
Financial Transactions concluded only in Czech language as Rán7coyá smlouva o obchodováni
na jinančním trhu' has the right to participate in Repurchase Agreements, Lending Facilities,
Buy-Backs, Tap Issuance or Exchanges and be counterparty in transactions related to the
Governinent Asset Funds.
3.8 The Primary Dealer with whom the Ministry of Finance may enter into an 1ŠDA Master
AgreemenÝ or Master Agreement for Financial Transactions concluded only in Czech language
as Rámcová smlouva o obchodování 17ä jínančním trhu has the right to be asked for price
indication in transactions with financial derivatives in the event that the Ministry of Finance
would conduct derivative transactions. All derivative transactions will be documented under an
ISDA Master Agreement or Master Agreement for Financial Transactions concluded only in
Czech language as Rámcová smlouva o obchodování na jínančním trhu with the Ministry of
Finance.
3.9 The Primary Dealer has the right to use the Lending Facilities set up by the Ministry of Finance
as stipulated in the ,,Ternisfor Ministry ofFinance Lending Facilities" as defined in the Annex
III of the Agreement with a purpose to improve market efficiency.
' In case that an exceptional and unforeseen event occurs, ¢$pe¢ia|ly when Crisis Act is applied, the Ministry of
Finance reserves the right to mandate other financial institutions outside the Primary Dealer Group as well.
? According to Interantional Capital Market A$$ociation arid Securities Industry and Financial Markets A$$o¢iaticm
standard.
3 According to International Securities Lending A$so¢iation standard.
' According to Czech Banking A$$i¢itation standard.
' According to International Swaps and Derivative$ Association, Inc. standard.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
3.10 The Primary Dealer is the prefered party along with Recognized Dealers for concluding other
financial transactions defined by the Ministry of Finance.
3.11 The Plimaly Dealer has the right to receive a commission for services supplied as agreed
separately prior to the transaction between the Ministry of Finance and the Primary Dealer Group
depending on the type of the transaction.
3.12 The Primary Dealer has the exclusive right to participate in the Primary Dealer Committee as
described in the Section 9 of the Agreement.
3.13 The Primary Dealer has the exclusive right to have a representative in the DETŠ Committee as
long as it is participant of the particular DETS.
3.14 The Primary Dealer has the right to advise and discuss with Debt and Financial Assets
Management Department of the Ministry of Finance estimates of the Czech Republic borrowing
needs and issuance planning, introduction of new financial instruments, selection of issuing and
Buy-Backs or Exdianges methods, operating rules, choice of markets for primary market
transactions and developments in government debt markets and issuance activities.
3.15 The Primary Dealer has the exclusive right to select by decision taken by the Priinary Dealers in
a Primary Dealer Committee meeting an electronic platform or electronic platforms as DETS
fřom a list of electronic trading platfonns fulfňling the selection criteria setjointly by the Ministry
of Finance and Primary Dealer Group as defined in Section 4 of the Agreement. Primary Dealer
l and Priinary Dealer 2 act as one member of Primary Dealer Group and shall have one vote
together in the Pl"inľaly Dealer Cominittee.
3.16 The ranking achieved in the last Perfonnance Evaluation might be taken into consideration within
the exclusive rights or preferences for Primaiy Dealers.
4. THE CHOICE OF THE DESIGNATED ELECTRONIC TRADING PLATFORM(S)
4.1 The choice of DETS for trading with the Czech Government Bonds on which the Primaiy Dealer
complies with Quoting Obligations is based on the decision made by the Primaiy Dealers in a
Primary Dealer Committee meeting on selection of electronic platf'ortn(s) from a list of electronic
trading platfonns following selection criteria jointly set by the Ministry of Finance and Primary
Dealers.
4.2 In order to be considered eligible, a DETS n:iust:
a) be a regulated market,
b) offer equal and fair access to all Primary Dealers free of membership fee for market takers,
and the transaction fees charged to market takers may not be prohibitively high,
c) communicate its fee schedule to the Ministry of Finance,
d) agree to follow the guidelines set by the Priinary Dealer Committee in order to ensure that
the platform technically enables Priniary Dealers to comply with their Quoting Obligations,
e) make public current bid and offer prices and the depth of trading interests at those prices
which are advertised through its system on a continuous basis during nonnal trading hours,
on reasonable commercial terms to all inarket participants and fřee of charge to the Ministry
of Finance,
f) provide the Ministry of Finance with market statistics on daily quoting perfomances and
concluded trades, and other data required by the Ministry of Finance for the purpose of
monitoring the inarket, as well as data suitable for monitoring Primary Dealers' compliance
with Quoting Obligations as defined in the Section 5 of the Agreement and subsequent
evaluation of Primary Dealers as defined in the Section 6 of the Agreement,
g) enable settlement of trades through CDCP and
h) be selected by a simple majority of Primary Dealers.
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4.3 A selected DETS keeps its status for a period of two years and its status is reviewed every two
years in accordance with the aforetnentioned procedure.
4.4 The DETS representative must send an application to the Ministry of Finance stating that it fiilfils
the above criteria and the Ministry of Finance consecutively evaluates applications pursuant to
above mentioned conditions.
5. QUOTING OBLIGATIONS
5.1 Priniary Dealer is obliged to be an active inarketmnaker of the secondary market for Czech
Government Bonds and to fulfil Quoting Obligations as set by the Ministty of Finance after
consultation with the Primary Dealer Group.
5.2 Primary Dealer is obliged to act as an active market-maker on one of the chosen DETS.
The choice of DETS where the quoting is performed lies with each Primary Dealer.
5.3 Primary Dealer can quote a part of their allocated Czech Government Bonds on one DETS and
another part(s) on one or tnore other DETS(S).
5.4 Primaty Dealer will be considered to have complied with its daily Quoting Obligations regarding
a specific Czech Government Bond only if it has complied with it on one or inore DETS(S).
5.5 Primary Dealer commits to comply with the internal regulations of each and every selected DETS
on which they quote prices.
5.6 Primary Dealer is encouraged to paiticipate as market takers on all selected DETS(s).
5.7 Priinary Dealer has fulfilled its Quoting Obligations for the Evaluation Period as long as its
Monthly Compliance Ratio for each month of the Evaluation Period reaches at least 90% as
defined in Annex VI of the Agreement.
5.8 Monthly Coinpliance Ratio is calculated as a simple average of the Daily Compliance Ratios.
5.9 Daily Compliance Ratio is calculated with regard to particular Czech Governtnent Bond as long
as a quoted spread is equal or lower than Market Competitive Spread during five hours of
quotations with the lowest spread during a Trading Day as defined in the Annex VI of the
Agreeinent.
5.10 Primary Dealer's compliance with its Quoting Obligations is monitored by the Ministry of
Finance on the basis of reports submitted daily to the Ministry of Finance by the selected DETS(S).
5.| l Primary Dealer will be infonned on its compliance with Quoting Obligations by the Ministry of
Finance on demand on a daily or monthly basis.
5.12 In case of technical issues regarding the fulfillment of quoting obligations on selected DETS, the
Primary Dealer is obliged to inform the Ministry of Finance on the given fact without any delay
and the Ministry of Finance may take it into account in daily compliance ratio calculation.
6. EVALUATION OF MEMBERS OF PRIMARY DEALER GROW
6.1 The Performance Evaluation of each member of Primary Dealer Group is based on APEI
calculacted for last four consecutive Evaluation Periods.
6.2 The composition and the calculation of the APEJ is outlined in the Annex l of the Agreenwnt.
This methodology can be modified based on decision of the Ministry of Finance after
the consultation with the Primary Dealer Group in the Primaiy Dealer Committee meetings.
6.3 If the Primary Dealer fails to comply with the obligation refen'ed to in article 7.3 of the
Agreement, he may be excluded from the Perfortnance Evaluation defined in this Section of the
Agreement in the respective Evaluation Period.
6.4 [f during Evaluation Period the Primary Dealer demonstrates lowered credibility, i.e. any delay
in settlement or payment, the APEI in respective Evaluation Periód will be reduced in the range
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from O to 10 points; In case of major breach of payment discipline he may be excluded from the
Performance Evaluation deňned in this Section of the Agreement in the respective Evaluation
Period.
6.5 The Performance Evaluations are communicated to each member of Primaiy Dealer Group
individually, including the value of APEL
6.6 A list of five best-performing members of Primary Dealer Group is published within the regular
Debt Portfolio Managenient QLlarterly Report and The Czech Republic Government Debt
Manageinent Annual Report published in the month following the end of Evaluation Period and
in February respectively on the website of the Ministry of Finance.
7. REPORTING OF TRANSACTIONS
7.] The Primary Dealer undertakes to provide information on completed transactions, transaction
volumes, institutional as well as geographical structure and such other information with respect
to primaiy and secondary market transactions with Czech Government Bonds requested by
the Ministry of Finance and/or any competent market authority and/or binding regulation
provided that the Primaiy Dealer is not prohibited to submit such information by law, other
binding regulations or contractual agreement with investors.
7.2 The Primary Dealer shall subinit quarterly to the Ministry of Finance a report on its activity
structured according to the European harmonized reporting format, following the guidelines
outlined on the website ofthe relevant Economic and Financial Committee (EFC) Sub-Committee
on EU Sovereign Debt Markets in cooperation with the Association for Financial Markets in
Europe.
7.3 The data referred to in the article 7.2 is to be transn:iitted electmnically to the Ministry of Finance,
The data is to be received no later than twenty calendar days after the last day of the quarter to
which they relate.
7.4 On request by the Ministry of Finance, the Primary DeaĹer shall provide additional information,
not included in the reporting format, defined in the article 7.2 and 7.3, such as specification of
individual investors of the Czech Government Bonds in the primary market provided that
the Primary Dealer has obtained such information in the course of participating in a primaiy
market transaction and that the Priínary Dealer is not prohibited to subn]it such information by
law, other binding regulations and submitting such infonnation is not against market practice. All
information on individual investors obtained from Primary Dealers will be treated by Ministry of
Finance as confidential information and will be used only for internal analysis.
7.5 Jfrequested by the Ministry of Finance, Primary Dealer wili co-operate in an audit of these reports
and information mentioned in article 7.2, 7.3 and 7.4 provided that any such cooperation is nót
subject to any restrictions or limitations to its ability to cooperate that arise by virtue of the
Primary Dealers internal policies regulatory, statutoiy Ql' other requirements (as determined by
the Primary Dealer in its sole discretion).
7.6 The Ministry of Finance equally informs the Primary Dealers Qf any topics or projects in respect
of which it anticipates receiving fřom the Primary Dealers specific support in terms of research
and advise.
7.7 The Ministry of Finance shall treat i11fôITnation provided by Priinary Dealers confidentially.
The Ministry of Finance shall only publish or make public information at the level of aggregated
statistics. The Ministry of Finance has, however, the right to publish rankings of members of the
Primaiy Dealer Group according to the APEL
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8. SELECTION OF THE PRIMARY DEALER GROUP
8.1 An applicantto become a member ofthe Primary Dealer Group shall submit a written application.
8.2 The Ministry of Finance selects new meinbers of the Primary Dealer Group for two-year period,
starting on l January and ending on 3 1 December of the foIIowing year. The selection is notified
to Primary Dealers no later than 30 November of the year preceding the first year of the relevant
period, The Ministry of Finance reserves the right to define the number of members as well as
the proportion between resident and non-resident members of the Primary Dealer Group.
8.3 Only the following entities may become members of the Priinary Dealer Group:
a) a bank with a banking licence granted pursuant to Article 4 of Act No. 21/1992 Coll.,
Banking Act, as amended (hereinafter referred to as the "Banking Act "), which on the basis
of this licence is authorised to provide investment services pursuant to Article 4 (2) a) to C)
and e) of Act No. 256/2004 CoIl., Capital Market Act (hereinafťer referred to as the "Capital
Market ACt"),
b) a branch of foreign bank with a banking licence granted pursuant to Article 5 of the Banking
Act, which on the basis of this licence is authorised to provide investment services pursuant
to Article 4 (2) a) to C) and e) of the Capital Market Act,
c) a foreign entity having its registered office in another member state of the European Union,
which on the basis of the single licence pursuant to Article 5c et seq. of the Banking Act is
authorised to perform activities pursuant to Article 5d d) and g) of item 4 of the Banking Act
on the territory of the Czech Republic,
d) a securities dealer pursuant to Article 5 of the Capital Market Act which is authorised to
provide investment services pursuant to Article 4 (2) a) to C) and e) of the Capital Market
Act,
e) a foreign entity providing in accordance with Article 28 ofthe Capital MarketAct investtnent
services pursuantto Article 4 (2) a) to C) and e) of the Capital Market Act through its branch,
f) a foreign entity having its registered ofňce in another member state of the European Union,
which is authorised on the basis of the single licence pursuant to Articles 24 and 25 of
the Capital Market Act to provide investtnent services pursuant to Article 4 (2) a) to C) and
e) of the Capital Market Act on the territory of the Czech Republic,
g) a foreign entity having its registered office in another member state of the European Union,
which is a bank, bank's branch, securities dealer or securities dealer's branch, and which is
authorised to provide investment services pursuant to Article 4 (2) a) to C) and e) of the
Capital Market Act on the territory of a member state of the European Union.
h) an entity authorised by the United Kingdom Prudential Regulation Autl1oriN and regulated
by the United Kingdom Financial Conduct Authority and the Prudential Regulation
Authority (or any successor bodies) to perform regulated activities including at least: (i)
dealing in investments as principal; (ii) dealing in investments as agent; (iii) arranging
(bringing about) deals in investments; and (iv) advising on investments.
8.4 An applicant to become a member of the Primary Dealer Group is required to fůlfil the following
criteria at the time of submitting the application:
a) to be a member of a group where entities act as primary or recognized dealer (or to have a
similar fůnction) for at least three other European Union member states at the same time
(applicable to non-resident institutions),
b) to have high level of management' and depth and experience, dealing capability as well as
proven geographic and institutional distribution capacity,
C) in the 6 months period preceding to the submission of the application it has participated,
through one or more members of Primary Dealer Group, in Auctions and has subscribed for
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
at least 3% of the total adjusted face value of Czech Governinent Bonds allocated in this
period by the Ministry of Finance,
d) to be an active DETS participant, i.e. to comply with the Quoting Obligations, for a period
of 6 months at least preceding to the submission of the application and to have a past record
of active secondary trading of the Czech Government Bonds,
e) to prove a record of support of the Czech Governinent Securities market and promotion of
the Czech Government Securities by adequate analysis, research and publications,
f) in the opinion of the Ministry of Finance, shall maintain sufficient resources in terms of
human resources, financial situation and such organization of its syndicate desk, trading and
sales forces to support efficient priinary and secondary market of Czech Government
Securities,
g) in the opinion of the Ministry of Finance, shall maintain the highest standards in financial
business practice, consistent with the Ministry of Finance's objective of achieving orderly,
efficient and liquid Czech Government Securities market.
8.5 The Primaiy Dealers are selected by the Ministry of Finance from the present Primary Dealer
Group and from other institutions the Ministry of Finance niight decide to consider. The selection
will be based on Performance Evaluation deňned in the Section 6 of the Agreement, the criteria
stipulated in this section and other criteria the Ministiy of Finance might consider relevant.
8.6 The Ministry of Finance is also entitled to replace any of the existing Primary Dealers who might
resign in accordance with Section 12 herein during the time of validity of the Agreement by a
new member of the Primary Dealer Group selected based on criteria set in this section.
9. PRIMARY DEALER COMMITTEE
9.] The Primary Dealer GroLlp, the Ministry of Finance and the Czech National Bank shall form
a committee with the aiin to ensure eňicient and sniooth transaction of the Czech Government
Securities markets and to provide a forum for exchange of information, consultations on primary
and secondary market organization, policies and resolving of issues that might arise with regard
to implementation ď provisions of the Agreement.
9.2 Each Primary Dealer shall appoint one its representative. Primary Dealer l and Primary Dealer 2
shall have one vote together.
9,3 The Ministry of Finance shall appoint two its representatives, one of them shall act as
a chairperson of the committee and the other one shall act as a secretaiy of the comnittee.
9.4 The Czech National Bank shall appoint two representatives,
9.5 [f any of the appointed representatives (committee menibers) is unable to attend the cominittee
tneeting he or she may be replaced by a deputy men)ber for such specific meeting as specified by
written notice of the respective entity sent to the MinĹstry of Finance well in advance.
9.6 Regular meetings of the committee shall be convened at least once a halE usually 14 calendar
days preceding date of publishing issuance calendars for the forthcoming month and roughly a
tnonth before new Evaluation Period staňs,
9.7 Meetings shall be called at the initiative of the chairperson or when a half of the committee
members appointed by Primary Dealers requests a meeting to consider a specific matter.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
10. NOTICES
Each communication to be made hereunder shall, unless stated otherwise, be made in writing by letter,
telefax or e-mail to the addresses and telefax number (S) as defined bellow,
The Czech Republic - Ministry of Finance
Ministry of Finance
Debt and Financial Assets Management Department
Letenská 525/15, 118 10 Praha 1
Primary Dealer l:
UniCredit Bank Czech Republic and Slovakia, a.s.
Želetavská 1525/1,
14092 Praha 4 - Michle
Primary Dealer 2:
UniCredit SpA
Tower A, Piazza Gae Aulenti 3,
20154 Miláno
Italy
11. GOVERNING LAW AND JURISDICTION
l 1.1 The Agreement shall be governed by and construed in accordance with the Czech law, This rule
applies to all and every dispute that may arise out of the Agreement and of the relation established
by the Agreement.
l 1.2 If any dispute may arise between the parties hereto in connection with the Agreement, the parties
will seek an agreement to resolve it between themselves first. In a case that the agreement to
resolve such dispute cannot be reached, the parties hereby submit to the jurisdiction of the courts
of the Czech Republic. The parties agree that the competent court to have exclusive jurisdiction
to settle any such dispute shall be The Municipal Court in Prague.
12. ENTRY INTO FORCE AND TERMINATION OF THE AGREEMENT
12.1 The Agreement is valid and enters into force either on the date of its execution or on l January
2026, whichever is the later, and expires on 3 l December 2026.
12.2 The validity and the effectivness of the Agreement may be unilaterally and repeatedly extended
by the Ministry of Finance for periods of one year, until 31 Decanber of the following calendar
year, based on the written notice from the Ministry of Finance sent to the Primaľy Dealer by no
later than 3 l December of respective year,
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
12.3 The Primary Dealer may terminate its participation in the Agreement by giving not less than 90-
day written notice sent by registered letter to the Ministry of Finance. The 90-day notice period
begins on the first day of the calendar month following the day of delivery of tlie notice. This
Agreement will remain in place between the Ministry of Finance and the remaining Primary
Dealer.
12.4 The Ministry of Finance may terminate the Agreement at any time by giving a not less than 30
days written notice of termination to tlie Priinary Dealer. The 30-day notice period begins on
the calendar day following the day of the delivery of the notice.
12.5 The Agreement has been executed in six counterparts, three in Czech and three in English
language. Each of the counterparties of the Agreement shall recieve two counterparts, one in
Czech and one in English language. Each of the executed counterpaňs shall be deemed an
original. In case of any discrepancy or inconsistency between the Czech and English language
version, the English version shall prevail.
12.6 The Ministry of Finance pledges to keep the Auction Rules in accord with this Agreement. Where
provisions of the Agreement are in conflict with the Auction Rules, provisions of Auction Rules
shall prevail.
12.7 The Annexes attached hereto form unseparable pan of the Agreement. The Agreement has
following Annexes:
a) Annex I: Performance Evaluation of Priniary Dealers
b) Annex jI: Terms for Ministry of Finance Tap Issuances, Buy-Backs and Exchanges
C) Annex III: Terms for Ministry of Finance Lending Facilities
d) Annex IV: Terms for Ministry of Finance Syndicated Public Offerings
e) Annex V: Terms for Ministry of Finance Private Placements
f) Annex VI: Evaluation of Quoting Obligations
g) Annex VIl: Contact List
12.8 Changes and amendments to Annexes l-Vl to the Agreement are subject to agreement between
the Ministiy of Finance and the Primary Dealer Group and do not require that this Agreement is
amended by written amendment, Changes and aínendments to Annex VIJ to the Agreement are
made by written notice to the other counterpaity.
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The Czech Republic - Ministrý of Finance UniCredit Bank CZ&SK and UniCredit SpA
IN WITNESS whereof this Agreenient has been concluded on the date stated at beginning.
SIGNATURES
The Czech Republic — Ministry of Finance
UniCredit Bank Czech Republic and Slovakia,
a.s
UniCredit SpA
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex I: Performance Evaluation of Primary Dealers
Evaluation Framework
The privilege of being a Primaiy Dealer in Czech Government Securities is garanted to market
participants subject to their compliance with the Primary Dealers' obligations. The Primary Dealers'
performance is evaluated based on APEJ on a quarterly basis. In order to provide global and objective
assessment several criteria are considered. The structure of scoring process is outlined
in the performance evaluation tree below. The performance of the Prhnaty Dealer will be masured and
calculated on an aggregate basis.
The composition and calculation ofthe criteria is discussed and disclosed to the Primary Dealers to avoid
speculative statistical optimization on the side of Primary Dealers which may not be an optimal strategy
for any participating party.
The maximum score Primary Dealer can achieve is 100 points. The score is calculated based on relative
performance. The most successful Primary Dealer in a particular sub-criterion is assigned the maximum
number of points. The others Primary Dealers are allocated points proportionally to the performance of
the winner. Score is then aggregated over the grid of sub-criteria and Primary Dealers are ranked in the
descending order based OIl the number of points:
N
^"" =N'(&)]
where N is number of sub-criteria, APEli stands for the total score of i-th Primary Dealer (pDj)
in the Evaluation Period, functionftakes maximuin or mininium value fřom the set of Primary Dealer's
results in each sub-criterion depending on the ranking order. Function h makes the inverse ofthe fraction
if the ranking order is ascending. In case of the descending order the function makes the fřaction power
to one for the set of all results different fřom zero. The sum is over all sub-criteria of evaluated criteria
and Xc is maximum score in c-th sub-criterion.
Weights within the performance evaluation tree are assigned in a two-step process. First, the total
number of points is distributed to reflect the relative importance of criterion. Following the current
practice in other developed markets, Ministry of Finance gives increasing weight to the secondaiy
market criterion. Second, the number of points for each criterion is allocated among related sub-criteria
in the way matching the importance for evaluation process.
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The Czech Republic - Ministrý of Finance UniCredit Bank CZ&SK and UniCredit SpA
Figure l: Performance Evaluation Tree
APEI
Primary Secondary Market
Market and Market
Operations
Government DETS " MinOispteryra'stioMnasrket
Securities
Primary Auctions Quoting Deposand
Share - Obligation Repurchase
Performance Agreements
Government
Bonds Qualitatlve FX Spots, FX
Performa nce Forwards and FX
Dependability
Traded Volume — Swaps
Auction Pricing _
Strategy Lending Facility
Auction Tap Issuances,
Participation Buy-Backs and
Primary Auctions Excahnges
S ha re - Treas li ry —
Tap Issuances
Bills Buy-Backs and
Exchanges Pricing
Strategy
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The Czech Republic - Ministrý of Finance UniCredit Bank CZ&SK and UniCredit SpA
A. Primary Market Participation
Auctions are the inain source of fůnding and Ministry of Finance evaluates the quantity and quality of
Primary Dealers' contribution to satisfý financing needs on the basis of five sub-criteria. The lnaxilnum
score for primary market participation is 55 points.
A.] Primary Auctions Share - Government Bonds (PAS)
The maximuin number of points in this sub-criterion is assigned to the Primary Dealer underwriting the
largest share of successful bids in Auctions of Czech Government Bonds in the Evaluation Period. To
ensure comparable figures among different Auctions in the Evaluation Period, market share is duration
weightedt The Ministry of Finance may also use different weights for Czecli Government Bonds
denominated in local currency and Czech Government Bonds denominated in foreign currencies
to support Prirnary Dealers' participation in foreign currency financing operations on Czech
Government Bond primary market.
PAS' = E:-1w/djgb,,/
w,D, L'-", GB,,j
where K denotes number of Auctions of Czech Government Bonds in the Evaluation Period, PD is
number of Primary Dealers, Wj denotes the weight based on currency of Czech Government Bond
offered in j-th Auction, Dj is duration of Czech Government Bonds in j-th Auction and GBi,j is CZK
equivalent of the nominal amount of Czech Government Bond subscribed by i-th Primaty Dealer inj-th
Auction.
The inaximum score for this sub-criterion is 30 points. Within this sub-criterion, the Ministry of Finance
reserves the right to apply a negative penalty of l point for each settlement failure during the Evaluation
Period caused by inaction or lack of cooperation on the part of the Primary Dealer.
A.2 Dependabi/iiy (DEP)
The ratio of successful bids to total bids submitted shows whether the Primaty Dealer is committed to
acquire the Czech Government Bonds or just seeking the opportunity for short-term profit. Thus,
Primary Dealer with the highest ratio scores inaximum in this sub-criterion.
Ef, Wjbid,,,,j
DEP' = Ej, w/(bid,,,,j + biäN,L,/'j'
where K denotes number ofAuctions of Czech Government Bonds in the Evaluation Period, w)' denotes
the weight based on currency of Czech Government Bond offered in j th Auction, bíds,i,j is CZK
equivalent of the total nominal amount of successM bids submitted by i-th Primary Dealer at the
competitive part of thej-th Auction and bidN,i,j is CZK equivalent of the total nominal amoLlnt of bids
subinitted by i-th Priinary Dealer at the ccnnpetitive part of thej-th Auction which were not accepted by
the Ministry of Finance.
The maximuin score for this sub-criterion is 5 points.
A.3 Auction Pricing Strategy (APS)
6 Duration of security or book-entry sě¢witý in all ¢a]culatiorls is considered as a time to maturity of the security
or book-entry securitj' relevant to the trade settlement date.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
This sub-criterion evaluates pricing strategy of Primaiy Dealers. Ministry of Finance appreciates
Primary Dealers willing to pay highest nominal an:iount; duration and currency weighted price in the
Auction of Czech Government Bonds. Priinaty Dealer with the highest nominal amount, duration and
currency weighted price scores maximum.
K Li,j
A'S, = Z WjDj Z ql.i,jmax{'l.i,, - 75; O}
j"1 1=1
where K denotes number of Auctions of Czech Government Bonds in the Evaluation Period, Wj denotes
the weight based on currency of Czech Government Bond offered in j-th Auction, D/ is duration of
Czech Government Bond in j-th Auction, Li,j is number of all bids submitted by i-th Primary Dealer at
the competitive part of the j-th Auction, ql,i,j is the ratio of l-th bid nominal amount submitted by i-th
Prilnaly Dealer inj-th Auction to total nominal amount sold at the competitive part inj-th Auction, Pi,i,j
is price of l-th bid submitted by i-th Primary Dealer at the competitive part ofj th Auction and PI is the
avarage price in j-th Auction.
The maximum score for this sub-critericm is 5 points.
A.4 Auction Partic{pation (PAR)
Regular participation in Auctions of Czech Government Bonds is one of the key qualities of Pritnary
Dealers. A Primary Dealer performs better when he can be relied upon. Primary Dealer with the highest
regular participation figure scores maxiinum:
ŽJ-1"/"ľ/
PAR' = ZYm Wj
where K denotes number of Auctions of Czech Government Bonds in the Evaluation Period, w/ denotes
the weight based on currency of Czech Government Bond offered in j-th Auction, 11jj equals l if i-th
Primary Dealer bought more than ] % of the total nominal amount sold at the competitive part ofj-th
Auction, otherwise njj equals O.
The maximum score for this sub-criteriQn is 5 points.
AS Priman/ Auctions Share - Treasunj Bills (TBS)
The maxiinum number of points in this sub-criterion is assigned to the Primary Dealer underwriting the
largest share of Treasury Bills during the Evaluation Period:
TBj
TBS' = E?", TB,
where PD is number of Primary Dealers and TBí is the total nominal amount of Czech Treasury Bills
subscribed by i-th Primary Dealer in Auctions of Treasuiy Bills during the Evaluation Period.
The maximum score for this sub-criterion is tO points. Within this sub-criterion, the Ministry of Finance
reserves the right to apply a negative penalty of l point for each settlement failure during the EvalmtÍon
Period caused by inaction or lack of cooperation on the part of the Primary Dealer.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
B. Secondary Market Participation and Market Transactions
Market-making and secondaiy market trading is performed on DETSs. The aim of the Ministry
of Finance is to build as transparent, liquid and deep secondary market for Czech Government Bonds as
possible. In order to achieve this goal, high quality of market-nľaking is essential. Ministry of Finance
evaluates separately Primary Dealers activity on DETSS, the overall quality and structure of secondary
market activity and performance in Ministry of Finance direct transactions on secondary market.
Ministry of Finance encourages Priniary Dealers' activity on the secondary market leading to balanced
geographic and institutional distribution of Czech Government Bonds. The maximum score for
secondary market paiticipation is 45 points.
B.1 Quoting Obligations Performance on DETSS (MMO)
Each Primary Dealer is obliged to perform market-making on one ofthe chosen DETSS. Compliance with
the Quoting Obligations is inonitored by the Ministry of Finance on a monthly basis. Peiformance
Evaluation of Primary Dealers compliance is calculated as simple sum of monthly compliance ratios:
M
MMO, = E MCRm,,
mm
where Mis number of months during the Evaluation Period, MCRm,l is Monthly Compliance Ratio of i-
th Primaiy Dealer in nřth month as defined in Annex VI of the Agreement, When MCRm,i falls below a
minimum level, i.e. i-th Primaty Dealer is thus not compliant for ni-th month, MCRm,i equals O.
The maximum score for this sub-criterion is 10 points.
B.2 Qualitative Performance on DETS (QF)
The Ministry of Finance evaluates Primary Dealers qualitative performance on DETSs with a goal
of achieving as liquid and deep secondary market as possible, Evaluated structure of qualitative
performance includes quoted bid/offer spread, quoted size and quoting time given a following formula
for Quotation Factor (QF)'
SQQB SQoľ SNQOB SNQf,l
QF, = (ŕ Z Z :°'" V,,n,,(t',,n,,-'o,n,,)+(1-a) Z Z :"" Y,n,,(",,n1 -'f,n,i)
o=1 n=1 om,i f=1 n=1
where a is the weight of Czech Government Bonds subjected to Quoting Obligations on the calculation
of QF, SQOB is number of Czech Government Bonds sutj!iected to Quoting Obligations on DETSS,
SNQOB is number of Czech Governinent Bonds not subjected to Quoting Obligations on DETSS, SQ,,i
is number of quotations of o-th Czech Government Bond subjected to Quoting Obligations on DETSS
subinitted by i-th Primary Dealer during best five hours in particular Trading Day, SNQf,i is number of
quotations off-th Czech Government Bond not subjected to Quoting Obligations on DETSS submitted
by i-th Primaty Dealer during best five hours in particular Trading Day, D.,,, is duration of the particular
Czech Government Bond in the n-th quotation, S.,n,i is bid/offer spread (in ticks) quoted by i-th Primary
Dealer for the particular Czech Government Bond beginning at the time t.,n,i and ending at the time
t'.,n,i of n-th quotation of given Czech Government Bond and Y.,n,1 is CZK equivalent of the nominal
ainount of the particular Czech Government Bond quoted by i-th Primaiy Dealer beginning at the time
t.,n,i and ending at the time ť.,n,í of n-th quotation of given Czech Government Bond, The Ministry of
Finance deems weighting of Czech Government Bonds subjected to Quoting Obligations should differ
from the weighting of the other Czech Government Bonds quoted on DETS.
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The Czech Republic - Ministrý of Finance UniCredit Bank CZ&SK and UniCredit SpA
The maximum score for this sub-criterion is 10 points.
B.3 Tŕaded Vo/unie on DETS (TYF)
It is in the interest of the Ministry of Finance that the secondary tnarket is as liquid and deep as possible
not only in terms of transacted volume but also with regard to number of transactions executed. The
Ministry of Finance evaluates contribution of Primaíy Dealers to the liquidity of the domestic secondary
market for Czech Government Bonds traded on DETSs using Traded Volume Factor (TYF):
K K
TYF, = YŤp,, Z w/DjVp,l,/ + (l - Y)TA,, Z WjD/VA,i,j
j=1 /=1
where Yis the weight for trades with Czech Government Bonds when the Primaty Dealer was a provider
of the executed quotation and its value is set at 70%, Tp,ľ is number of executed transactions on DETS
by i-th Primary Dealer when the Primary Dealer was a provider of the executed quotation during the
Evaluation Period, Ta,ĺ is number of executed transactions on DETS by i-th Primary Dealer when the
Primaíy Dealer was a aggressor of the executed quotation during the Evaluation Period, K is number of
transaction of the traded Czech Government Bonds, Wj denotes the weight based on currency of Czech
Governnient Bond offered in j-th transaction, Dj is duration of Czech Government Bond on Trading
day in j-th transaction, Yp,ĺj is traded CZK equivalent of the nominal amount on Czech Government
Bond inj-th transaction by i-th Primary Dealer when the Primary Dealer was a provider of the executed
quotation and Ya,1,/ is traded CZK equivalent of the nominal an]ount on Czech Government Bond inj-
th transaction by i-th Primary Dealer when the Primary Dealer was an aggressor of the executed
quotation.
The lnaximuln score for this sub-criterion is 5 points.
B. 4 Minishy ofFinance Market Transactions (DMO)
Ministry of Finance evaluates its counterparty offers and realized trades on secondary market
transactions, i.e. depos, Repurchase Agreements, FX spots, FX fQrwards and FX swaps, Lending
Facilities, Tap Issuances, Buy-Backs or Exchanges. Primary Dealer is evaluated based on the duration
and currency weighted share of its traded nominal amount on the total weighted nominal an:iount traded
during the Evaluation Period having Ministry of Finance as a counterparty in particular type of
instrument, for the purpose of this assessment, the durations of FX spots and FX forwards equal one.
The traded types of instruments are divided into four groups and each group has a weight assigned which
enters into calculation of total evaluation ofconcluded trades within the Evaluation Period ofa particular
Primary Dealer.
The groups and assigned weights are:
l. Depos and Repurchase Agreements (50%),
2. FX spots, FX forwards and FX swap (30%),
3. Lending Facilities (10%),
4. Tap Issuances, Buy-Backs and Exchanges of Czech Government Securities (10%).
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Formula for evaluation of sub-criterion:
" Yii,t
DMQ = Ž: "h EĹ", Yu
where N denotes number of groups of instruinent types, ú)/, denotes weight of h-th group of instrument
types, PD is number of Primary Dealers and Yiu is the i-th Primary Dealer's waded duration and
currency weighted CZK equivalent of the total noniinal amount for h-th group of instrument types in
the Evaluation Period.
The inaximum score for this sub-criterion is 15 points. Within this sub-criterion, the Ministry of Finance
reserves the right to apply a negative penalty of l point for each settlement failure during the Evaluation
Period caused by inaction or lack of cooperation on the part of the Primáty Dealer.
B.5 Tap Issuances, Buy-Backs and Exchanges Pricing S/ra/egy (TPS)
This sub-criterion evaluates pricing strategy of Primary Dealers. Ministry of Finance appreciates
Primáty Dealers willing to pay highest nominal amount, duration and currency weighted price in the
Tap Issuances and Buy-Backs of Czech Government Securities. When evaluating the Exchanges, one
underlying leg of the transaction is evaluated as the Tap Issuance and the other as a Buy-Back. Primary
Dealer with the highest nominal amount, duration and currency weighted price scores maximum:
KT LT,1j KH Lgjj
'"t = l' ., "/"TJ F ('TJ.'J " ¶,i"('T,l,(./))EZ,'·':"i::i:v, ,,,,, " (' W,"r./ F (¶2'('b.l'./) " 'B·'.'·')z:','":'i';;!/v,,,,, ,
where B denotes weight of Tap Issuances, K denotes number of transactions, Wj denotes the weight
based on currency of Czech Government Bond offered inj-th transaction, D,,j denotes duration of Czech
Government Bond in j-th transaction, L.,i,j denotes number of bids submitted by i-th Primary Dealer in
j-th transaction, PD,,j denotes number of Primary Dealers participating inj-th transaction, Ř,l,i,j denotes
l-th bid price submitted by i-th Primary Dealer in j-th transaction and Y,l,lj denotes CZK equivalent
of total nominal amount of l-th bid submitted by i-th Primary Dealer in j-th transaction. Subscript T
refers to Tap Issuances, B refers to Buy-Backs. The weight of Tap Issuances is set at 30% and the weight
of Buy-Backs is set at 70%. In case the Buy-Backs are not executed in the form of reverse auction, but
the Ministry of Finance is the provider ofthe price of Buy-Backs in Exchanges, the second addend of the
formula equals to zero.
The lnaxinluln score for this sub-criterion is 5 points.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex II: Terms for Ministry of Finance Tap Issuances, Buy-Backs and Exchanges
l The Ministry of Finance may consider Tap Issuances, Buy-Backs and Exchanges via direct
participation on the secondary market via DETS as long as technical solution of DETS allows for
such transactions or via another suitable platform (e.g. Refinitiv FX Trading or Bloomberg
Terminal) or via e-mail. Execution of these transactions via DETS is a preferred solution. These
transactions are executed both to manage the refinancing risk and to support liquidity and efficiency
of secondmy market. As an example, in cases where a bond is extraordinarily squeezed a special
reopening is an extremely powerfůl tool that can be utilized to restore normal trading conditions and
support secóndaiy market liquidity.
2 The Ministry of Finance may execute Tap Issuances, Buy-Backs or Exchanges any Trading Day
10:00 a. ni. - 12:00 p. m. and 2:00 p. m. - 4:00 p. m. (CET) on Trading Days when there is no
Auction executed. If the Ministry of Finance decides to execute these transactions on other Trading
Days or during different hours, it is obliged to inform Primary Dealers about its intention to execute
such transactions no later than at 4:00 p. m. (CET) on Trading Day one day before such transactions
are intended to be executed.
3 The Ministry of Finance may execute transactions of a particular Czech Government Securities
pursuant to Article 2. of the Annex ll usually during a week when Auction of the respective Czech
Government Bonds is not executed.
4 The Ministry of Finance may consider Tap Issuances and Exchanges only with respect to Czech
Govemment Bonds that it holds in its own asset account. Furthennore, the Ministry of Finance is
obliged to make holdings of its asset account public on its web site.
5 The Ministry of Finance reserves the right to cancel the Tap Issuances, Buy-Backs or Exchanges
within 15 minutes after the execution of transaction on DETS or another suitable platfonn in the
event of evident mistake, transaction is not matched with declared intention of the Ministry of
Finance or is considered as inadequate.
6 Primary Dealers are not allowed to submit bids or dTers in relation to Tap lssuances, Buy-Backs or
Exchanges directly to the Ministry of Finance unless they are asked to do so by the Ministry of
Finance,
7 The Ministry of Finance is not obliged to ask Primaiy Dealers to submit any bids or offers in relation
to Tap Issuances, Buy-Backs or Exchanges. The decision to ask Primáty Dealers to submit any bids
or offers in relation to Tap Issuances, Buy-Backs or Exchanges is solely upon the Ministry of
Finance.
8 Primary dealers may submit maximally three bids or offers per issuance that is included in the Tap
Issuances, Buy-Ba¢ks or Exchanges.
9 The MinÍstry of Finance reserves the right to change the terms for Tap Issuances, Buy-Backs, or
Exchanges flexibly if an exceptional and unforeseen event occurs, especially when the Crisis Act is
applied.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex III: Terms for Ministry of Finance Lending Facilities
l The Ministry of Finance may execute Lending Facilities via Refinitiv FX Trading, Bloomberg
Terminal, e-mail or DETSs as long as technical solution of DETS allows for such transactions.
2 The Lending Facility applies to the Czech Government Bonds. The Ministiy of Finance may
also provide short-term government bonds if it holds them on its own asset account or
investment portfolio-
3 The Lending Facility is available to Primary Dealers in Czech Government Securities, who
comply with the obligation referred to in article 3.7.
4 In normal market conditions the maximum face amount lending in Czech Government Bond
per transaction is CZK 1.5 billion. However, this limit may be raised in the event of abnormal
price formation on the Czech Government Bond market, if significant difference between
supply and demand of the particular Czech Government Bond persists or if an exceptiQna] and
unforeseen event occurs, especially when the Crisis Act is applied.
5 The Lending Facility is available as repo transactions and as loans of securities. Primary Dealers
borrow the Czech Government Bonds and the Ministry of Finance borrows CZK liquidity,
Czech Government Bonds, Treasury Bills or Czech National Bank Bills in exchange. The
Ministry of Finance has reserved the right to not apply collateral in loans of securities in the
event of overall shortage of the Czech Government Bonds on the market. The rate at which the
Ministry of Finance borrows liquidity and lends Czech Government bonds shall be suhject to
agreement between a particular Primary Dealer and the Ministry of Finance and shall be lower
than rate of reverse repo transactions in the saine maturity and amount executed by the Ministry
of Finance with the same or another Primary Dealer at the same moment. The fee at which the
Ministry of Finance lends Czech Government Bonds shall be subject to agreement between a
particular Prijnary Dealer and the Ministry of Finance.
6 The Czech Govemnient Bonds may be borrowed fór a period up to 90 days, the demand for
lending facility mainly arises fřom the Primary Dealer's side
7 Transactions may be made on Prague Trading Days between 8:00 a. m. and 4:00 p. m. (CET)
usually with agreed settlement one or two trading days later,
8 The Ministry of Finance has reserved the right to make discretionaiy allocations if deemed
appropriate.
9 Usually no haircut is applied to the Ministry of Finances' Lending Facilities.
10 Settlement takes place as agreed between the particular member of the Primary Dealer Group
and the transactions are settled through the CDCP, Clearstream/Euroclear or another central
depository of which the Ministry of Finance is member.
l l If the Primary Dealer fails in delivery of Government Bond borrowed within the Lending
Facilities, the Ministry of Finance reserves the right for the cost compensation.
12 In case the Ministry of Finance does not possess Czech Government Bonds required by Primary
Dealer to borrow, the Lending Faci|ity will not be used for that particular security.
13 The Ministry of Finance reserves the right not to enter into any such transaction if it finds it not
suitable.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex IV: Terms for Ministry of Finance Syndicated Public Offerings
l The Ministry of Finance may consider Syndicated Public Offering of Czech Govenrment Bonds.
The Ministry of Finance has set out the below terms, subject to which it will enter into such
Syndicated Public Offering. For the avoidance of doubt, the Ministry of Finance reserves the
right not to enter into a transaction at its sole discretion and will not be responsible for any losses
that any dealer may incur as a result thereof.
2 These bonds will be sold to investors by the group of Lead Managers, which will be selected
for this purpose by the Ministry of Finance based on the Performance Evaluation of Primary
Dealers as deňned in the Section 6 of the Agreement and other objective criteria affirming
Primaty Dealer's capacity and credentials on particular market including Primary Dealer's
standing in league table on the relevant market based on data provided by Dealogic Limited,
when applicable.
3 The legal documentation for Syndicated Public Offering under the Czech law will consist of
Subscription Agreement only.
4 The Subscription Agreement and any non-contractual obligations arising out of or in connection
with it shall be governed by, and shall be construed in accordance with, Czech law. All disputes
arising out of or in connection with the Subscription Agreement shall be resolved by the Czech
courts.
5 The Lead Managers will cover all reasonable expenses associated with the offering, including
the legal counsels' fees, any Prague Stock Exchange listing fees and the expenses associated
with the marketing of the offering. By the Lead Managers to act as the lead managers in relation
to the issue of the bonds and to subscribe and pay for, or to procure subscriptions and payment
for, the bonds as provided above, the Ministiy of Finance may pay to the Lead Managers a
combined coln|nission (comprising selling concession (if any) and management and
underwriting con]mission; the Coln|nission) set as a percentage of the par value of the bonds.
6 The Ministry of Finance may sell and place the bonds issued subsequently during the issue
period or the additional issue period by any means as the Ministry of Finance may deem fit in
its sole discretion, including by ]neans of a direct sale to a specified Lead Manager or Lead
Managers in accordance with the Subcription Agreement on the subscription and purchase of
the bonds, or by way of Auction of such bonds in accordance with the Auction Rules.
7 Each Lead Manager severally undertakes to indemnifý the Ministry of Finance, against any
liability, damages, cost, loss or expense (including, without limitation, legal fees, costs and
expenses) which it will incur, or which will be made against it, as a result of or in relation to
any failure by that Lead Manager, acting wilfully or grossly negligent.
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex V: Terms for Ministry of Finance Private Placements
l The Ministry of Finance may, from time to time, issue and sell bonds to investors in privately
placed transactions. These bonds will be sold to a single investor, or a very limited number of
investors, originated on the basis of 'reverse inquiry' fřom the investor coinmunity rather than
being actively marketed by a broker dealer. The Ministry of Finance has set outthe below terms,
subject to which it will enter into such Private Placement transactions. For the avoidance of
doubt, the Ministry of Finance reserves the right not to enter into a transaction at its sole
discretion and will not be responsible for any losses that any dealer may incur as a resultthereof,
2 The Ministty of Finance will enter into Private Placement transactions only with Primary
Dealers in good standing. The Ministry of Finance reserves the right to enter into Private
Placement transactions on other markets than the CZK, EUR and USD markets with a broker
dealer outside the Primary Dealer Group. With respect to the issuance on the CZK market, the
Ministry of Finance will consider only tenor of 15 years or more.
3 If the saine or similar Private Placement's idea is presented by more than one broker dealer and
the Ministry of Finance decides to enter into this transaction, the broker dealer who is able
to provide the most f'avourable conditions to the Ministry of Finance will be selected as
a counterparty of the Ministry of Finance. In case of the šatne conditions, the broker dealer who
presented the idea to the Ministry of Finance first (i. e. before the others) will be selected as a
counterparty of the Ministry of Finance, The Ministry of Finance shall also prefer the broker
dealer who is able to reveal a name of the investor(s).
4 Ministry of Finance may publish annually, as a part of its Funding and Debt Management
Strategy, a maximum amount or proportion of its international funding target for the year which
can be raised via Private Placements. This target may be updated on a quarterly basis. Private
placement transactions will be executed in rninimum size of CZK l billion equivalent, with no
stated maxilnuln, for CZK, EUR and USD, and no stated minimum for other currencies, and in
ínaturity longer than l year.
5 The Ministry of Finance will be open to executing Private Placement transactions in
any currency. Irrespective of the currency of issue, the Ministry of Finance will only consider
transactions in which the relevant dealer is ready to enter into an associated swap which will
result in the Ministry of Finance's cashfiows being fully hedged into CZK or EUR for at least
first 10 years of life of the privately placed bond. The Ministry of Finance reserves the right not
to enter into such swap at its discretion. The Ministry of Finance will consider only swaps that
do not require the counterparúes to enter into CSA or do not require collateralization of the
position of either counterparty, unless the Ministry of Finance rules require otherwise.
6 The Ministry of Finance will be open to executing Private Placement transactions with
any coupon type. Irrespective of the structure of the coupon, the Ministry of Finance will only
consider transactions in which an associated swap is executed with the relevant dealer which
will result in the Ministry of Finance's cashňows being fully hedged into vanilla fixed or floating
interest rate.
7 The Ministry of Finance will consider all-in pricing as the key criterion for the execution of
Private Placement transactions, While the Ministry of Finance may execute transactions in
various structures, all-in pricing will be assessed for the entire package, i. e. note plus
the associated swap which fully hedges the Ministry of Finance into vanilla fixed or floating
interest rate CZK or EUR fůnding.
8 All-in pricing will be the effective spread that the Ministry of Finance will pay, including all
fees and expenses related to the transaction, expressed in basis points over the mid-swap rate for
the relevant maturity, converted into CZK or EUR. The Ministry of Finance will consider, as a
'soft target', any transactions which will, on an after-swap basis, provide funding at or inside
the offer side of Czech Government Bonds or its Eurobond secondary trading levels
(interpolated or extrapolated, as required).
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The Czech Repub]ic - Ministty of Finance UniCredit Bank CZ&SK and UniCredit SpA
9 Private placanent transactions will be documented under the Ministry of Finance's EMTN
programme or, as the case inay be, under other type of standard docuinentation used in the
relevant PrĹvate Placeinent market.
10 Private Placanent transaction related costs have to be fully bom by the dealer, including
Ministry of Finance's legal and other adviser's costs.
11 The Ministry of Finance's objective with respect to Private Placement transaction is to place the
bonds with buy-and-hold investors. The Ministry of Finance reserves the right to require the
dealer to disclose, prior the execution ofthe transaction, the identity of investor, including name,
type, country, and contact details, provided that the dealer is not prohibited to submit such
information by law, other binding regulations or contractual agreement with investors.
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The Czech Republic - Ministrý of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex VI: Evaluation of Quoting Obligations
Each Primary Dealer is obliged to quote Czech Government Bonds as selected by the Ministry of
Finance after consultation with Priínaty Dealers on the DETS. The Primary Dealer is compliant with
the Quoting Obligations with regard to a particular Czech Goveniment Security subject to quoting
obligations (SQOB) as long as a quoted bid/offer spread on that security is equal to or lower than Market
Competitive Spread during 5 hours of quotations with lowest quoted bid/offer spread during a Trading
Day provided that Minimum Trading Volume condition is met as well. Then the Compliance Ratio is
equal to l (100%), As long as the quotations during a Trading Day only meet the compliance criteria
for a lower period of time than 5 hours, then the Compliance Ratio is reduced pro rata. A certain degree
of deviation from the compliance is allowed on a monthly basis as specified below in Monthly
Conipliance Ratio calculation.
In case of any technical issues preventing Primary Dealer to provide Czech Government Bonds
quotation, it is obliged to send a notice to the Ministry of Finance on the email address If
the Ministry of Finance finds these technical issues justified and occasional, it inay exclude affected
Primary Dealer's data for these particular days from Compliance Ratio calculation, so the technical
issues would not affect Monthly Compliance Ratio calculations.
Maturity Buckets (remaining time to maturity)
Only inarket making with quantity higher than or equal to Minimum Trading Volume will be included
in tlie compliance calculations. The Minimum Trading Volume decreases with the maturity in
accordance with the fact that long-term funding is more risky than short-term funding. The DETS
Co|n|nittee will determine a fixed minimum amount for each bond bucket as specified in thetable below:
Bucket A 1.25-3.5 years CZK 50 million
Bucket B 3.5-6.5 years CZK 50 million
Bucket C 6.5-13.5 years CZK 40 million
Bucket D Exceeding 13.5 years CZK 30 million
In case of inclusion of Czech Government Bond with significantly longer residual time to maturity, it is
possible to the Ministry of Finance and the Primary Dealer Group to agree on exception in tem of the
Minimum Trading Volume.
Calculation of MarketAverage Spread
The Market Average Spread (MAS) for o-th SQOB is calculated as a scalling of tlie average of i-th
Primary Dealer time-weighted bid/offer spread during the best five hours for d-th Trading Day.
_ zl?i z:Q°i"' S,,d,i(t'n,o,d,i — tn,o,d,i)
MAS"d " El?, E:!°i'"(t'n,o,d,l - t,,,Qď,t)
where PD is number of Primaty Dealers (excl. Primary Dealers that are suspended fřom trading on
a Trading Day), SQo,d,i is number of quotations of o-th SQOB submitted by i-th Prilnaľy Dealer during
best five hours in dth Trading Day, So,d,l is bid/offer spread quoted for o-th SQOB for at least Minimum
Trading Volume (in ticks) by i-th Primary Dealer during the best five hours for d-th Trading Day, t'n,ad,i
is End of n-th proposal for spot contract quotation with regard to o-th SQOB during d-th Trading Day
by i-th Primary Dealer (as a fraction of a 24 hour day) and tn,,,d,i is Start of n-th proposal for spot
contract quotation with regard to o-th SQOB during d-th Trading Day by i-th Primary Dealer (as a
fraction of a 24 hour day).
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
Calculation of Market Competitive Spread
The Market Competitive Spread (MCS) in o-th SQOB in d-th Trading Day is calculated as multiplied
by the Market Average Spread. The multiplier factor will be selected based on the assessment that it is
important to ensure that the system is neither restrictive nor too benevolent. The multiplier factor k will
be evaluated on an ongoing basis in cooperation with the Primary Dealers.
MCS,,d = kMAS,,d
Calculation of Compliance Ratio
For o-th SQOB, Compliance Ratio (ČR) will be in the interval between O and l (or O % and 100 %),
depending on the number of hours during d-th Trading day which i-th Primary Dealer quotes prices in
o-th SQOB within the o-th SQÓB Market Competitive Spread and for Minimum Trading Volume:
SQo,d,í 1F(S,,,,, S: MCS,,d; , :O)
t n,o,d,t " tn,o,d,i
CR,,,,, = =54
where SQo,d,i is number of quotations of o-th SQOB submitted by i-th Primary Dealer during best five
hours in d-th Trading Day, S,,d,i is bid/offer spread for a o-th SQOB on at least Minin7um Trading
Volume quoted by i-th Primary Dealer during tlie best five hours for d-th Trading Day, t'n,,,d,i is End
of n-th proposal for spot contract quotation with regard to o-th SQOB during d-th Trading Day by i-th
Primary Dealer and tn,,,d,i is Start of n-th proposal for spot contract quotation with regard to o-th SQOB
during d-th Trading Day by i-th Priinary Dealer.
Calculation of Daily Compliance Ratio
Based on Compliance Ratio for i-tli Primary Dealer in all SQOB Daily Compliance Ratio (DCR) is
calculated for d-th Trading Day:
=' CR,,d,t
DCRd.i = SQÓB
where SQOB is number of Czech Government Bonds subjected to Quoting Obligations on DETSS
Calculation of Monthly Compliance Ratio
Monthly Compliance Ratio (MCR) of m-th month is calculated as simple average Daily Compliance
Ratio for i-th Primary Dealer:
_ E:, DCR,,,
MCRm,i — Dm
where Dm is number of Trading Days during m-th month,
Each Primary Dealer is compliant with the Quoting Obligations as long as following condition is
fůlfilled:
MCRm,, Z 0.90.
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The Czech Republic - Ministrý of Finance UniCredit Bank CZ&SK and UniCredit SpA
Annex VII: Contact List
Primary Dealer for Czech Government Securities provides list of contact persons, their email adresess
and telephone numbers of persons who will be acting on behalf of the institution in accordance with
privilegies and obligations defined by the Agreement. In case of any change and ainendment to the list
of contact persons, Primary Dealer shall communicate the change or amendment to the Ministry of
Finance in accordance with article 12.8 of the Agreement.
UniCredit Bank Czech Republic and Slovakia, a.s.
Secondary market - DETS
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The Czech Republic - Ministry of Finance UniCredit Bank CZ&SK and UniCredit SpA
UniCredit SpA
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The Czech Republic - Ministry of Finance UniCredit f3ank CZ&SK and UniCredit SpA
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