Thông tư 119/2020/TT-BTC đăng ký, lưu ký, bù trừ và thanh toán giao dịch chứng khoán

 

CIRCULAR

On regulations for registration, depository, clearing and settlement of securities

__________

Pursuant to the Law on Securities dated November 26, 2019;

Pursuant to the Law on Enterprises dated June 17, 2020;

Pursuant to the Government’s Decree No. 155/2020/ND-CP dated December 31, 2020 on elaboration of implementing a number of articles of the Law on Securities;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 on defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Chairperson of the State Securities Commission of Vietnam;

The Minister of Finance hereby promulgates the Circular on regulations for registration, depository, clearing and settlement of securities.

 

Chapter I

GENERAL PROVISIONS

 

Article 1. Scope of regulation and subjects of application

1. This Circular defines the registration, depository, clearing and settlement of securities on the securities market in Vietnam.

This Circular shall not define the clearing and settlement of derivatives, debt instruments of the Government, government-guaranteed bonds, and municipal bonds.

2. Subjects of application of this Circular shall include:

a) The Vietnam Securities Depository and Clearing Corporation.

b) Securities corporations, commercial banks, branches of foreign bank, depository members, clearing members, organization with direct account, payment banks, issuance organizations, public companies.

c) Organization and individual using the service of registration, depository, clearing and settlement of securities

dd) Other relevant agencies, organizations and individuals.

Article 2. Interpretation of terms

In this Circular, these terms are construed as follows:

1. Certificate securities means securities issued in the form of physical certificates. Information on lawful ownership of securities owners is specified in securities certificates.

2. Book-entry securities means securities issued in the form of book entries or electronic data. Information on lawful ownership of book-entry securities owners is specified in the securities owner register.

3. Securities owner registers (or securities registers) are books recorded the information on securities owners made by the issuance organization or the public companies when securities application is submitted at the Vietnam Securities Depository and Clearing Corporation and books made by the Vietnam Securities Depository and Clearing Corporation when managing the registered securities.

4. Securities owners are those whose names are listed on the securities owner register at Vietnam Securities Depository and Clearing Corporation made when managing the registered securities.

5. Securities ownership certificate/securities ownership register means a document granted by an issuing organization or a public companies or an organization authorized by an issuing organization or a public companies book-entry securities owner to certify information on securities ownership at a certain point of time.

6. The final registration date is the date that the Vietnam Securities Depository and Clearing Corporation make lists entitled securities owners in accordance with the provisions of law.

7. Multilateral clearing means the general clearing between the received money, securities and the payable amount, securities for securities transactions within the same period, payment method performed on the securities trading system to determine net payment obligation of investors and clearing members.

8. Market areas are separate areas on the clearing and settlement system of the Vietnam Securities Depository and Clearing Corporation, which are established for securities in the same period and method payment, risk management mechanism, clearing members, settlement banks participating in clearing and settlement activities of securities transactions.

9. Securities depository is the bringing of securities registered at the Vietnam Securities Depository and Clearing Corporation into concentrated custody at the Vietnam Securities Depository and Clearing Corporation to perform transactions.

10. Valuable papers are types of valuable papers as prescribed in law on banks used in monetary market operations between the State bank and depository clients.

11. Valid dossiers and documents means a dossier and documents consisting of adequate documents with fully declared information in accordance with law provisions.

 

Chapter II

SECURITIES REGISTRATION

 

Article 3. Securities registration at the Vietnam Securities Depository and Clearing Corporation.

1. Types of securities and forms of securities registration at the Vietnam Securities Depository and Clearing Corporation are specified in Clauses 1, 2 and 3, Article 149 of the Decree No. 155/2020/ND-CP dated December 31, 2020 of the Government on details the implementation of a number of articles of the Securities Law.

2. An issuing organization or a public company shall register the following information with the Vietnam Securities Depository and Clearing Corporation:

a) Information on the issuing organization or public companies;

b) Information about securities of the issuing organization or the public company;

c) Information on the securities owners including: list of securities owners, types of securities, the number of securities owned and securities depository accounts in case the owners of securities have the need to register securities at the same time with securities depository.

3. An issuing organization or a public company shall carry out procedures for securities registration directly with the Vietnam Securities Depository and Clearing Corporation or through securities companies. When there is a change in registered information, an issuing organization or a public company must perform the information adjustment with the Vietnam Securities Depository and Clearing Corporation. The issuing organization and the public company shall be responsible for the accuracy, completeness and punctuality of the information specified in Clause 2 of this Article.

4. The Vietnam Securities Depository and Clearing Corporation shall promulgate the regulation on securities registration.

Article 4. Granting ticker symbol

1. The Vietnam Securities Depository and Clearing Corporation shall issue the domestic ticker symbol and international securities identification number (ISIN symbol) for securities and shares centrally registered at the Vietnam Securities Depository and Clearing Corporation.

2. Domestic ticker symbol are uniformly used when registering securities at the Vietnam Securities Depository and Clearing Corporation and listed and registered for trading on the securities trading system.

3. International securities identification numbers are uniformly used for securities issued in Vietnam for trading and settlement in Vietnamese and international securities markets.

4. The Vietnam Securities Depository and Clearing Corporation shall promulgate the regulation on issuance of the domestic ticker symbol and international securities identification number.

Article 5. Management of registered securities information

1. The Vietnam Securities Depository and Clearing Corporation shall focused manage all information which the issuing organization or public companies have registered under the provisions of Clause 2 of Article 3 of this Circular.

2. The Vietnam Securities Depository and Clearing Corporation shall manage information and adjust registered securities information according to the regulations on securities registration.

Article 6. Transfer of securities ownership

1. The transfer of the ownership of securities centrally registered at the Vietnam Securities Depository and Clearing Corporation shall be carried out by the Vietnam Securities Depository and Clearing Corporation according to the following principles:

a) Transfer the securities ownership through transactions conducted through the trading system;

b) Transfer the securities ownership outside the securities trading system for non-trading transactions or transactions which cannot be carried out through the trading system in the following cases:

2. Cases of transfer of securities ownership under the provisions of point b, Clause 1 of this Article include:

a) Donation, gift or inheritance of securities are under the provisions of the Civil Code;

b) Odd-lot transactions under the law on securities and securities market.

c) The issuing organization and the public company repurchases employees’ shares according to the company’s regulations on share issuance or employees;  issuing organization and public companies repurchase stocks of officials and employees who are entitled to buy at preferential treatment in accordance with the law on equitization; issuing organization and public companies redeem shares at the request of shareholders, repurchase shares of each shareholder in correspondence to their proportion of shares in the company according to the provisions of the Enterprise Law;

d) Transferring shares of founding shareholders during the transfer restriction period;

dd) An investor entrusting the transfer of his/her ownership of securities to the fund management company in case the fund management company accepts to manage the entrusted portfolio by assets; the fund management company transfers the authorized securities ownership to the entrusting investor in case there is any change in the corresponding terms in the investment trust contract; the fund management company transfers the authorized securities ownership to an entrusting investor or another fund management company in case of termination of the investment portfolio management contract; the fund management company is dissolved, bankrupted, terminated the activities of returning assets to entrusting investors or transfers the asset portfolio to another fund management company for management; transfer ownership between the fund management companies managing the assets of the same trust investors at the request of that investor;

e) Transfer the ownership is in compliance with the judgments and decisions of the court, the decisions of the referee or decision of enforcement agencies;

g) Division, separation, consolidation or merger of an enterprise; capital contribution by shares to enterprises; reorganize the public service providers; dissolve enterprises, business households in accordance with law provisions;

h) Public offering; transfer of state capital, state owned enterprises investing in listed organizations, organizing transaction registration by the method of auction, competitive offering, book setting in accordance with law provisions; transfer of ownership by the shareholders of a public company offering securities to the public by auction through the Stock Exchange;

i) Transfer of securities ownership of structure securities ownership, fund certificates are transferred in swap transactions to exchange-traded fund; transfer of securities ownership in service of issuance or cancellation of depository certificates in transactions between investors and overseas depository certificate issuing organizations;

k) Ownership and valuable papers are transferred in monetary market at the request of the State Bank; transfer ownership of private corporate bonds;

l) Transferring the ownership in the securities borrowing and lending in accordance with the provisions of Article 40 of this Circular includes the transfer of securities ownership from the lender to the borrower, and vice versa, or the transfer of collateral ownership being securities from the securities borrower to the securities lender in case the borrower loses the ability to repay the loan; transfer of securities ownership to handle the case of insolvency for securities transactions;

m) Transfer of ownership due to the disposal of collateral that is securities registered at the Vietnam Securities Depository and Clearing Corporation and blockade is performed in accordance with point c, Clause 1, Article 23 of this Circular. In case the transfer of securities ownership related to foreign investors leads to a change in the foreign ownership ratio in a public company, a securities company or a fund management company, it shall only be implemented after having the intention approved by the State Securities Commission;

n) The transfer of preference shares without transfer limitations in accordance with the Law on Enterprises; transfer of securities ownership due to division of common property between husband and wife during the marriage period in accordance with the Law on Marriage and Family;

o) Transfer of ownership of underlying securities for the exercise of covered warrants, Government bond futures contracts under the method of transfer of underlying securities;

p) Transfer of ownership of securities upon division, split, consolidation, merger or dissolution of a securities investment fund; the establishment and increase of charter capital of a separate securities investment company; an increase or decrease in the charter capital of a member fund; transfer ownership of securities when the fund pays securities in the resale activities of the open fund;

q) Transfer of share ownership among foreign investors in case the maximum foreign ownership ratio for such shares has been reached and the negotiated price between parties is higher than the value of securities on the securities trading system at the time of the transaction;

r) Other transfer forms of securities ownership are carried out after be accepted by the State Securities Commission

3. The State Securities Commission shall consider and approve cases of the transfer of securities ownership specified at point r, Clause 2 of this Article on the basis of some or all of the following documents:

a) A written request for transfer of securities ownership beyond of the securities trading system;

b) A transaction contract or papers of agreement between the parties;

c) Decisions of the General Meeting of Shareholders or the Board of Directors or the Board of Members or the Enterprise Owners of the parties transferring ownership (for domestic organizations) on the transfer of securities ownership under Law on Enterprise;

d) The decision of the General Meeting of Shareholders of the public company, the Board of Representatives of the closed-end fund approving the exemption to carry out the procedures for a public bid as prescribed at points a and b, Clause 2, Article 35 of the Law on Securities;

dd) A document stating opinions of the securities issuer entitled to transfer of ownership on the transfer of securities ownership among investors stated in the dossier;

e) A written certification of a depository member (in case of deposited securities) or an issuing organization or a public company (in case of securities not yet be deposited) of the number of securities transferred ownership that the transferor currently owns;

g) Documents of the specialized management agency providing opinions on the transfer of securities ownership of the issuing organization or public corporation operating in the field which is required to be granted opinion prescribed by specialized law;

h) Establishment and operation license or Certificate of enterprise registration or equivalent papers of the transferors of ownership (for an organization); identity card or citizen identification card (for an individual);

i) The foreign investor’s certificate of securities trading code registration issued by the Vietnam Securities Depository and Clearing Corporation;

k) Power of attorney or documents proving the competence to sign a transaction contract;

l) Documents of the transferors clarifying contents related to information disclosure, public bid, non-cash payment, payment guarantee and other contents as required by the State Securities Commission.

4. The application as prescribed in Clause 3 of this Article shall be made in one (01) original set and submitted directly or by post to the State Securities Commission. In case the documents in the dossier are copies, they must be copies issued from the original books or certified copies by competent agencies or organizations or copies that have been checked to be right with the originals. Documents made in a foreign language must be accompanied by a certified translation into Vietnamese by the competent authority; documents issued or certified by foreign competent authorities must be consularly legalized.

Within 07 working days from the date of receipt of the dossier, the State Securities Commission shall send a written request to amend and supplement the dossier (if any). Within 10 working days from the date of receipt of valid dossiers and documents, the State Securities Commission must reply in writing to the approval or refusal to transfer the ownership of securities.

5. The transferor of securities must make a depository of securities before the transfer of ownership in the cases specified in Clause 2 of this Article, except the following cases:

a) The transferor is missing, dead, or has been resettled overseas and cannot be contacted;

b) The issuing organization, the public company repurchases employees’ shares according to the company’s regulations on issuing shares to employees; issuing organization, public companies repurchase stocks of officials and employees who are entitled to buy at preferential treatment in accordance with the law on equalization;

c) Transfer the ownership is in accordance with the judgments and decisions of the court, the decisions of the referee or decision of enforcement agencies;

d) Transfer of ownership due to reorganization, dissolution of enterprises, dissolution of business households but the transferor of ownership no longer exists due to the completion of reorganization, enterprise dissolution, household business dissolution procedures;

dd) Other transfer forms of securities ownership are carried out after be accepted by the State Securities Commission

6. The Vietnam Securities Depository and Clearing Corporation shall promulgate the regulation on securities registration.

Article 7. Cancellation of securities registration

1. The Vietnam Securities Depository and Clearing Corporation shall conduct securities deregistration in the following cases:

a) Debt instruments of the Government, government-guaranteed bonds, municipal bonds, corporation bonds, covered warrants are in maturity date;

b) Debt instruments of the Government, government-guaranteed bonds, municipal bonds, corporation bonds are repurchased by the issuing organizations before the maturity date;

c) The issuing organization decreases capital, dissolves, goes bankrupt or terminates its existence due to the reorganization of the enterprise;

d) Issuing organizations implement swap stocks, government debt instruments, government-guaranteed bonds, municipal bonds, and corporate bonds;

dd) Shares of the equitized enterprise that are not a public company subjected to cancellation of listing or trading registration and the enterprise requests to cancel the registration of securities;

e) Certificates of investment fund, covered warrants subjected to cancellation of listing.

g) Exchange-traded fund is dissolved;

h) Securities of public companies are registered at Vietnam Securities Depository but no longer qualified as a public company and asked to cancel the registration;

i) An issuing organization or a public company that has registered securities under an agreement with the Vietnam Securities Depository and Clearing Corporation voluntarily cancels the registration of securities;

k) Cancellation the digital registration of government debt instruments, government-guaranteed bonds, municipal bonds of market makers, investors failed to pay for purchase; cancellation of government debt instruments due to the maturity of liquidity guarantee contracts between the State Treasury and market makers and investors.

2. The cancellation of securities registration shall comply with the regulations on securities registration activities.

Article 8. Exercise of rights of securities owners

1. The Vietnam Securities Depository and Clearing Corporation shall make a list of the securities owners on the last registration day, calculate and allocate rights that securities owners may have in accordance with law provisions on the basis of the documents below:

a) A written notice of the issuing organization, public company or a competent organization or individual in accordance with relevant laws;

b) The power of attorney of the issuing organization and the public corporation to Vietnam Securities Depository and Clearing Corporation to act on behalf of the issuing organization or public company to perform related services for the securities registered at the Vietnam Securities Depository and Clearing Corporation as stated in the Service Contract between the Vietnam Securities Depository and Clearing Corporation and the issuing organization or public company.

2. Issuing organizations and public companies, organization and individuals having competence in convening the General Meeting of Shareholder in accordance with the provisions of the Law on Enterprises may only use the list of securities owners provided by the Vietnam Securities Depository and Clearing Corporation for the purposes stated in the written notice prescribed in point a Clause 1 of this Article and shall bear full responsibility if using such list improperly or disclosing confidential information.

3. Deposited securities owners shall have rights, benefits distributed through the Vietnam Securities Depository and Clearing Corporation and the depository members at the place such securities owner open securities depository account. Un-deposited securities owners shall have rights or benefits allocated directly by the issuing organization and public companies or organizations authorized by the issuing organization and public companies.

4. The Vietnam Securities Depository and Clearing Corporation, depository member shall be responsible for exercising rights for owners of securities registered or deposited at the Vietnam Securities Depository and Clearing Corporation, be responsible for the damage caused to the securities owners due to non-compliance with the provisions on the exercise of rights of this Circular or regulations on the registration, depository, offsetting and settlement of the Vietnam Securities Depository and Clearing Corporation within their responsibilities.

5. Making and providing lists as well as organizing the exercise of securities owners shall be carried out on the basis of the authorization of the issuing organization and public companies and regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 9. Responsibilities of issuing organizations, public companies with registered securities

1. To comply with the provisions of the law and the relevant professional operation regulations of the Vietnam Securities Depository and Clearing Corporation.

2. To sign the service provision contracts with the Vietnam Securities Depository and Clearing Corporation as prescribed in Article 10 of this Circular.

3. To provide timely and accurately information or necessary materials for the Vietnam Securities Depository and Clearing Corporation to register securities and exercise the right as prescribed or at the request in writing of the Vietnam Securities Depository and Clearing Corporation to clarify such documents and information as mentioned above, be fully responsible for the information content provided to the Vietnam Securities Depository and Clearing Corporation

4. Be responsible for any damage caused to the Vietnam Securities Depository and Clearing Corporation and securities owners if failing to comply with the law and regulations of the Vietnam Securities Depository and Clearing Corporation, except for force majeure.

5. To pay service charges to the Vietnam Securities Depository and Clearing Corporation in accordance with the regulations of the Ministry of Finance.

6. Other responsibilities in accordance with the law and regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 10. Service provision contracts between the Vietnam Securities Depository and Clearing Corporation and the issuing organizations and public companies

1. Contract of service provision between the Vietnam Securities Depository and Clearing Corporation and the issuing organizations and public companies shall include the following contents:

a) The service of issuing organization or a public company authorizing the Vietnam Securities Depository and Clearing Corporation to perform (the service of securities information management registered at the Vietnam Securities Depository and Clearing Corporation securities clearing, services of confirmation of transfer of securities ownership to securities owners, services of exercising the rights of securities owners, and other services arising under the agreement of the two parties);

b) Rights and obligations of the Vietnam Securities Depository and Clearing Corporation, issuing organizations and public companies;

c) Settlement of disputes;

d) Termination of the contract.

dd) Fee collection of services to be provided.

2. The Vietnam Securities Depository and Clearing Corporation shall issue the contract form of service provision between the Vietnam Securities Depository and Clearing Corporation and the issuing organizations, public companies.

 

Chapter III

SECURITIES DEPOSITORY OPERATION

 

Article 11. Registration of securities depository operation

1. Conditions, dossiers and procedures for registration of securities depository activities of securities companies, commercial banks, and foreign bank branches in Vietnam shall comply with the provisions of Article 57, Article 58, Article 59 of the Securities Law. The written proposal for registration of securities depository operation and explanation of facilities serving securities deposit at branches shall be made as prescribed in Appendix I and Appendix II enclosed herewith this Circular;

2. After State Securities Commission grants the Certificate of securities deposit registration, the securities company or commercial bank may authorize the securities depository for its branches. Securities companies and commercial banks must ensure that their branches meet the material and technical foundations of performing securities depository activities.

3. Securities companies and commercial banks are responsible for reporting to the State Securities Commission on the authorization for their branches to conduct securities depository activities, together with proof of technical facilities to carry out securities depository activities at the branch according to the form provided in Appendix II to this Circular.

4. Within 07 working days from the date of receipt of the report as prescribed in Clause 3 of this Article, the State Securities Commission shall notify in writing the securities company or commercial bank of the receive a report authorizing the branch to conduct securities depository activities.

5. Within 03 months from the date of receipt of a notice from the State Securities Commission under the provisions of Clause 4 of this Article, the securities company or commercial bank must register its securities depository operation, to conduct securities depository activities for the branch in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation. After this time limit, if the securities company or commercial bank does not register its securities depository activities or conducts securities depository activities for its branch, it must report to the State Securities Commission.

Article 12. Termination of securities depository of branches of securities companies or commercial banks

1. The Vietnam Securities Depository and Clearing Corporation shall terminate the securities depository of branches of securities companies or commercial banks in the following cases:

a) The securities company or commercial bank has its certificate of registration of securities depository operation revoked.

b) The securities company or commercial bank voluntarily terminates the securities depository in its branches;

c) Branches of securities companies, branches of commercial banks are terminated its operation.

d) The branch’s material and technical facilities are unsatisfactory to carry out the securities depository activities as notified by the State Securities Commission.

2. The termination of securities depository activities of a securities company branch or commercial bank branch shall comply with the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 13. Principles of securities depository

1. The securities depository of clients at the Vietnam Securities Depository and Clearing Corporation shall comply with the following principles: clients shall deposit their securities at depository members and depository members shall redeposit their clients’ securities at the Vietnam Securities Depository and Clearing Corporation.

2. Depository members shall hold in custody securities of their clients in the capacity as parties authorized by their clients to conduct securities depository operations. In order to have their securities depository, clients shall sign contracts on opening of securities depository accounts with depository members.

3. The Vietnam Securities Depository and Clearing Corporation shall re-deposit securities from depository member or organizations opening directly accounts. To re-deposit securities, depository members and organizations opening directly accounts must open a securities depository account in their names at the Vietnam Securities Depository and Clearing Corporation.

Article 14. Opening of securities depository accounts

1. Depository members must open a securities depository account at the Vietnam Securities Depository and Clearing Corporation to carry out transactions for such member’s securities. Each member may only open one (01) securities depository account at the Vietnam Securities Depository and Clearing Corporation and must not open depository account in other depository members, except for the following cases:

a) Depository members open a securities depository account in fund founding members to carry out transactions related to exchange-traded fund;

b) Securities members are securities companies which no longer be a member in the Vietnam Stock Exchange may open securities depository accounts at other depository members to handle the remaining securities on proprietary trading account.

c) Depository members who are not clearing member open securities depository accounts at clearing members for the purpose of managing clearing margin assets and making payments for securities transactions of depository member;

d) Depository member which is a securities company issuing covered warrants to open an additional securities depository account at the Vietnam Securities Depository and Clearing Corporation to perform activities of risk prevention for the covered warrants.

dd) Depository member who is a market maker opens an additional securities depository account at the Vietnam Securities Depository and Clearing Corporation to perform market making activities.

2. Organizations opening direct accounts are allowed to open securities depository accounts at the Vietnam Securities Depository and Clearing Corporation.

3. Opening securities depository accounts for investors and issuing organization of foreign depository certificates:

a) At each depository member, investors may only open one (01) securities depository account;

b) Foreign investors open securities depository accounts in accordance with relevant laws;

c) An issuing organization of foreign depository certificates may open a securities depository account after being granted a securities transaction code.

4. Each investment fund, securities investment company may only open one (01) depository account at one (01) depository bank, supervisory banks under the relevant law provisions.

5. A fund management company may open separate securities depository accounts for itself and for each securities investment fund under its management. In case of investment portfolio management, at each depository bank, the fund management company may open two (02) securities depository accounts in the name of the fund management company and entrust one (01) securities depository account to the domestic entrusting client and one (01) securities depository account to the foreign entrusting investor on behalf of the investor.

6. Branches of foreign fund management companies in Vietnam are allowed to open 02 securities depository accounts at depository members, of which 01 securities depository account for themselves and 01 securities depository account for management portfolio management for foreign investors.

7. Foreign securities companies are allowed to open 02 separate securities depository accounts at depository members, in which 01 securities depository account for themselves and 01 securities depository account for its clients.

8. An insurance enterprise, when making investments on the securities market shall open two separate securities depository accounts to separately manage investments from equity capital and from insurance premiums. In case an insurance enterprise has a foreign investor owning more than 50% of the charter capital, depository securities on the securities depository account sourced from equity shall be governed by the law on foreign ownership in the securities market.

9. Foreign investment funds, foreign investment organizations which managed by many fund management companies, investment organizations under foreign government or investment organizations, financial institutions under the international financial institutions that Vietnam is a member may open many depository accounts on the principle if each securities transaction code is granted, 01 depository account shall be opened at the depository bank.

10. In case the depository bank where the investor opens the securities depository account is not a clearing member, the investor must open a depository account at the clearing member for the purpose of management of collateral clearing assets and securities transaction settlement.

11. The opening of securities depository accounts at the Vietnam Securities Depository and Clearing Corporation shall comply with the regulations on securities depository activities of Vietnam Securities Depository and Clearing Corporation.

Article 15. Securities depository accounts of depository members and organizations opening direct accounts at the Vietnam Securities Depository and Clearing Corporation

1. In order to meet the management requirements of the Vietnam Securities Depository and Clearing Corporation, the securities depository accounts of depository members and organizations open direct accounts at the Vietnam Securities Depository and Vietnamese securities clearing includes:

a) Traded securities account.

b) Securities account suspended from trading;

c) Securities account for security transactions;

d) Blocked or temporarily seized securities accounts;

dd) Securities accounts pending payment;

e) Securities account waiting for return;

g) Securities account waiting for loan;

h) Mortgaged securities account for securities loans at the Vietnam Securities Depository and Clearing Corporation;

i) A clearing margin account in case a depository member is concurrently a clearing member of the Vietnam Securities Depository and Clearing Corporation;

k) Other accounts according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

2. Depository accounts of members specified in Clause 1 of this Article are categorized as follows:

a) A depository member’s own account;

b) Accounts for domestic clients of depository members;

c) Accounts for foreign clients of depository members.

3. A securities depository account of a depository member or an organization opening a direct account at the Vietnam Securities Depository and Clearing Corporation shall include the following contents:

a) Securities depository number.

b) Name and address of the depository members or the organization opening the account;

c) Volume, type and code of deposited securities.

d) Increased or decreased volume of securities and the reason for such increase or decrease.

e) Other necessary information.

Article 16. Management of securities depository accounts at the Vietnam Securities Depository and Clearing Corporation

1. The Vietnam Securities Depository and Clearing Corporation shall manage securities depository accounts on the following principles:

a) Securities deposited at the Vietnam Securities Depository and Clearing Corporation must be clients’ own assets and managed separately from the Vietnam Securities Depository and Clearing Corporation’s assets.

b) The Viet Nam Securities Depository and Clearing Corporation may only use clients’ securities in the cases specified at points h, i, k, l and m, Clause 1, Article 156 of Decree No. /2020/ND-CP dated .... month .... year of the Government detailing the implementation of a number of articles of the Law on Securities.

2. The Securities Depositary Center may conduct accounting on securities depository accounts only when accounting documents are sufficient, valid and original.

3. Total balance on clients’ securities depository accounts opened at depository members must be always consistent with the balance of depository members’ depository accounts opened at the Securities Depositary Center. The detail balance on securities depository accounts of each client in depository member must match the data owned by such clients at the Vietnam Securities Depository and Clearing Corporation.

4. If there are any changes or errors in the information of securities depository accounts or depository members, organizations opening accounts directly shall be responsible for reporting and adjusting immediately to Vietnam Securities Depository. The adjustment of information about the securities depository account shall comply with the regulations on depository activities of the Vietnam Securities Depository and Clearing Corporation.

5. If detecting errors in the information on the securities depository accounts of depository members, organizations opening accounts directly or clients of depository member or Vietnam Securities Depository must immediately notify depository members and organizations opening accounts directly and such organizations shall adjust the errors

Article 17. Clients’ securities depository accounts at depository members

1. To meet the management requirements of a depository member, a client’s securities depository account opened at a depository member includes:

a) Traded securities account.

b) Securities account suspended from trading;

c) Securities account for security transactions;

d) Blocked or temporarily seized securities accounts;

dd) Securities accounts pending payment;

e) Securities account waiting for return;

g) Securities account waiting for loan;

h) Mortgaged securities account for securities loans at the Vietnam Securities Depository and Clearing Corporation;

i) A clearing margin account in case a depository member is concurrently a clearing member of the Vietnam Securities Depository and Clearing Corporation;

k) Other accounts according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

2. Clients’ securities depository accounts opened at depository members must express the following contents:

a) Securities depository number.

b) The name and contact address of clients being account owners;

c) Number and date of issue of identity card or citizen identification card for individual client who is Vietnamese; serial number and date of issuance of the enterprise registration certificate, the establishment and operation license or an equivalent document for the client being a domestic organization; serial number and date of issuance of the Securities Trading Code Registration Certificate for clients being foreign investors;

d) Volume, type and code of deposited securities.

dd) Increased or decreased volume of securities and the reason for such increase or decrease.

e) Other necessary information.

3. With regard to the investment portfolio management of the fund management company, the depository account at a depository bank must have full information about entrusting clients as prescribed at points b, c, d, dd and e, Clause 2 of this Article.

Article 18. Securities depository accounts management at depository members

1. A depository member shall manage clients’ securities depository accounts on the following principles:

a) The depository member shall open a specific securities depository account for each client and separately manage clients’ assets.

b) Securities deposited by clients at the depository member must be these clients’ own assets and managed separately from the depository member’s assets.

c) A depository member may only use securities in a client’s securities depository account in the following cases:

- Depository member is a securities company that processes securities on a client’s account in margin trading in accordance with law provisions or handles securities on a client’s account in accordance with the commitment, agreement of the client with a depository member or with another organization or individual or dealing with securities on the client’s account in accordance with the client’s written designation or authorization;

- The depository members are clearing members handling stock in the clearing margin account of clients to ensure solvency of securities transactions, repayment of resources used and compensate for financial loss in case the client loses the securities transaction solvency.

d) The depository member shall promptly and adequately notify clients of benefits arising in relation to their deposited securities.

dd) Depository members shall be responsible for daily updating the information on opening and closing clients’ securities depository accounts of clients in a day in depository member for the Vietnam Securities Depository and Clearing Corporation and comparing information on securities depository account balance of each client with figures on securities ownership of clients at the Vietnam Securities Depository and Clearing Corporation on the basis of data on securities ownership of clients that the Vietnam Securities Depository and Clearing Corporation provides for depository members. The updating of account information and balances shall comply with the regulations on depository activities of the Vietnam Securities Depository and Clearing Corporation.

2. At the request of clients, a depository member must send each client a statement of its securities depository account within the time agreed upon with the client; in case there is no agreement on the time limit, a depository member must send the client a statement of his or her securities depository account after 01 working day from the date of the client’s request.

3. Clients shall promptly notify the depository member of any change or error in the information of their securities depository accounts at the depository member.

Article 19. Effect of securities depository

1. The securities depository at the Vietnam Securities Depository and Clearing Corporation shall take effect from the time when the Vietnam Securities Depository and Clearing Corporation accounts on the related securities depository account of depository members or organizations opening directly accounts at the Vietnam Securities Depository and Clearing Corporation.

2. Securities accounting and account transfer by way of book entries between members’ or clients’ securities depository accounts at the Vietnam Securities Depository and Clearing Corporation have the same legal validity as transfer of certificate securities and are recognized by law.

Article 20. Deposit of securities

1. The deposit of securities except for Government debt instruments, government-guaranteed bonds, and municipal bonds of clients at Vietnam Securities Depository and Clearing Corporation shall be made according to original following principles:

a) Clients shall deposit securities into the Vietnam Securities Depository and Clearing Corporation through the depository members where they open accounts;

b) Depository members shall have carried out procedures for receiving depository securities of clients and re-deposit into the Vietnam Securities Depository and Clearing Corporation within 01 working day from the date of receipt of a valid application of the client;

c) The Vietnam Securities Depository and Clearing Corporation shall be responsible for handling the securities depository application within 01 working day after receipt of a valid application of depository members;

2. Depository members, organization opening accounts directly, clients depositing invalid securities, forged securities, stolen securities or securities with insufficient information shall be fully responsible for depositing such securities and compensating for the damage caused by such depository securities to involved parties.

3. The Vietnam Securities Depository and Clearing Corporation shall perform the requirement of deposit of securities for the shareholder of the issuing organization when there is requirement from the issuing organization on behalf of the shareholders.

4. The Vietnam Securities Depository and Clearing Corporation shall account to the securities depository account of depository members, organizations opening the account directly or clients of depository members involved in the case of depositing the Government’s debt instruments, bonds guaranteed by the Government, municipal bonds, and stocks, fund certificates additionally registered from the securities deposited at the Vietnam Securities Depository and Clearing Corporation.

5. The securities depository shall comply with the regulations on securities depository activities of the Vietnam Securities Depository and Clearing Corporation.

Article 21. Withdrawal of securities

1. Securities withdrawal at client’s request:

a) The client may only be required to withdraw the securities within the number of securities owned on the securities depository account, except for the impounded, blocked, clearing margin securities;

b) Depository members must submit the securities withdrawal application to Vietnam Securities Depository within one (01) working day after receipt of a valid application of clients;

c) The Vietnam Securities Depository and Clearing Corporation shall be responsible for handling the securities withdrawal application within 01 working day after receipt of a satisfactory application of depository members;

d) Information on securities ownership of investors withdrawing the deposited securities shall be recorded in the list of un-deposited securities owners;

dd) The issuer shall re-issue the securities ownership certificate or the securities ownership certificate book to the securities owner who withdraws securities in the event that the issuing organization issues the securities ownership certificate or book of securities ownership certificates.

2. The securities withdrawal due to expired securities, securities withdrawal due to volunteer registration cancellation shall comply with the principles of accounting automatically of the Vietnam Securities Depository and Clearing Corporation on decrease of the amount of depository securities on a securities depository account of the member involved after the issuing organization complete canceling the securities registration at the Vietnam Securities Depository and Clearing Corporation.

3. The securities withdrawal of deposited securities at the Vietnam Securities Depository and Clearing Corporation shall comply with the regulations on securities depository activities of Vietnam Securities Depository and Clearing Corporation.

Article 22. Account transfer of securities

1. The account transfer of securities to make payment of the purchase and sale through the trading system shall comply with the provisions of the clearing and settlement of securities transactions.

2. The Vietnam Securities Depository and Clearing Corporation shall carry out the account transfer of securities outside of the securities trading system and not associated with the transfer of securities ownership in the following cases:

a) The client performs the transfer of securities from securities depository accounts of the client at a depository member to the depository account, clearing margin account of such client at another depository member;

b) Transfer of valuable papers between securities depository accounts of the same investor serving currency market transactions;

c) Transferring securities for the purpose of preventing the risk of covered warrants of the securities company issuing secured warrants; securities transfers for market-making activities of a market maker;

d) Securities are transferred due to transfer investment portfolio between depository accounts of an investor at the request of such investor;

dd) Securities transfer due to changes in information on types of securities, adjustment of errors in the number of securities owned, or change of representatives of state capital ownership; transfer of securities due to changes in foreign ownership ratios or changes in nationality resulting in a change from domestic investor to foreign investor and vice versa;

e) Transferring when a depository member where the client is opening an account has the State Securities Commission revoked the Certificate of registration of securities depository operation, withdraws securities brokerage operation or is subjected be revoked the Certificate of a depository member by the Vietnam Securities Depository and Clearing Corporation; transfer when clearing members are revoked of the Certificate of eligibility to provide clearing and settlement services for securities transactions the State Securities Commission;

g) If organizations opening accounts directly terminate the service provision contracts with the Vietnam Securities Depository and Clearing Corporation;

h) Organize open a direct account transfer securities from securities depository account at the Vietnam Securities Depository and Clearing Corporation to the securities depository account, clearing margin account of organization opening a direct account at a depository member and vice versa.

3. The Vietnam Securities Depository and Clearing Corporation shall carry out the transfer of depository securities associated with the transfer of securities ownership outside the securities trading system in the cases specified in Clause 2, Article 6 of this Circular and other cases of transfer are after received the opinion of the State Securities Commission.

4. Depository members shall send dossiers of securities transfer to the Vietnam Securities Depository and Clearing Corporation within 01 working day after receiving valid dossiers from clients.

5. The Vietnam Securities Depository and Clearing Corporation shall be responsible for handling the securities transfer application within 01 working day for the transfer case specified at points a, b, c, d, dd, and h Clause 2 this Article in the limit of maximum 05 working days for the transfer case provided in points e, g Clause 2 and Clause 3 of this Article from the date of receipt of a valid application.

6. The transfer of securities at the Vietnam Securities Depository and Clearing Corporation shall comply with the regulations on securities depository activities of the Vietnam Securities Depository and Clearing Corporation.

Article 23. Securities blockade and clearance

1. The Vietnam Securities Depository and Clearing Corporation shall conduct securities blockade and clearance in the following cases:

a) Securities blockade, clearance at the request of competent State agencies:

b) Securities blockade or clearance at the request of investors;

c) Securities blockade or clearance of investors as a method provided to secure the performance of obligations in secured transactions.

2. For case specified at point a of this Clause, the Vietnam Securities Depository and Clearing Corporation shall block and clear securities after having the written request of competent State agencies in accordance with law provisions;

b) After blocking or clearing securities on a securities depository account, the Vietnam Securities Depository and Clearing Corporation shall notify so that depository members, organizations opening accounts directly block or clear securities as well as notify the involved clients of depository members.

3. For case specified at point b this Article, the Vietnam Securities Depository and Clearing Corporation shall block or clear securities of investors upon request of such investors submitted to the Vietnam Securities Depository and Clearing Corporation through depository members where investors have blocked or cleared securities.

Blocked securities are freely transferable, not to be blocked, on hold or deposited. The Vietnam Securities Depository and Clearing Corporation shall be responsible for handling of blockade or clearance application of mortgaged securities within 01 working day after receipt of a satisfactory application. Securities blockade and clearance at the request of investors shall comply with the regulations on securities depository activities of Vietnam Securities Depository and Clearing Corporation.

4. For the case specified at point c, Clause 1 of this Article, the Vietnam Securities Depository and Clearing Corporation shall comply with the regulations on registration of security measures for centrally registered securities at the Vietnam Securities Depository and Clearing Corporation.

 

Chapter IV

SECURITIES CLEARING AND SETTLEMENT ACTIVITIES UNDER THE CENTRAL CLEARING PARTNERSHIP MECHANISM

 

Article 24. Principles of clearing and settlement of securities transactions

1. The Vietnam Securities Depository and Clearing Corporation shall perform the multilateral clearing to determine payment obligations of securities transactions with the following principles:

a) Clearing of securities shall be conducted by each type of securities and separately according to brokerage accounts for domestic clients, brokerage accounts for or foreign clients and dealing accounts of clearing members.

b) The clearing of money is done for each depository member on the basis of a common clearing between the received amount and the payable amount for transactions with the same payment period and method in the securities trading system and separate by types of brokerage accounts for domestic clients, brokerage accounts for foreign clients and proprietary trading accounts of clearing members.

2. The payment of securities transfer at the Vietnam Securities Depository and Clearing Corporation and payment at payment banks shall be made on the basis of the obligation to pay the securities and charge determined by the Vietnam Securities Depository and Clearing Corporation.

3. The clearing member is responsible for fulfilling all obligations of the client to the Vietnam Securities Depository and Clearing Corporation with the role as the client’s authorized representative, including transactions of non-clearing trading members, clients of non-clearing trading members.

4. Within 12 months from the official implementation of the clearing and settlement of securities transactions under the central clearing partner mechanism, depository members are allowed to participate in clearing and settlement activities securities transactions such as direct clearing members, exercising rights and obligations of clearing members for the provision of clearing and settlement services for securities transactions under the central clearing partner mechanism in accordance with the law and regulations of the Vietnam Securities Depository and Clearing Corporation.

5. The Vietnam Securities Depository and Clearing Corporation ensures solvency for securities transactions through the payment guarantee mechanisms specified in Article 35 of this Circular.

6. The Vietnam Securities Depository and Clearing Corporation shall promulgate the regulations on clearing and settlement for securities transactions.

Article 25. Clearing margin account of investor

1. Clearing members open clearing margin accounts for investors to manage clearing margin assets and fulfill the investors’ obligation to pay for securities transactions on the principle of each investors are allowed to open 01 clearing margin account. The securities company is not a clearing member and its client must open a clearing margin account to manage clearing margin assets and fulfill payment obligations at a common clearing member on the basis of a clearing and settlement entrusted contract between the securities company and such common clearing member.

If the investor having a securities depository account at a depository bank which is not a clearing member, the investor opens a securities trading account and a clearing margin account at the same securities company which is clearing member to manage clearing collateral and perform the payment obligations of securities transactions.

2. In cases where the property of the clearing margin is money, clearing members must open a deposit account in the name of the clearing member at a bank for clearing deposit and separately manage the deposits for execution investor’s clearing fund. Where the offset collateral is securities, the clearing member manages the securities right on the investor’s securities depository account at the Vietnam Securities Depository and Clearing Corporation.

3. The investor’s clearing margin account may only be used for the following activities:

a) Receive and return clearing collateral assets to investors;

b) Receive or pay for securities transactions of investors, receive interest payments of the deposit at the bank at the interest rate agreed between clearing members and the account management bank;

c) Receiving or transferring securities on the settlement date, receiving rights and benefits arising from securities on the clearing margin account in accordance with instructions in the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 26. Investor’s clearing margin

1. Before conducting securities transactions, investors must have sufficient clearing collateral at the request of clearing members and law provisions on securities trading, clearing and settlement of securities transactions for the securities transactions expected to be performed. The investor’s clearing deposit is made in cash and securities of the investor. Clearing margin securities must be the securities satisfy the conditions specified in Clause 3, Article 29 of this Circular and accepted by clearing members.

2. Investors must maintain a clearing margin for the transactions that have not yet been settled and must add additional clearing collateral in case the value of the clearing collateral is lower than the value of the required clearing margin or balance of clearing margin deposits does not guarantee the minimum clearing margin ratio in cash as required by clearing members. Depending on market conditions, clearing members have the right to request investors to add additional clearing margin right in the trading session. The level of the additional clearing margin and the time limit for the addition of the clearing margin shall comply with the instructions of the clearing member.

3. When investors make initial clearing margin or add clearing margin, clearing members are required to ask investors to make the deposit to offset the whole in cash or allow the investor to offset the partial margin deduction by securities which accepted by clearing members but ensures that it does not exceed 40% of the value of the clearing collateral assets. An investor may withdraw clearing collateral assets if the value of the offset collateral exceeds the required clearing margin value determined by the clearing member.

4. Money and securities on the investor’s clearing margin account are owned by the investor, not owned by the clearing member. Clearing members are only allowed to use money and securities on the investors’ clearing margin accounts as prescribed in Clause 5 Article 30 of this Circular.

Article 27. Clearing margin accounts of clearing members

1. The Vietnam Securities Depository and Clearing Corporation is responsible for opening clearing deposit accounts in the name of Vietnam Securities Depository and Clearing Corporation at payment banks and securities clearing margin accounts in the name of Vietnam Securities Depository and Clearing Corporation at Vietnam Securities Depository and Clearing Corporation to manage clearing collateral assets for securities transactions of clearing members and clearing members clients as specified in Clause 3, Article 24 of this Circular.

2. At a settlement bank, Vietnam Securities Depository and Clearing Corporation opens for each clearing member 03 clearing deposit accounts and 03 payment deposit accounts in the name of the Vietnam Securities Depository and Clearing Corporation to separately manage clearing margin assets and make payments for proprietary trading transactions, transactions of domestic brokerage clients and transactions of domestic brokers out.

3. Clearing margin accounts may be used only for receiving and returning clearing collateral assets. Assets on this account include the assets of a client that clearing members use to offset their own securities trading and the interest received from bank deposits. Money and securities arising from exercising the rights of clearing margin securities on the clearing margin securities account shall be allocated according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

4. Clearing margin accounts of clearing members must be established by the Vietnam Securities Depository and Clearing Corporation, ensuring the separate management between clearing members’ assets from those of the Vietnam Securities Depository and Clearing Corporation; separating assets and money from each clearing member; separate from clearing collateral assets of the derivative securities market.

5. The Vietnam Securities Depository and Clearing Corporation is responsible for establishing a management system with complete information on payment obligations, settlement value, required ratio of clearing margin, value and portfolio of clearing collateral assets by each clearing member.

6. The Vietnam Securities Depository and Clearing Corporation has the right to request clearing members to provide detailed information about their trading accounts (in case clearing members are trading members of the Stock Exchange), clearing margin accounts, the value and portfolio of clearing collateral assets clearing collateral assets of each investor.

Article 28. Clearing margin of clearing members

1. The clearing deposit of clearing members with respect to Vietnam Securities Depository and Clearing Corporation shall be implemented as follows:

a) Clearing members must make a full and timely clearing deposit to the Vietnam Securities Depository and Clearing Corporation for all unsettled securities transactions in the name of the clearing member, including transactions of clearing members themselves and transactions of clearing members’ clients;

b) The clearing member must pay additionally clearing collateral assets when the value of the clearing collateral assets fails to meet the required offset margin value or the balance of the clearing deposit is not guaranteed for the minimum offset deposit rate in cash calculated by Vietnam Securities Depository and Clearing Corporation for all unsettled securities transactions in the name of clearing members and may withdrawal clearing margin if the value of the offset collateral exceeds the required offset margin;

c) Clearing collateral assets of clearing members include cash and securities which are accepted by the Vietnam Securities Depositary and Clearing Corporation. The rate of offset deposit in cash shall comply with the regulations of the Vietnam Securities Depository and Clearing Corporation, ensuring not lower than 90% of the value of the offset collateral. The required offset margin value for unsettled securities transactions in the name of clearing members shall be calculated by the Vietnam Securities Depository and Clearing Corporation in a daily basis for clearing members with the value of risk margin, variable margin, and the offset for market risk.

2. The Vietnam Securities Depository and Clearing Corporation shall determine the required clearing margin level for unsettled securities transactions according to clearing members, types of securities and separate for each activity of self-dealing, domestic and foreign brokerage. In case clearing members fail to fully and promptly pay the clearing margin as required, the Vietnam Securities Depository and Clearing Corporation may apply the following handling measures:

a) To request the Vietnam Stock Exchange to suspend trading for violating clearing members who are trading members and non-clearing trading members having entrusted contracts of clearing and settlement with clearing member;

b) Rejection of position replacement for transactions of clearing members and non-clearing members entrusted for clearing and settlement through clearing members after the Vietnam Securities Depository and Clearing Corporation has requested the Vietnam Stock Exchange to suspend trading activities of such member;

c) To handle violations of the violating clearing members according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

3. The Vietnam Securities Depository and Clearing Corporation does not make term deposits for clearing deposits of clearing members. Demand deposit interest will be refunded to clearing members according to the announced interest rate at the payment bank.

4. The determination of the clearing collateral type, method of calculating the margin offset, parameter calculation, types of asset approved for clearing margin, payment procedures, withdrawn of offset margin, the percentage of registered funds clearing, the minimum offset margin in cash, the exercise of the rights related to clearing margin securities and other related contents shall comply with the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 29. Clearing margin assets

1. Investors and clearing members may use money and securities meeting the conditions specified in Clauses 2 and 3 of this Article to make clearing deposits.

2. Securities accepted by the Vietnam Securities Depository and Clearing Corporation as clearing collateral for securities transactions must meet the following conditions:

a) Not being subject to warning, control, suspension of trading on the Stock Exchange or securities of issuing organizations in the state of dissolution, bankruptcy, consolidation or merger;

b) Not being a collateral in transactions under the civil law on trading of collateral, including collateral in margin trading at securities companies; not a property that is being blocked by a state management agency or organization in accordance with relevant laws;

c) Not being blocked or be hold at the Vietnam Securities Depository and Clearing Corporation;

d) Being of a type of free transfer and deposited on a securities trading account at the Vietnam Securities Depository and Clearing Corporation; is the property owned by the clearing margin party who are investor or the clearing member;

dd) Other conditions according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

3. Securities selected by a clearing member allowing investors to enter as a clearing margin must ensure:

a) The conditions specified at points a, b, c and d, Clause 2 of this Article.

b) Other conditions required by the clearing member.

4. The Vietnam Securities Depository and Clearing Corporation, clearing members shall take responsibility to publish the list of approved securities clearing and deposit discount rate of each stock on its electrical bulletin. In case of changing the securities approved as clearing collateral, the investor or clearing member is responsible for replacing it with money or other approved securities at the request of the Vietnam Securities Depository and Clearing Corporation, clearing member.

5. During the time of clearing margin, investors and clearing members are still entitled to receive rights and benefits arising from clearing margin securities according to the regulations of the Law on Enterprises, Law on Securities and according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

6. During the clearing collateral, investor, clearing member may not transfer, donate, mortgage, deposit, register as guarantee assets or use collateral of clearing margin for other purposes.

Article 30. Management of clearing margin accounts, clearing margin assets of investors and clearing members

1. Clearing members must separately manage their accounts and clearing margin assets for each investor; separate from their own accounts and clearing margin assets; separate accounts and clearing margin assets from the derivative securities market.

2. Clearing members are only allowed to use the clearing margin assets on the investors’ clearing margin account to ensure payment obligations, make payments for their own securities transactions, not to use to not be used to guarantee the payment obligations, make payments for transactions of the clearing member and other investors, not to use as guarantee asset or payment for others purposes, not to use as collateral for their loans or use for investment, except for cases as prescribed in Clause 5 this Article. Deposit interest will be refunded to investors at the demand deposit interest rate paid by the bank.

3. The clearing margin assets of investors must be managed separately, it shall not be and shall not be considered as asset of the clearing member, even if it has been deposit as clearing margin on the clearing margin account of the clearing member.

4. In case a clearing member dissolves or goes bankrupt, the investor’s clearing margin assets are not the property of the clearing member and must not be used for settlement in accordance with the law on dissolution and bankruptcy, it shall not have distributed to creditors of clearing members or distributed to shareholders, capital contributors of clearing members in any form. The clearing member is responsible for immediately repaying the investor the remaining amount of clearing collateral after the investor’s payment obligations are fulfilled.

5. Every day and during trading sessions where securities prices fluctuate, clearing members calculate the required clearing margin, reassess the value of the offset collateral, ensuring investors always maintain clearing margin as agreed in the contract and in accordance with law provisions. In case investors are incapable of settling for securities transactions, clearing members may use, sell or transfer the clearing margin assets without the investor’s consent. Within 01 working day after handling the clearing margin, the clearing member must notify the investor in the method agreed with the investor on the handling of the clearing collateral assets. The notice must state the reason, type of property handled, method, time and implementation value.

6. The Vietnam Securities Depository and Clearing Corporation has the right to use clearing collateral assets of investors, clearing members have paid to the Vietnam Securities Depository and Clearing Corporation for fulfill obligations of investors, clearing members according to the provisions of point m, Clause 1, Article 156 of Decree No. .../2020/ND-CP dated .... month .... year of the Government details the implementation of a number of articles of the Law on Securities. Within 01 working day after dealing with clearing collateral, the Vietnam Securities Depository and Clearing Corporation must notify in writing for the clearing members of the disposal of clearing collateral. The notice must clearly state the reason, type of property handled, method and time of settlement, and value of implementation.

Article 31. Clearing deposit and settlement of securities trading of organizations open direct account, clients of the depository bank

1. Organizations open direct account, clients of the depository bank when conducting securities transactions, must satisfy requirements on securities trading and make clearing margin before trading in accordance with the law on securities transactions, securities clearing and settlement.

2. In case there is an agreement with a clearing member, the organization opening the direct account may manage the clearing margin assets by themselves on the depository account of the organization opening the direct account; depository bank which is not  clearing member can manage the clearing collateral assets such as money and securities of the clients on the clients’ depository account at the depository bank, but the clearing and settlement of securities transactions of the organization that opens the direct account, the clients of the depository bank must be conducted on clearing margin accounts opened at clearing members.

3. Clearing members are responsible for all obligations of clearing margin, and settlement for securities transactions of the organization opening the direct account, the clients of the depository bank who is not a clearing member for the Vietnam Securities Depository and Clearing Corporation, even if there is an agreement on the management of clearing margin and payment for securities transactions with the organization opening a direct account or such depository bank.

4. Depository banks being clearing members shall fully perform the clearing members’ responsibilities as provided for in Clause 3, Article 24 of this Circular and may refuse to confirm the payment of securities transactions of investors in case where securities company placing trading orders as a clearing member incorrectly places information of the investor’s order or places orders without the confirmation or guarantee of the depository bank. In this case, the securities company being a clearing member shall correct errors for investors’ transactions according to the provisions of Article 33 of this Circular.

Article 32. Position, reconciliation, confirmation of transactions

1. After receiving the trading results from the Stock Exchanges, the Vietnam Securities Depository and Clearing Corporation shall check the validity of the transactions before executing a trading position. The Vietnam Securities Depository and Clearing Corporation has the right to refuse positions and eliminate payments for invalid transactions as prescribed in Clause 1 Article 37 of this Circular.

2. The Vietnam Securities Depository and Clearing Corporation shall have to notify the list of valid transactions to clearing members for comparison and confirmation.

3. Clearing members are responsible for comparing transaction details with the valid list of transactions sent by the Vietnam Securities Depository and Clearing Corporation and reconfirmed with the Vietnam Deposit and Clearing Corporation securities according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 33. Rectifying errors after transactions

1. The Vietnam Securities Depository and Clearing Corporation shall conduct rectifying errors after transactions in the following cases:

a) Depository members being securities companies improperly or wrongly place clients’ orders: incorrect account number of the client, the wrong securities, incorrect price, superfluous orders, purchase order mistaken for sell orders and vice versa, wrong securities quantity.

b) Clearing members do not control the securities balance and clients’ money as prescribed, resulting in a lack of securities or money to pay for securities transactions;

c) The number of sold securities or the number of securities bought is different because the total number of sold securities is not equal to the total volume of securities purchased on the executed trading orders of the day;

d) Securities company being a clearing member placed trading orders for the clients of the clearing member being a depository bank without confirmation or wrong order in comparison with the confirmation of the depository bank;

dd) Client’s account that lacks securities by the prescribed time does not send notice or confirmation to the Vietnam Securities Depository and Clearing Corporation;

e) Transactions that lack client account information.

2. Rectifying errors after transactions shall be carried out by Vietnam Securities Depository and Clearing Corporation according to the following principles:

a) The Vietnam Securities Depository and Clearing Corporation shall rectify errors on securities dealing accounts at the request of clearing members for the cases specified at points a, b, c, Clause 1 of this Article;

b) For the case specified at point d, Clause 1 of this Article, the Vietnam Securities Depository and Clearing Corporation corrects the error on the securities dealing account of the securities company after the depository bank refuses to confirm receive payment for securities transactions from clients;

c) For the case specified at point dd, Clause 1 of this Article, the Vietnam Securities Depository and Clearing Corporation shall rectify the error on the securities dealing account of clearing members without consulting the clearing members;

d) For the case specified at point e, Clause 1 of this Article, the Vietnam Securities Depository and Clearing Corporation shall rectify the correct error of the updated client’s account within the prescribed time. After this time, for transactions that lack investor account information, the Vietnam Securities Depository and Clearing Corporation shall rectify the error to the clearing member’s securities dealing account.

3. If the error-correcting depository member has no securities dealing account: Vietnam Securities Depository and Clearing Corporation shall open a securities dealing account for the clearing members to conduct temporary accounting of the volume of securities that such clearing member may receive or must return due to such error correction. The implementation mechanism is as follows:

a) When receiving securities due to the error correction, that clearing member shall immediately sell the volume of securities received on the error correction at the upcoming trading session for the Vietnam Securities Depository and Clearing Corporation to liquidate the account.

b) When returning lent securities from lenders, the clearing members may maintain the securities dealing accounts until completion of obligations to the lenders.

4. In case of error correction leading to an excess of the prescribed maximum foreign ownership ratio, clearing members shall sell part or all of the securities received from the error correction transaction in the latest trading session to reduce foreign ownership ratio to a regulated level.

5. For errors not referred to in Clause 1 of this Article, the Vietnam Securities Depository and Clearing Corporation shall have competence in review, process after being approved by the State Securities Commission.

6. The clearing members who considered lose securities settlement ability due to rectifying errors after transaction may apply support mechanisms under the provisions of Article 35 of this Circular.

7. The Vietnam Securities Depository and Clearing Corporation shall be responsible for notifying to the Stock Exchange on transactions subjected to rectify errors after transaction.

8. Rectifying errors after transaction shall comply with the guidance in the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 34. Rectifying errors of securities dealing transactions

1. If the clearing member which is securities companies enter the wrong securities dealing account numbers, securities dealing order into trading system, the Vietnam Securities Depository and Depository Corporation shall make adjustments to the correct securities dealing account number, securities dealing order of the securities companies, depository bank to clear and settle transactions.

2. If the securities company enters the wrong order leading to lack of securities to settle or the founding members of exchange traded funds lack securities or fund certificates for settlement due to unsuccessful swap transactions under the provisions of as prescribed by laws on management of exchange traded funds, it shall apply the support mechanism as defined in Article 35 of this Circular.

3. The Vietnam Securities Depository and Depository Corporation shall be responsible for notifying transactions rectified errors after transaction to the Stock Exchange.

Article 35. Handling cases of loss of solvency for securities transaction

1. Clearing members and clearing members’ clients lose their solvency for securities transactions in one of the following cases:

a) Failure to promptly or improperly perform the obligations of the securities clearing and settlement deposit in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation;

b) Being bankrupt or declared bankrupt in accordance with the law on enterprise bankruptcy;

c) Other cases according to the regulations of the Vietnam Securities Depository and Clearing Corporation.

2. In case of a lack of money, the Vietnam Securities Depository and Clearing Corporation may use support sources to ensure the settlement of securities transactions when clearing members and clients of clearing members lose solvency for securities transactions in the following order:

a) Using clearing deposit of the insolvency clearing member for securities transactions in accordance with the order specified in the regulations of the Vietnam Securities Depository and Clearing Corporation;

b) Using the clearing fund’s contributions in cash of clearing members who are insolvent for securities transactions in case the clearing deposit of clearing members is not enough to offset the payment obligations;

c) To use, sell or transfer clearing margin assets of clearing members, insolvency investors for securities transactions, assets contributed to clearing funds in securities of clearing members the insolvency for securities transactions in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation;

d) Use the clearing fund’s contributions to other clearing members according to the proportions decided by the Vietnam Securities Depository and Clearing Corporation. In this case, the Vietnam Securities Depository and Clearing Corporation shall notify clearing members of the use of the clearing fund to ensure the payment within the usage day. A clearing member who is insolvent for securities transactions shall return all used clearing fund assets and pay interest to other clearing members at the interest rate regulated by the Corporation Vietnam securities signing and clearing regulations;

dd) Use the operations risk prevention fund and other lawful capital sources of the Vietnam Securities Depository and Clearing Corporation after obtaining approval from the Ministry of Finance.

3. In case of lack of securities due to rectify error after transaction or securities dealing trading, clearing members shall apply support measures in the following order:

a) Such members shall use borrowed securities through the securities borrowing and lending system managed by the Vietnam Securities Depository and Clearing Corporation.

b) In case at the settlement time of the clearing member still does not have enough securities for payment, the Vietnam Securities Depository and Clearing Company will delay the payment time for the number of securities in shortage of clearing members to continue applying the support mechanism due to the lack of securities as specified in point a or point c of this Clause. The delay of payment time limit shall comply with Article 36 of this Circular.

c) Mandatory purchase through the securities trading system. Mandatory purchase transactions are settled on the same day and are offset together with transactions having the same date of settlement via the system of Vietnam Securities Depository and Clearing Corporation;

4. The Vietnam Securities Depository and Clearing Corporation may make a cash payment for a lack of securities in the following cases:

a) The settlement date is the last registration date to exercise the right to generate material benefits but the clearing member fails to complete the loan, compulsory securities purchase within the prescribed time;

b) The shortage securities are not allowed to borrow and compulsory purchase according to the regulations of the Vietnam Securities Depository and Clearing Corporation and the Vietnam Stock Exchange;

c) The clearing member has applied the support measures as prescribed in Clause 3 of this Article but still does not have enough securities for payment.

5. Clearing members who are insolvent for securities transactions, clients of clearing members who are incapable of settling securities transactions must repay the used support sources specified in Clause 2 of this Article in the following order:

a) Legal capital sources of the Vietnam Securities Depository and Clearing Corporation;

b) The operations risk prevention fund of the Vietnam Securities Depository and Clearing Corporation;

c) Contributions of other clearing members in the clearing fund;

d) Contribution of the clearing member who is unable to settle securities transactions in the clearing fund.

6. The Vietnam Securities Depository and Clearing Corporation is allowed to use, sell and transfer existing securities, pending securities from previous purchases on securities dealing accounts, market creating of the insolvent clearing members; pending securities from previous under-cash purchases on the account of insolvent investors to repay used support sources and to offset related costs incurred.

In the event that existing securities cannot be sold, used or transferred, or the proceeds from the sale, use or transfer are not sufficient or the proceeds from the sale, use or transfer are insufficient to repay the support sources and related expenses incurred, the Vietnam Securities Depository and Clearing Corporation is allowed to use the proceeds from other securities sale transactions, rights and benefits obtained from securities of insolvent clearing members or investors to repay the support sources and compensate for costs and losses incurred.

7. The use of payment assistance sources, collateral handling mechanism, loan repayment, determination of payment price, time and order of cash payment comply with the regulations of the Vietnam Securities Depository and Clearing Corporation.

8. In addition to the use of measures to ensure solvency as prescribed in Clauses 2, 3 and 4 of this Article, the Vietnam Securities Depository and Clearing Corporation may implement the following measures:

a) Request clearing members to explain reasons, provide all information related to the insolvency of securities transactions, provide a list of clients, identifying information of clients and information of the clearing margin accounts of clients and clearing members;

b) Coordinate with the Vietnam Stock Exchange to suspend trading for clearing members being trading members or non-clearing trading members having entrusted clearing, settlement contracts with insolvent clearing members for securities transactions, except for transactions requested by the Vietnam Securities Depository and Clearing Corporation (if any) to reduce payment obligations or clearing margin obligations of investors, clearing members;

c) Adjusting the required clearing margin level, the level of contribution of the clearing fund for insolvent clearing members for securities transactions.

9. In the event that the investor loses the solvency for the securities transaction, the clearing officer shall immediately report to the Vietnam Securities Depository and Clearing Corporation information on securities transactions, investor’s portfolio of collateral assets and taking appropriate remedial measures, including:

a) To request an investor or clearing member to perform a mandatory transaction for a transaction performed on the same transaction day to minimize payment obligation;

b) To suspend the receipt of new securities trading orders from a related investor and concurrently cancel unexecuted trading orders of that investor;

c) To use, sell or transfer the investors’ collateral assets to purchase or used as collateral for the loans to fulfill payment obligations for securities transactions of investors. In case of insufficient, clearing members must use their assets to make payments on behalf of investors.

10. The application of the securities borrow and loan mechanism to support the payment shall comply with the guidance in the regulations of the Vietnam Securities Depository and Clearing Corporation.

11. In cases where clearing members are required to purchase securities through the securities trading system, clearing members shall comply with regulations of the Stock Exchange.

Article 36. Settlement time-limit delay

1. The delay of settlement time-limit deadline shall comply with the following principles:

a) The Vietnam Securities Depository and Clearing Corporation will split the deficient number of securities to delay the payment deadline;

b) The time limit for delaying payment is 03 working days from the date of payment of the deficient securities. The value of the number of securities delayed for the payment term is determined on the basis of the closing price of securities which maturity is delayed on the trading day immediately preceding the settlement date;

c) The payment of securities whose payment term is delayed is done by the method of clearing common to transactions with the next settlement date;

d) Depository members having transactions delayed the settlement time-limit shall indemnify organizations and individuals with relevant reciprocal transactions at the rate of 5% of the value of transactions delayed the settlement time-limit for a day of settlement delay.

2. The method of determining the quantity and value of deficient securities that must be delayed for payment and the order of delaying payment term shall be implement in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 37. Rejection of clearing members’ trading positions and elimination of securities trading settlement

1. The Vietnam Securities Depository and Clearing Corporation shall conduct rejection of clearing members’ trading positions and elimination of securities trading settlement in the following cases:

a) Clearing members and clients of clearing members sell securities when they have not yet owned against the guidance of the Ministry of Finance;

b) Transactions of clearing members or clients of clearing members are executed after the Vietnam Securities Depository and Clearing Corporation notifies the Vietnam Stock Exchange of the suspension of the translation against that clearing member;

c) Executed transactions for securities codes not yet accepted for clearing and settlement in the system of Vietnam Securities Depository and Clearing Corporation;

d) The transaction has an invalid account number because the clearing member registration number or the transaction account type character does not exist;

dd) A transaction contains invalid information, including: not having code of the session; trading date other than the current date; not having the buy or sell order number; the transaction price or volume is less than or equal to zero; not having order confirmation;

e) A transaction that contains a combination of four information on market codes, trading board codes, securities codes, order confirmation numbers be identical to previously received transactions;

g) Other cases after obtaining approval from the State Securities Commission.

2. The clearing member whose transaction is denied position and removed the payment at points a and b, Clause 1 of this Article must compensate the organization or individual having the related transaction at the rate of 20% of the price transaction value for which position is denied or not paid. In the case of a violation of the law, clearing members shall be sanction in accordance with the law on handling of administrative violations in the fields of securities and securities markets.

3. The Vietnam Securities Depository and Clearing Corporation shall be responsible for notifying the denied position and removed transactions to the Stock Exchange.

Article 38. Management and use of clearing funds

1. The clearing fund is formed from cash or securities contributions accepted by the Vietnam Securities Depository and Clearing Corporation for the purpose of compensating for damages and completing securities transactions payment obligations in the name of clearing members in case investors, clearing members lose their solvency for securities transactions. The proportion of the value of securities contributed to the clearing fund shall comply with the regulations of the Vietnam Securities Depository and Clearing Corporation.

2. The Vietnam Securities Depository and Clearing Corporation shall determine its contribution to the clearing fund based on the risk of insolvency of securities transactions of clearing members separated by each market area. The value of the clearing fund contribution for any market area is only used to support the settlement and compensation for losses arising related to securities trading of such market area.

3. Clearing members are obliged to contribute to the clearing fund at the initial minimum, periodical contributions due to reassessment and additional extraordinary contributions at the request of the Vietnam Securities Depository and Clearing Corporation. Contribution to clearing funds of clearing members shall comply with regulations of the Ministry of Finance regarding funds managed by the Vietnam Securities Depository and Clearing Corporation.

4. The Vietnam Securities Depository and Clearing Corporation shall re-evaluate the size of the clearing fund periodically and determine each clearing member’s obligation to contribute to the clearing fund based on the size of the payment value, market volatility, level of risk and other criteria:

a) If the balance to contribute to the clearing fund is greater than the obligation to contribute, the clearing member may withdraw the difference;

b) If the contribution balance of the clearing fund is smaller than the obligation to contribute, the clearing member must contribute the difference.

5. A clearing member shall make an extraordinary additional contribution to the clearing fund in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation in the following cases:

a) After all assets contributed to the clearing fund have been used up according to the order specified at point d, Clause 2, Article 35 of this Circular, there is still not enough money to pay for securities transactions. The additional contribution level shall be decided by the Vietnam Securities Depository and Clearing Corporation after being approved by the State Securities Commission;

b) Clearing members are put in warning situation in accordance with the securities law on financial safety, laws on banking on capital safety;

c) Assets contributed to the clearing fund of clearing members are frozen or confiscated according to regulations of a competent state agency or under a court decision;

d) Other cases regulated by the Vietnam Securities Depository and Clearing Corporation and approved by the State Securities Commission.

6. Management and use of clearing fund:

a) Contributions to the clearing fund are owned by clearing members and managed by the Vietnam Securities Depository and Clearing Corporation separately from the assets of the Vietnam Securities Depository and Clearing Corporation and separate from the derivative market. The Vietnam Securities Depository and Clearing Corporation has the right to use, transfer, or even sell assets contributed to the clearing fund to fulfill its payment obligations, offset losses arising from the securities transactions with correct names of clearing members;

b) For cash contributions, the Vietnam Securities Depository and Clearing Corporation shall open a deposit account at a settlement bank to manage the clearing members’ money contributing to the clearing fund;

c) For contributions by securities, the Vietnam Securities Depository and Clearing Corporation opens a securities depository account at the Vietnam Securities Depository and Clearing Corporation to manage contributed securities clearing funds of clearing members. Dividends, arising interests and other benefits regarding contributed securities must be returned to the clearing members after the fulfillment of relevant financial obligations;

d) Interest arising in relation to the contribution of the clearing fund by money allocated to the clearing member in accordance with the amount and time of each clearing member’s contribution after subtracting administrative expenses to the Vietnam Securities Depository and Clearing Corporation and other related expenses (if any);

dd) Depend on the actual value of the clearing fund and the frequency and level of use of the clearing fund of clearing members, the Vietnam Securities Depository and Clearing Corporation is allowed to set the ceiling level for each payment assistance case. The interest rate of the clearing fund loan shall be determined by the Vietnam Securities Depository and Clearing Corporation after consulting the clearing member’s opinion and being approved by the State Securities Commission.

7. Return the clearing fund:

a) A clearing member is only entitled to a refund of the amount contributed to the clearing fund when the clearing member has its certificate of clearing member revoked. The refund will be made only after the Vietnam Securities Depository and Clearing Corporation has deducted all payables (debt obligations), including compensation for financial losses to the Vietnam Securities Depository and Clearing Corporation and other payables for securities transactions, the unfulfilled payment obligations of clearing members and clearing members’ clients in accordance with Clause 3 of Article 24 This Circular.

b) If a clearing member is in the process of revoking a clearing member’s certificate, the value of the clearing fund’s contribution of the clearing member shall be managed separately from the clearing fund and the basis for the agency competent to issue the decision of revoke (if any), after deducting the amount the clearing member must pay to the Vietnam Securities Depository and Clearing Corporation.

8. Method of determining the scale and obligation to contribute; rate of contribution to clearing fund by money; payment, withdrawal and refund order; the method of receiving and distributing interests is in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation.

Article 39. Management and use of the payment support fund from the date of officially implementing the clearing and settlement activities under the central clearing partner mechanism

1. Manage and use the payment support fund within 12 months from the date of officially implementing the clearing and settlement activities under the central clearing partner mechanism:

a) The Vietnam Securities Depository and Clearing Corporation shall continue to manage and use the payment assistance fund for the purpose of compensating financial losses for the Vietnam Securities Depository and Clearing Corporation and complete all securities transactions, settlement obligations of depository members, clearing members, investors in case of depository members, clearing members, investors loss their solvency for securities transactions. During this period, Vietnam Securities Depository and Clearing Corporation may use the settlement support fund as a clearing fund to secure the payment according to the provisions of this Clause and points b and d, Clause 2 of Article 35 this Circular.

b) Depository members are responsible for contributing to the payment assistance fun by money with the initial fixed contribution rate, the annual contribution rate and the maximum contribution rate shall be in accordance with the regulations of the Ministry of Finance regarding the available funds managed by Vietnam Securities Depository and Clearing Corporation.

c) Contributions to the settlement assistance funds are owned by depository members and managed by the Vietnam Securities Depository and Clearing Corporation separately from assets of the Securities Depository and Clearing Corporation contract in Vietnam. A depository member shall be entitled to a refund of the contribution amount in the settlement assistance fund in the following cases:

- Depository member be subjected to the revocation of the Certificate of a depository member in accordance with law provisions;

- Depository members are not granted clearing members certificates after 12 months from the time of officially implementing clearing activities under the central clearing partner mechanism.

d) The refund as prescribed in point c of this Clause shall be made only after the Vietnam Securities Depository and Clearing Corporation issues a decision to revoke the Certificate of a depository member and has deducted any payables (liabilities), including compensation for financial loss to the Vietnam Securities Depository and Clearing Corporation and payables for securities transactions, and other payment obligations not yet complete of the depository member and its client’s.

dd) In case a depository member is in the process of revoking its certificate of depository member, the value of contribution to the settlement assistance fund of a depository member shall be managed separately from the settlement assistance fund and serve as the basis for the competent agency to issue the decision on revoking its certificates (if any), after deducting the amount of the depository members must pay to the Vietnam Securities Depository and Clearing Corporation.

e) Interest arising from the contribution of the payment assistance fund shall be allocated to the depository members in proportion of the amount and time of contribution of each depository member after deducting management expenses for the Vietnam Securities Depository and Clearing Corporation (if any).

g) Method of determining scale and obligation to contribute; order of payment, withdrawal, refund; the method of receiving and distributing interests shall be in accordance with the regulations of the Vietnam Securities Depository and Clearing Corporation.

2. After 12 months from the official implementation of the clearing and settlement of securities transactions under the central clearing partner mechanism, the Vietnam Securities Depository and Clearing Corporation shall establish and manage and use the clearing fund as prescribed in Article 38 of this Circular to replace the settlement assistance fund and handle the payment assistance fund contributions of depository members as follows:

a) The contribution value of the settlement assistance fund of the depository member granted a clearing member’s certificate is converted into a contribution to the clearing fund. Clearing members pay additional contributions or be refunded their contributions (if any) according to the notice of the Vietnam Securities Depository and Clearing Corporation.

 b) The Vietnam Securities Depository and Clearing Corporation shall return the amount of contribution to the settlement assistance fund to the depository members who are not granted a clearing member certificate after deducting the amount that the depository must pay to the Vietnam Securities Depository and Clearing Corporation, including payables (debt obligations), compensation for financial loss to the Vietnam Securities Depository and Clearing Corporation and other payables for securities transactions, and unfulfilled payment obligations are held by such depository member in accordance with law provisions.

Article 40. Management of securities lending and borrowing system

1. The Vietnam Securities Depository and Clearing Corporation shall hold the intermediary role, managing and operating the securities lending and borrowing system for the purpose of connecting the lender and the securities borrower to perform transactions in accordance with law provisions.

2. Securities lending and borrowing system shall be implemented on the following principles:

a) Securities borrowing and lending shall be implemented under the agreement between the borrower and the lender on the principle that the borrower must have collateral; the order matching mechanism must ensure the principle of priority on interest rates, the quantity of securities and the time;

b) Collateral shall be qualified securities or money. The Vietnam Securities Depository and Clearing Corporation shall stipulate on securities qualified to be collateral and the discount rate of collateral after being approved by the State Securities Commission;

c) The value of collateral must achieve a minimum ratio of 110% of the loan value. The Vietnam Securities Depository and Clearing Corporation shall stipulate the value of collateral compared with the value of the loan after being approved by the State Securities Commission;

d) Loaning interest rates shall be agreed on the principle of compliance with the provisions of relevant law provisions;

dd) The loan must be repaid in borrowed securities or in cash after the granted approval of the lender. If the lender gets repaid loans in securities leading to excess of the maximum foreign ownership percentage, such excess shall be repaid in cash;

e) If the lender receives collateral transfer in securities when the borrower loses its solvency leading to excess of the maximum foreign ownership percentage as prescribed, the lender shall sell the securities exceeding the maximum ownership percentage as prescribed in the next trading day of the delivery receipt day.

3. The Vietnam Securities Depository and Clearing Corporation shall be responsible for organization, management and operation of the securities lending and borrowing system at the Vietnam Securities Depository and Clearing Corporation.

4. Activities borrowing and lending of securities shall comply with the guidance in the regulation of the Vietnam Securities Depository and Clearing Corporation.

 

Chapter V

REPORTING REGIME

 

Article 41. Periodical reports

1. Every month, depository members and organizations opening direct accounts must submit reports on securities depository activities, clearing members must submit written reports on securities clearing and settlement activities in writing copies or electronic data for the Vietnam Securities Depository and Clearing Corporation in accordance with the content specified in the regulations on operation of the Vietnam Securities Depository and Clearing Corporation.

2. Annually, the settlement bank must report in writing or electronically to the State Securities Commission on its eligibility to act as a settlement bank according to the form provided in Appendix III issued together with this Circular.

3. Every 06 months, depository members and clearing members being commercial banks or foreign bank branches must report in writing or electronically to the State Securities Commission on the status of meeting conditions for registration of securities depository activities and conditions for provision of securities clearing and settlement services using the form prescribed in Appendices IV and V attached to this Circular.

4. Payment banks must submit monthly, quarterly, annually reports on settlement of their transactions to State Securities Commission with contents specified in Appendix VI enclosed herewith this Circular.

5. Reporting time limits are prescribed as follows:

a) Monthly reports shall be submitted to the State Securities Commission within the first 10 days of the following month;

b) Quarterly reports shall be submitted to the State Securities Commission within the first 20 days of the first month of the following quarter;

c) Report on 06 months to the State Securities Commission within the first 45 days from the end of the first 6 months of the year;

d) An annual report must be sent to the State Securities Commission within the first 90 days of the following year.

6. The time to finalize the report data for periodic reports shall be as follows:

a) The annual reporting period is 12 months, counting from the beginning of January 01 to the end of December 31 of the calendar year;

b) The 6 months reporting period is counted from the beginning of January 01 to the end of June 30 of the calendar year;

c) Quarterly reporting period is 03 months, credit from the beginning of the first month of the quarter to the end of the last day of the last month of the quarter;

d) Monthly reporting period is 01 month, counting from the first day to the last day of the month.

Article 42. Irregular reports

1. The Vietnam Securities Depository and Clearing Corporation shall report in writing or electrical form to the State Securities Commission within 24 hours of the occurrence of any of the following events:

a) Termination of operations in securities depository, clearing and settlement of securities transactions of depository members;

b) Revocation of Certificate of securities depository and clearing member registration, termination of securities depository of branches of securities companies or commercial banks

c) Information is provided under the confidential regulation for competent State agencies;

d) Securities registration, depository, clearing and settlement operations are partly or wholly paralyzed.

2. Payment banks shall report in writing or electrical form to the State Securities Commission and the Vietnam Securities Depositary and Clearing Corporation immediately when securities settlement operations are wholly or partly paralyzed.

3. Settlement banks, depository members and clearing members being commercial banks, foreign bank branches must report in writing or electronically to the State Securities Commission within a maximum period of 24 hours since the conditions for making payment banking are not met, conditions for registration of securities depository activities and conditions for providing clearing and settlement services for securities transactions are provided.

4. The clearing member must report in writing or electrical form to the State Securities Commission within a maximum time limit of 24 hours of the occurrence of any of the following events:

a) The charter capital, equity decreased by more than 10% compared with the charter capital, equity in the annual financial statement or the most recent quarterly financial report;

b) The debt-to-equity ratio exceeds 05 times.

Article 43. Reports upon request

1. In addition to periodic and irregular reports prescribed in Articles 41, 42 of this Circular, in the case of necessity, to protect common interests and the interests of investors, the State Securities Commission may request the Vietnam Securities Depository and Clearing Corporation, depository members, organizations opening accounts directly, clearing members and the payment bank to report on the registration, depository, clearing and settlement of securities transactions.

2. The Vietnam Securities Depository and Clearing Corporation, depository members, organizations opening accounts directly and payment banks must repost to the State Securities Commission within the request time limit after receiving the request for reports as specified in Clause 1 This Article.

3. In case of necessity, in order to ensure the security of the payment system for securities transactions, the Vietnam Securities Depository and Clearing Corporation may request clearing members and settlement banks to report written or electronic data on margin clearing, clearing and settlement for securities transactions. Clearing members and clearing banks shall report to the Vietnam Securities Depository and Clearing Corporation within 24 hours after receiving the request for the report.

 

Chapter VI

IMPLEMENTATION PROVISIONS

 

Article 44. Effect

1. This Decree takes effect on February 15, 2021.

2. The Circular No. 05/2015/TT-BTC dated January 15, 2015 of the Minister of Finance guiding the securities registration, depository, clearing and settlement activities cease to be effective from the effective date of this Circular, except for the provisions in Clause 3, Article 45 of this Circular.

Article 45. Transitional provisions

1. Before the Vietnam Securities Depository and Clearing Corporation officially operated under the provisions of the Law on Securities No. 54/2019/QH14, the activities of registration, depository, clearing and settlement of securities transactions shall be implemented by the Vietnam Securities Depository Center in accordance with the Law on Securities No. 54/2019/QH14 and the Decree No. 155/2020/ND-CP dated December 31, 2020 of the Government detailing the implementation some articles of the Law on  Securities and provisions of this Circular.

2. Branches of securities companies, branches of commercial banks that have been granted the Decision on approval for securities depository operations by the State Securities Commission, and granted the Certificate of operation branch for securities depository activities by the Vietnam Securities Depository Center before the effective date of this Circular may continue their securities depository operations.

The State Securities Commission shall revoke the Decision approving the securities depository operation for branches of securities companies and commercial bank branches after the Vietnam Securities Depository and Clearing Corporation terminates the operation of such branches of securities companies and commercial bank branches on securities depository activities as prescribed in the provisions of Article 12 of this Circular.

3. Before the official implementation of the clearing and settlement for securities transactions under the central clearing partner mechanism, the Vietnam Securities Depository and Clearing Corporation is allowed to continue the clearing and settlement securities trading settlement and management and use of financial assistance funds in accordance with the provisions of the Circular 05/2015/TT-BTC dated January 15, 2015 of the Minister of Finance guiding the registration, depository, clearing and settlement of securities transactions.

Article 46. Implementation organization

1. On the basis of the provisions of this Circular, the Vietnam Securities Depository and Clearing Corporation promulgating the operation regulations and member regulations after being approved by the State Securities Commission.

2. Problems arising in the course of implementation should be promptly reported to the Ministry of Finance for study and provide additional guidance./.

 

For the Minister of Finance

The Deputy Minister

Huynh Quang Hai

 

* All Appendices are not translated herein.