Vietnam: What does the application for issuing the certificate of eligibility to provide derivative clearing and settlement services include?
- What are the requirements for issuance of certificate of eligibility to provide derivative clearing and settlement services in Vietnam?
- What does the application for issuing the certificate of eligibility to provide derivative clearing and settlement services in Vietnam include?
- What are the procedures for issuing the certificate of eligibility to provide derivative clearing and settlement services in Vietnam?
What are the requirements for issuance of certificate of eligibility to provide derivative clearing and settlement services in Vietnam?
According to Article 4 of Decree 158/2020/ND-CP stipulating the requirements for issuance of certificate of eligibility to provide derivative clearing and settlement services as follows:
- Securities companies and securities investment fund management companies (hereinafter referred to as “fund management company”) shall only trade derivatives after obtaining certificate of eligibility to trade derivatives from the State Securities Commission of Vietnam (“SSC”):
+ Securities companies may carry out one, several or all of derivative trading operations, including: derivative brokerage, derivative proprietary trading and derivative investment consulting;
+ Fund management companies may only provide derivative investment consulting.
- In order to be issued with certificate of eligibility to trade derivatives, a securities company is required to meet the following requirements:
+ Be sufficiently licensed to perform securities trading operations;
+ Meet the following charter capital and equity requirements:
++ For derivative brokerage: the minimum charter capital or equity is VND 800 billion;
++ For derivative proprietary trading: the minimum charter capital or equity is VND 600 billion;
++ For derivative investment consulting: the minimum charter capital or equity is VND 250 billion;
++ If a securities company engages in all of derivative brokerage, derivative proprietary trading and derivative investment consulting, its minimum charter capital or equity is VND 800 billion;
+ Meet internal control and risk management requirements for securities trading operations in accordance with regulations of law on operations of securities companies;
+ Meet personnel requirements: Director (General Director), Deputy Director (Deputy General Director) in charge of specific operations and at least 05 employees for each derivative trading operation must have securities professional certificates suitable for their operations as prescribed by law and professional certificate in derivatives and derivative market;
+ Maintain a working capital ratio of at least 220% in the last continuous 12 months; have sufficiently contributed to provisions as prescribed by law;
+ Incur no loss in the last 02 years;
+ Receive unqualified opinions from the accredited audit organizations for the latest audited annual financial statements and the latest reviewed mid-year financial statements (in case an application for certificate of eligibility to trade derivatives is submitted after June 30);
+ It is not following procedures for reorganization, dissolution or bankruptcy; it is not subject to any decision on suspension of business operations issued by competent authorities.
- In order to be issued with certificate of eligibility to trade derivatives, a fund management company is required to meet the following requirements:
+ Maintain the charter capital or equity of at least VND 25 billion;
+ Arrange Director (General Director) and Deputy Director (Deputy General Director) in charge of specific operations and at least 05 employees for derivative investment consulting who must have securities professional certificates suitable for their operations as prescribed by law and professional certificate in derivatives and derivative market;
+ Meet the requirements in Points dd, e, g, h Clause 2 of Article 4 of Decree 158/2020/ND-CP.
What does the application for issuing the certificate of eligibility to provide derivative clearing and settlement services in Vietnam include?
According to Clause 1 Article 10 of Decree 158/2020/ND-CP, an application for certificate of eligibility to provide derivative clearing and settlement services consists of:
- The application form made using Form No. 04 in the Appendix enclosed herewith;
- The resolution of the General Meeting of Shareholders, Board of Members or the owner’s decision on provision of derivative clearing and settlement services;
- The audited financial statements of the last 02 fiscal years and the latest reviewed mid-year financial statements (in case an application for certificate of eligibility to trade derivatives is submitted after June 30); the prudential ratio reports in the last 12 months (for a securities company) or documents proving the satisfaction of capital adequacy ratios (for a commercial bank or FBB);
- Internal control and risk management procedures for derivative clearing and settlement services;
- SBV’s approval given to the commercial bank or FBB for provision of derivative clearing and settlement services in accordance with regulations of law on credit institutions.
What are the procedures for issuing the certificate of eligibility to provide derivative clearing and settlement services in Vietnam?
According to the provisions of Article 10 of Decree 158/2020/ND-CP, the procedures for issuing the certificate of eligibility to provide derivative clearing and settlement services in Vietnam are:
- The application shall be submitted to SSC directly, by post or through the online public service system as regulated by the Minister of Finance.
- Within 05 business days from the receipt of the application, SSC shall request the applicant in writing to revise the application (if necessary).
- Within 15 days from the receipt of the adequate and valid application, SSC shall issue the certificate of eligibility to provide derivative clearing and settlement services. If an application is refused, SSC shall provide written reasons for such refusal.
- Within 12 months from the date of issuance of the certificate of eligibility to provide derivative clearing and settlement services, the certificate holder is required to apply for clearing member registration. If it fails to follow procedures for clearing member registration, SSC shall issue a decision to revoke the certificate of eligibility to provide derivative clearing and settlement services.
Note: A full set of original application documents is required. If a copy of document is submitted, it must be a copy extracted from master register or a certified copy.
LawNet
