What are the margins provided by clearing members in Vietnam? What are the regulations on management of accounts and margins of investors?
What are the margins provided by clearing members in Vietnam?
According to the provisions of Clause 1, Article 33 of Decree No. 158/2020/ND-CP, margins provided by clearing members include cash, securities and other assets accepted as margins as prescribed by Vietnam Securities Depository and Clearing Corporation.
What are the margins provided by clearing members in Vietnam? What are the regulations on management of accounts and margins of investors?
What are the regulations on management of accounts and margins of clearing members in Vietnam?
According to the provisions of Clause 2, Article 33 of Decree No. 158/2020/ND-CP on management of accounts and margins of clearing members in Vietnam as follows:
- Clearing members must provide margins for all of open positions held under their names, including their own open positions and those of their investors according to the following rules:
+ Vietnam Securities Depository and Clearing Corporation (VSDCC) shall calculate the margins required for open positions on each margin account of investors and clearing members so as to determine the required margin on each investor’s account of the clearing member;
+ Assets provided by an investor as margins for a clearing member as prescribed in Clauses 1, 2, 3 Article 34 hereof shall be used as margins for positions of that investor but not for positions of any other investors or that clearing member.
- On a daily basis and in trading sessions with a considerable fluctuation in securities price, VSDCC shall determine the required margin on each account of investors and on a clearing member’s account, and determine total value of margins to be provided by that the clearing member, and the value of additional margins provided by that clearing member (if any).
- A clearing member shall provide additional margins or close part or all of its positions at the request of VSDCC. If the clearing member fails to provide the required additional margins in a full and timely manner, VSDCC shall have the right to close part or all of positions held in the name of that clearing member, including positions of that clearing member and investors that fail to fully provide the required additional margins in a timely manner.
- If the value of margins of investors or clearing members exceeds the one required by VSDCC, clearing members are allowed to withdraw the excess amount of margins according to VSDCC’s instructions.
- Types of margins, method for determining the required margins, margin method, time limits for providing margins/additional margins, transfer of margins, method for valuation of margins, determination of position-based profit or loss, and management of accounts and margins of clearing members shall comply with regulations adopted by the Minister of Finance and VSDCC.
What are the regulations on management of accounts and margins of investors?
According to the provisions of Article 34 of Decree No. 158/2020/ND-CP, the management of accounts and margins of investors is carried out as follows:
- Investors must provide margins in a full and timely manner for clearing members under the terms and conditions of contracts for opening of derivative trading accounts. Margins provided must be those included in the list of assets accepted as margins by clearing members.
- On a daily basis and in trading sessions with a considerable fluctuation in securities prices, clearing members shall calculate position- based profit or loss, revaluate margins and ensure that investors maintain their margins as agreed upon in signed contracts and in conformity with regulations of law.
- Investors shall provide additional margins at the request of clearing members in accordance with regulations adopted by the Minister of Finance. If an investor fails to fully provide the additional margin in a timely manner as required, the clearing member is entitled to take actions as prescribed in Point b Clause 1 Article 31 hereof. If the value of margins provided by the investor exceeds the one required by the clearing member, the investor is allowed to withdraw the excess amount of margins.
- Clearing members must separately manage accounts and margins of each investor; manage their own accounts and margins separately from those of investors according to the following rules:
+ If margins are provided in cash, clearing members must open deposit accounts at licensed banks, and separately manage deposits provided as margins of each investor. Clearing members shall cooperate with the banks and request them to provide timely, comprehensive and accurate reports on balances on accounts of investors;
+ Clearing members shall manage margins which are securities on investors' depository accounts opened at VSDCC.
- In case a clearing member is declared bankrupt in accordance with regulations of the Law on bankruptcy, margins of investors shall not be deemed as the clearing member’s assets and cannot be settled in accordance with regulations of the Law on bankruptcy, and shall not be distributed to creditors of the clearing member or shareholders or capital contributors in any forms. These assets shall only be used for paying or ensuring payment obligations for open positions of investors. Assets that remain after investors’ payment obligations have been fulfilled shall be immediately returned to investors.
- Management of accounts and margins of investors shall comply with regulations adopted by the Minister of Finance.
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