What are the procedures for approving a commercial bank as a clearing bank in Vietnam?
What are the procedures for approving a commercial bank as a clearing bank in Vietnam?
The procedures for approving a commercial bank as a clearing bank shall comply with the provisions of Article 168 of Decree No. 155/2020/ND-CP, specifically as follows:
- The State Securities Commission shall select commercial banks as clearing banks that provide securities settlement services on the securities trading system.
- Within 15 working days from the receipt of the satisfactory application, the State Securities Commission shall decide whether to accept a bank as a clearing bank. In case the application is rejected, the State Securities Commission shall issue a written rejection and provide explanation.
What are the procedures for approving a commercial bank as a clearing bank in Vietnam?
What are the conditions to be appointed as a clearing bank?
Pursuant to Clause 2, Article 69 of the 2019 Law on Securities in Vietnam:
Clearing banks
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2. In order to be appointed as a clearing bank by the State Securities Commission, a commercial bank shall have:
a) The license for establishment and operation in Vietnam prescribed by law;
b) A charter capital of over 10.000 billion VND;
c) Profit in the last 02 years;
d) Satisfactory capital adequacy ratios prescribed by banking laws;
d) Technical facilities qualified for payment transactions and connected to the system of the Vietnam Securities Depository and Clearing Corporation;
e) A payment and offsetting system connected to the payment and offsetting system of the State Bank of Vietnam; and
g) Technical facilities capable of retention of transaction information for at least 10 years and provision of such information for the State Securities Commission or the Vietnam Securities Depository and Clearing Corporation within 48 hours upon request.
Thus, in order to be appointed as a clearing bank by the State Securities Commission, a commercial bank shall have:
- The license for establishment and operation in Vietnam prescribed by law;
- A charter capital of over 10.000 billion VND;
- Profit in the last 02 years;
- Satisfactory capital adequacy ratios prescribed by banking laws;
- Technical facilities qualified for payment transactions and connected to the system of the Vietnam Securities Depository and Clearing Corporation;
- A payment and offsetting system connected to the payment and offsetting system of the State Bank of Vietnam; and
- Technical facilities capable of retention of transaction information for at least 10 years and provision of such information for the State Securities Commission or the Vietnam Securities Depository and Clearing Corporation within 48 hours upon request.
What obligations does the clearing bank have to perform?
Pursuant to Clause 3, Article 69 of the 2019 Law on Securities in Vietnam:
Clearing banks
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3. A clearing bank has the following rights and obligations:
a) Separate payments for securities transactions on the securities transaction system from other payments of the bank in accordance with regulations of law on securities and the securities market;
b) Comply with reporting regulations and fill other obligations prescribed by law;
c) Maintain fulfillment of the conditions specified in Clause 2 of this Article.
And Clause 2, Article 166 of Decree No. 155/2020/ND-CP also stipulates:
General provisions
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2. Obligations of a commercial bank acting as a clearing bank:
a) Maintain fulfillment of the conditions specified in Clause 2 Article 69 of the Law on Securities;
b) Grant loans to insolvent clearing members to assist in securities settlement;
c) Pay compensation to the Vietnam Securities Depository and Clearing Corporation and clearing members for the costs and losses that are caused by the clearing bank’s failure to pay for securities transactions;
d) Submit reports periodically, in an ad hoc manner or when requested by the State Securities Commission on fulfillment of the conditions specified in Clause 2 Article 69 of the Law on Securities;
dd) Disclose information and fulfill other obligations as prescribed by law.
Thus, the clearing bank has the following obligations:
- Maintain fulfillment of the conditions to be appointed as a clearing bank;
- Separate payments for securities transactions on the securities transaction system from other payments of the bank in accordance with regulations of law on securities and the securities market;
- Comply with reporting regulations and fill other obligations prescribed by law
- Grant loans to insolvent clearing members to assist in securities settlement;
- Pay compensation to the Vietnam Securities Depository and Clearing Corporation and clearing members for the costs and losses that are caused by the clearing bank’s failure to pay for securities transactions;
- Submit reports periodically, in an ad hoc manner or when requested by the State Securities Commission on fulfillment of the conditions specified in Clause 2 Article 69 of the 2019 Law on Securities in Vietnam;
- Disclose information and fulfill other obligations as prescribed by law.
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