What is a clearing bank? What are the obligations of a commercial bank acting as a clearing bank in Vietnam?
What is a clearing bank in Vietnam?
According to the provisions of Article 69 of the 2019 Law on Securities in Vietnam on clearing banks as follows:
- Clearing banks include the State Bank of Vietnam and commercial banks that provide payment services for securities transactions on the securities transaction system.
- 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.
In addition, a clearing bank has the following rights and obligations specified in Clause 3, Article 69 of the 2019 Law on Securities in Vietnam as follows:
- 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;
- Maintain fulfillment of the conditions specified in Clause 2 of this Article.
What is a clearing bank? What are the obligations of a commercial bank acting as a clearing bank in Vietnam?
What are the obligations of a commercial bank acting as a clearing bank in Vietnam?
According to the provisions of Clause 2, Article 166 of Decree No. 155/2020/ND-CP:
Obligations of a commercial bank acting as a clearing bank:
- Maintain fulfillment of the conditions specified in Clause 2 Article 69 of the Law on Securities;
- 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 Law on Securities;
- Disclose information and fulfill other obligations as prescribed by law.
At the same time, the State Securities Commission shall carry out periodic and ad hoc inspection of the fulfillment of conditions and obligations of clearing banks.
A clearing bank that fails to maintain fulfillment of conditions or fails to fulfill conditions by the deadline imposed by the State Securities Commission, fails to fulfill its obligations or ensure safe operations, the State Securities Commission is entitled to select another capable bank as clearing bank specified in Article 69 of the Law on Securities.
The clearing bank shall be responsible for securities settlement and fulfillment of obligations related to securities settlement until a substitute clearing bank is appointed.
What is a commercial bank’s application for acting as a clearing bank in Vietnam?
According to the provisions of Article 167 of Decree No. 155/2020/ND-CP, a commercial bank’s application for acting as a clearing bank includes:
- The application form No. 51 in the Appendix of Decree No. 155/2020/ND-CP.
- Information about the bank, including fulfillment of the conditions specified in Article 69 of the Law on Securities.
- The decision on establishment of the commercial bank.
- The written commitment to establish a system and mechanism for management of deposit accounts and money; settlement accounts and money; promptly and fully provide information about deposit and settlement money at the request of the Vietnam Securities Depository and Clearing Corporation and the State Securities Commission.
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