Handling of Violations for Clearing Members in the Form of What When Violating Position Limit Regulations on Investor Accounts Twice in a Month?
What Are the Forms of Sanction for Clearing Members?
Based on Article 5 of the Regulation on Derivative Securities Clearing Members at the Vietnam Securities Depository Center issued with Decision 84/QD-VSD 2022, the forms of sanction for clearing members are regulated as follows:
Forms of Sanction for Clearing Members
1. VSD applies the following forms of sanction to clearing members:
a) Reminder;
b) Reprimand;
c) Suspension of clearing and settlement activities of derivative securities transactions of the clearing member;
d) Compulsory cancellation of the clearing membership status.
2. The forms of sanction as stipulated in points b, c, and d of Clause 1 of this Article shall be announced on the VSD's website and reported to the SSC. The sanctioned clearing member has the responsibility to disclose information on its own website.
3. Sanctions under points a, b, and c of Clause 1 of this Article do not apply to clearing members in the process of cancellation of clearing member status.
Thus, the Vietnam Securities Depository Center can sanction clearing members in the following forms:
- Reminder;
- Reprimand;
- Suspension of clearing and settlement activities of derivative securities transactions of the clearing member;
- Compulsory cancellation of clearing membership status.
Sanction for clearing members in the form of what when violating the position limit regulations on the investor's account 2 times in a month?
Sanction for Violating Position Limit Regulations on Investor Accounts Twice a Month
Based on Clause 1, Article 6 of the Regulation on Derivative Securities Clearing Members at the Vietnam Securities Depository Center issued with Decision 84/QD-VSD 2022, the sanction for violating position limit regulations on investor accounts is regulated as follows:
Reminder
1. VSD issues a written reminder to clearing members in the following cases:
a) Not contributing enough and/or not contributing on time to the Clearing Fund as notified by VSD;
b) Failing to rectify the violation of the margin asset utilization ratio before the deadline for the daily margin deposit as stipulated in the Clearing and Settlement Regulations of derivative securities transactions at VSD with a count of 2 accounts or less;
c) Violating position limit regulations on the investor's account twice within a month;
d) Failing to complete the reduction in the number of futures contracts exceeding the position limit within 2 working days from the date of receiving the violation notice from VSD except for cases of position limit breaches due to re-determination of professional investor status;
e) Being unable to meet financial obligations with the shortfall amount not exceeding the available margin balance of the clearing member at the time of determining insolvency (including the margin balance on the investor's account and proprietary trading margin);
f) Not paying the full amount of service fees related to clearing and settlement activities of derivative securities transactions on time as notified by VSD.
g) Failing to notify or reporting late to VSD regarding changes in registered clearing member information (in cases where VSD's approval is not required) as stipulated in Article 3 of this Regulation.
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Thus, in the case of a clearing member violating the position limit regulations on the investor's account twice within a month, the Vietnam Securities Depository Center can sanction the member with a reminder.
What Are the Reporting Responsibilities of Clearing Members?
Based on Article 10 of the Regulation on Derivative Securities Clearing Members at the Vietnam Securities Depository Center issued with Decision 84/QD-VSD 2022, the reporting responsibilities of clearing members are regulated as follows:
Reporting Responsibilities of Clearing Members
1. Clearing members must report to VSD within 1 working day from the occurrence of the following events:
a) The system serving clearing and settlement activities of derivative securities transactions at the clearing member encounters an issue;
b) Incidents related to clearing and settlement activities of derivative securities transactions that cannot be resolved within the same day;
c) Suspension of derivative securities business activities;
d) Cancellation of derivative securities trading membership status;
e) Insolvency as stipulated in Clause 1, Article 15 of Circular 58/2021/TT-BTC;
f) Being placed under warning statuses as per securities laws on financial safety and banking laws on capital safety.
2. Reports on Demand
In necessary cases, VSD may request clearing members to provide information on open positions, margin assets of the clearing member, customers of the clearing member, and other documents related to clearing and settlement activities of derivative securities transactions at the clearing member.
Clearing members are thus required to report within 1 working day from the occurrence of the aforementioned events or report as requested in necessary cases.
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