Vietnam: Can concluded foreign currency transaction agreements between banks and clients be changed or terminated?
Vietnam: Can concluded foreign currency transaction agreements between banks and clients be changed or terminated?
In Article 14 of Circular 02/2021/TT-NHNN, there are regulations on transaction agreements as follows:
Transaction agreements
1. Authorized credit institutions and clients shall conclude transaction agreements with the basic information mentioned in Clause 1 Article 10 herein as prescribed by law.
2. Transaction agreements shall be concluded by transaction units of authorized credit institutions according to regulations in internal procedures for foreign currency transactions promulgated by authorized credit institutions. A concluded transaction agreement may not be unilaterally changed and may only be changed or terminated after both parties have reached an agreement in writing.
3. In case a client makes a transaction directly at a transaction location of an authorized credit institution, both parties shall conclude the transaction agreement in writing, which must bear the signature of the competent person.
Thus, in case the bank and customer have a written agreement, the foreign currency transaction agreement on the foreign currency market between the bank and customer that has been established can be changed or canceled.
What are the requirements for foreign currency transaction agreements between banks and clients concluded by the phone in Vietnam?
What are the requirements for foreign currency transaction agreements between banks and clients concluded by the phone in Vietnam?
In Article 15 of Circular 02/2021/TT-NHNN, there are regulations on transaction confirmation as follows:
Transaction confirmation
1. For transaction agreements concluded by the phone or electronic means, both parties thereto shall make written confirmations of the transactions, which must include the basic information mentioned in Clause 1 Article 10 herein and the signature of the competent person.
2. Transaction confirmations must be made and sent no later than the working day following the transaction date.
3. In case both parties sign a written framework agreement which states that the client allows the authorized credit institution to make the foreign currency transaction automatically, the authorized credit institution shall adhere to the framework agreement but must notify the client of the transaction made and ensure that the basic information mentioned in Clause 1 Article 10 herein is available.
4. If a transaction confirmation is faxed or emailed, within 10 working days from the transaction date, both parties must send the original copy of the confirmation to each other.
Thus, the foreign currency transaction agreement between the bank and the customer over the phone must meet the following requirements:
- Both parties must confirm the transaction in writing;
- Ensure at least the following contents:
+ Names of the parties;
+ Transaction date;
+ Currencies of the transaction;
+ Amount of foreign currencies;
+ Exchange rate;
+ Payment date;
+ Premium (for FX option transactions);
+ Expiration date (for FX option transactions).
- Signed by an authorized person.
How many types of foreign currency transactions in Vietnam are there?
In Clause 6, Article 2, Circular 02/2021/TT-NHNN has regulations on foreign currency transactions in Vietnam as follows:
Definitions
In this Circular, the terms below are construed as follows:
...
6. “foreign currency transactions” includes foreign exchange spot transaction, foreign exchange forward, currency swap, and call option and put option transactions.
The term “giao dịch ngoại tệ” (“foreign currency transaction”) used in this Circular is synonymous to the term “giao dịch hối đoái” (“exchange transaction”) used in other legislative documents promulgated by the Governor of the State Bank.
7. “foreign exchange spot transaction” (hereinafter referred to as “FX spot”) means an exchange of an amount of a currency for another currency at the exchange rate at the transaction time where the payment is made within 02 working days after the transaction date.
8. “foreign exchange forward” (hereinafter referred to as “FX forward”) means an exchange of an amount of a currency for another currency at the exchange rate at the transaction time where the payment is made within 03 working days after the transaction date.
9. “currency swap” means a transaction between two parties which involves buying and selling of an equivalent amount of money in different currencies on different days at different exchange rates on each day.
Currency swap includes two FX spots or two FX forwards or one FX spot and one FX forward.
10. “call option or put option transaction” (hereinafter referred to as “FX option transaction”) means a transaction between two parties in which the buyer pays the seller a premium for the FX option but the buyer does not have the obligation to buy or sell an amount of a foreign currency for another foreign currency within a period of time agreed by both parties at the exchange rate determined at the transaction time and the payment is made on a later date. If the buyer opts to exercise their call option or put option, the seller has the obligation to sell or buy the amount of foreign currency as agreed upon.
In FX option transactions, the put option for one currency is also the call option for another currency.
Thus, there are 04 types of foreign currency transactions in Vietnam including:
- foreign exchange spot transaction,
- foreign exchange forward,
- currency swap,
- call option and put option transactions.
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