What are regulations on offsetting fund in Vietnam? What are regulations on minimum contribution amounts to the clearing fund in the derivative market in Vietnam?

What are regulations on offsetting fund in Vietnam?

Pursuant to Article 67 of the Law on Securities in 2019 stipulating offsetting fund in Vietnam:

Offsetting fund

1. The offsetting fund is contributed to by depository members to pay damages and settle transactions of the depository members or investors that are insolvent.

2. The offsetting fund shall be managed by VSDCC. Assets of the offsetting fund and assets of VSDCC shall be separately managed.

3. Methods of contributions, contribution amounts, management and use of the offsetting fund shall comply with regulations of the Minister of Finance.

As regulations above, the offsetting fund is contributed to by depository members to pay damages and settle transactions of the depository members or investors that are insolvent.

What are regulations on offsetting fund in Vietnam? What are regulations on minimum contribution amounts to the clearing fund in the derivative market in Vietnam? - image from internet

What are regulations on minimum contribution amounts to the clearing fund in the derivative market in Vietnam?

Pursuant to Clause 2 Article 16 of the Circular 58/2021/TT-BTC stipulating minimum contribution amounts to the clearing fund in the derivative market in Vietnam:

Clearing fund

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2. Contribution amounts:

a) Initial minimum contribution amount: VND 10 billion for a direct clearing member or VND 15 billion for a general clearing member;

b) VSDCC shall monthly carry out re-evaluation of the clearing fund and determine obligations to make contributions to the clearing fund of each clearing member on the basis of trading scale, price fluctuation, financial liabilities, risk level and other criteria. The contribution amount of each clearing member which is determined in the periodical re-evaluation shall not be lower than the initial minimum contribution amount specified in Point a of this Clause.

In case the sum of contribution amounts made to the clearing fund by the clearing member is greater than the required contribution amount, the clearing member is entitled to withdraw the difference; In case the sum of contribution amounts made to the clearing fund by the clearing member is smaller than the required contribution amount, the clearing member is obliged to make additional contribution.

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As regulations above, the initial minimum contribution amount to the clearing fund in the derivative market in Vietnam is VND 10 billion for a direct clearing member or VND 15 billion for a general clearing member.

VSDCC shall monthly carry out re-evaluation of the clearing fund and determine obligations to make contributions to the clearing fund of each clearing member. The contribution amount of each clearing member shall not be lower than the initial minimum contribution amount.

What are rights and obligations of offsetting members in Vietnam?

Pursuant to Clause 4 and 5, Article 56 of the Law on Securities in 2019 stipulating rights and obligations of offsetting members in Vietnam:

[1] Offsetting members have the rights to:

- Provide offsetting and payment services for derivatives and other kinds of securities.

- Offsetting members that are commercial banks and FBBs may only offset and pay for their own derivatives;

- Request investors to fully and punctually pay the deposits;

- Use deposited assets of investors to fulfill the obligations to VSDCC;

- Close positions, liquidate open positions of investors;

- Use deposited assets to pay for open positions of insolvent investors;

- Exercise other rights prescribed by law and VSDCC’s charter.

[2] Offsetting members have the obligations to:

- Fully and punctually make deposits to VSDCC;

- Contribute to the offsetting fund and risk management fund as prescribed by law;

- Establish and maintain the internal control and risk management system;

- Separately manage assets and positions of investors;

- Fulfill other obligations prescribed by law and VSDCC’s charter.

Best regards!