What are regulations on securities borrowing mechanism to support transaction payment in Vietnam?

What are regulations on securities borrowing mechanism to support transaction payment in Vietnam?

In Article 16 of the Regulation on clearing and settlement of securities transactions at the Vietnam Securities Depository, issued together with Decision 109/QD-VSD in 2022, stipulating securities borrowing mechanism to support transaction payment is as follows:

1. A member who corrects errors after trading as prescribed in Article 6 or handles proprietary trading errors as prescribed at Points b, c, Clause 1, Article 7 of this Regulation leads to a lack of securities to pay for securities transactions. Securities must be borrowed through VSD's securities lending and borrowing system in accordance with the provisions of Point b, Clause 1, Article 41 of Circular No. 05/2015/TT-BTC . Securities borrowing must be completed no later than 9:30 a.m. on the payment date for corporate bond transactions and at 2:45 p.m. on T+1 day for transactions of stocks, fund certificates and warrants.

2. After the time limit specified in Clause 1 of this Article, if a Member fails to borrow securities to support payment, securities transactions with shortage of securities will be delayed for payment as prescribed in Article 17 of this Regulation. 

3. The order and procedures for transferring and returning borrowed securities shall comply with the provisions of the Regulation on organization of securities lending and borrowing activities of VSD.

What are regulations on determination of transactions delayed for payment of securities transactions in Vietnam?

In Article 17 of the Regulation on clearing and settlement of securities transactions at the Vietnam Securities Depository, issued together with Decision 109/QD-VSD in 2022, determination of transactions delayed for payment of securities transactions is regulated as follows:

1. VSD shall delay the payment deadline for securities transactions in the following cases:

a. A member who is temporarily insolvent is not eligible to borrow from the Payment Support Fund in accordance with the regulations on management and use of the Payment Support Fund. pay.

b. A member who is temporarily short of securities as prescribed in Article 16 of this Regulation does not borrow enough securities within the stipulated time.

2. Delayed payment transactions are determined according to the following principles:

a. For transactions lacking securities:

i. Transactions that are delayed in payment are determined at 9.30am on the payment day for corporate bonds and at 3pm on T+1 in the case of stocks, fund certificates, and covered warrants.

ii. VSD self-determined transactions lacking securities to delay the payment deadline.

b. For underfunded transactions:

i. VSD sends a notice to the Member requesting to determine the transaction leading to a lack of payment ( Form 09/TTBT of this Regulation) no later than 10:30 am on the payment day.

ii.Members must send documents on identification of short-term transactions no later than 11:00 a.m. payment date for corporate bond transactions and transactions of stocks, fund certificates and warrants.

iii. Transactions that are delayed in payment are determined at 11:15 am on the payment day. In case the Member does not perform the identification of the transaction with insufficient funds, VSD will automatically determine the back orders in the following ways:

- Separate the reverse transactions by each type of domestic customer, foreign customer, self-trading;

- Take transactions of the same trading day with a total payment value equal to or higher than the missing amount to pay for transactions of that trading day in order of order matching time on the trading system of the Stock Exchanges from below. up from the end of the trading session;

- Transactions where the counterparty buys and sells with the same Member and the same type of account are excluded when determining backward transactions.

3. VSD will send a Notice of delayed payment transactions to the relevant Member and the Stock Exchange ( Form 10/TTBT of this Regulation) , and at the same time send a Notice of adjustment clearing results and notice of direct payment transactions in the form of electronic documents to the Member and the Paying Bank immediately after the delay of payment is completed .

What are responsibilities of Members in case of delay of payment, cancellation of securities transactions in Vietnam? 

In Article 20 of the Regulation on clearing and settlement of securities transactions at the Vietnam Securities Depository, issued together with Decision 109/QD-VSD in 2022, stipulating responsibilities of Members in case of delay of payment, cancellation of securities transactions are as follows:

1. A member whose transaction is delayed by the payment deadline must pay compensation to the organization or individual involved in the relevant reciprocal transaction as prescribed at Point d, Clause 1, Article 44 of Circular No. 05/2015/TT-BTC, except for the case specified in Clause 3 of this Article.

2. Members whose transactions are rejected and do not pay must compensate the organizations and individuals involved in reciprocal transactions as prescribed in Clause 2, Article 45 of Circular No. 05/2015/TT -BTC.

3. For the case of non-payment at Point a, Clause 1.1 of Article 19, Members whose transactions are eliminated are compensated according to the provisions of Clause 2, Article 45 of Circular No. 05/2015/TT-BTC.

4. For the case of non-payment at Point b, Clause 1.1. Article 19, Counterpart members that do not transfer money or transfer insufficient money to pay for direct transactions must compensate the relevant member (Members who have mobilized enough securities for payment) in accordance with Clause 2 of this Article 45 Circular No. 05/2015/TT-BTC.

Best Regards!