What are use and refund of the used amount from the Clearing Fund for derivatives market at the Vietnam Securities Depository?

What are use and refund of the used amount from the Clearing Fund for derivatives market at the Vietnam Securities Depository?

In Article 7 of the Regulation on management and use of clearing funds for the derivatives market at the Vietnam Securities Depository, issued together with Decision 115/QD-VSD in 2022, stipulating use and refund of the used amount from the Clearing Fund for derivatives market at the Vietnam Securities Depository is as follows:

1. The use of the clearing fund shall be implemented by VSD to secure payment obligations of insolvent clearing members as prescribed in Clause 4, Article 16 of Circular No. 58/2021/TT- BTC . Clearing members who are insolvent must return the used amount from the clearing fund as prescribed in Clause 6, Article 15 of Circular No. 58/2021/TT-BTC.

2. Within 01 day from the date VSD uses the contribution to the Clearing Fund to secure payment obligations as prescribed in Clause 1 of this Article, the clearing member is responsible for returning the cleared amount to the Clearing Fund to the Clearing Fund, use and interest on the use of the Clearing Fund is calculated according to the following formula:

I = 0.03% x P (1)

In there:

I: interest in use

P: amount used from Clearance Fund

3. Past the time limit specified in Clause 2 of this Article, clearing members must bear interest on the use of the late payment clearing fund calculated by the following formula:

I c = 0.0375% x P c x n c (2)

In there:

I c : late payment interest

P c : amount used from late payment clearing fund

n c : number of days of late payment

4. The distribution of deposit interest and interest using the Clearing Fund shall comply with the following principles:

a) Deposit interests arising from the Clearing Fund's deposit account and the interest on using the Clearing Fund collected from insolvent clearing members will be allocated by VSD to clearing members in accordance with the number of clearing members. money and time of each member's contribution after deducting the deposit account management fee at the paying bank (if any). The receipt and distribution of deposit interest and interest from the clearing fund shall comply with the provisions of Clauses 1 and 2, Appendix 3 issued together with this Regulation.

b) Except for the case specified at Point a, Clause 1, Article 8 of this Regulation, interest on deposits and interest on the use of the Clearing Fund shall be allocated by VSD on the last day of the month.

c) The total amount allocated by clearing members will be recorded by VSD in the value of assets contributed to the Clearing Fund by each clearing member or the value of the payable amount specified at Point b, Clause 1, Article 8 of this Regulation. 

5. The sale of escrow assets and assets contributed to the Clearing Fund by securities to return to the Clearing Fund shall comply with the provisions of the Regulation on clearing and settlement of derivatives transactions at VSD.

What are separate management and return of assets contributed to the Clearing Fund for derivatives market at the Vietnam Securities Depository?

In Article 8 of the Regulation on management and use of clearing funds for the derivatives market at the Vietnam Securities Depository, issued together with Decision 115/QD-VSD in 2022, stipulating separate management and return of assets contributed to the Clearing Fund for derivatives market at the Vietnam Securities Depository as follows:

1. After the clearing member is stopped providing services by VSD to cancel the clearing member status and the clearing member has completed the following tasks: selling assets contributed to the Clearing Fund by securities to return used payment support sources (if any); closing, transferring positions, paying for position losses and gains, paying for contract performance, VSD performs separate management of contributed assets to the clearing member's clearing fund which is in the process of canceling the investment. The way members clear are as follows:

a) Determining the value of assets contributed to the Clearing Fund by a clearing member to manage separately from the Clearing Fund (hereinafter referred to as the value of assets under separate management), including:

- The value of assets contributed to the Clearing Fund in cash and securities (if any) is determined according to the provisions of Clause 1, Section III, Appendix 2 issued together with this Regulation.

- Interest on deposits and interest on the use of the Clearing Fund are allocated at the time of segregation management and determined according to the provisions of Clause 2, Appendix 3 issued together with this Regulation.

b) Determine the value of assets contributed to the Clearing Fund that VSD must return or still collect from clearing members (hereinafter referred to as payables and receivables) according to the following principles:

- In case the amount of money clearing members are using from the clearing fund but have not yet been refunded is smaller than the value of separately managed assets, the payable amount is determined as the difference between the value of separately managed assets with the amount the clearing member is using from the clearing fund but has not yet been refunded;

- In case the amount of money a clearing member is using from the clearing fund but has not yet been refunded is larger than the value of separately managed assets, the receivable is determined as the difference between the amount of money clearing members are using from the Clearing Fund but not yet refunded with the value of segregated assets under management.

- In case the clearing member no longer owes the Clearing Fund, the payable amount is determined as the value of separately managed assets.

2. When managed separately, VSD may deduct from the payable amount to recover debts, service prices and financial obligations that clearing members still have to pay to VSD.

3. For debts, service prices, and financial obligations that clearing members still have to pay to VSD arising after the time of separate management, VSD shall make periodic deductions on December 31. 12 annually or at the time of determining the amount to be refunded for recovery by a competent authority as prescribed in Clause 8 of this Article or when returning assets contributed to the Clearing Fund as prescribed in Clause 9 of this Article.

4. Within 01 working day from the date of completion of the contents specified in Clauses 1 and 2 of this Article, VSD shall send a written notice to the clearing member about the separate management of the value of contributed assets, clearing fund, remaining payable or receivable.

5. Interest on deposit from payables arising (according to the demand interest rate announced by the paying bank from time to time) after the time of segregation (if any) is continued to be managed separately by VSD and distributed to clearing members according to the provisions of Clause 3, Appendix 3 issued together with this Regulation.

6. From the time of separate management, clearing members are not required to bear interest on the receivables determined under Point b, Clause 1 of this Article.

7. The arising rights related to the contributed securities The clearing member's clearing fund of the payable amount (if any) shall be aggregated by VSD into the list of holders of depository securities exercising the right to be established. at the last registration date as prescribed in the Regulation on exercising rights for securities holders at VSD.

8. In case the competent authority issues a notice to withdraw the clearing member's contribution to the Clearing Fund, VSD determines the payable amount, allocates the deposit interest from the payable amount at the time determined according to the specified in Clause 3, Appendix 3 issued together with this Regulation and deduct the debts, service prices and other financial obligations that clearing members still have to pay to VSD (if any). The remaining amount to be refunded is the basis for the competent authority to recover.

9. VSD refunds the value of assets contributed to the Clearing Fund (remaining payable amount) to a clearing member whose status as a clearing member has been canceled or is no longer a clearing member according to regulations. at point b, clause 4, Article 16 of Circular No. 58/2021/TT-BTC. Refunds are made as follows:

a) At the time of issuing the decision to cancel the clearing member status, VSD determines the payable amount, allocates deposit interest from the payable amount (if any) according to the provisions of Clause 3, Appendix 3 of the Circular No. promulgated together with this Regulation, deduct the amount that clearing members still have to pay to VSD specified in Clause 3 of this Article. The remaining payable amount will be refunded by VSD to the clearing member.

b) Within 01 working day from the date of issuance of the decision to cancel the clearing member status, VSD shall refund the remaining balance payable to the clearing member according to the process in Section IV of Appendix 2 promulgated together with these Regulations.

What are obligations of VSD towards the Clearing Fund for derivatives market at the Vietnam Securities Depository? 

In Clause 2, Article 9 of the Regulation on management and use of clearing funds for the derivatives market at the Vietnam Securities Depository, issued together with Decision 115/QD-VSD in 2022, defining obligations of VSD towards the Clearing Fund for derivatives market at the Vietnam Securities Depository as follows:

2. Obligations of VSD:

a) Manage the assets contributed by clearing members to the clearing fund separately from the assets of VSD.

b) Ensure the management and use of the Clearing Fund in accordance with the provisions of this Regulation and relevant legal documents.

c) Carry out accounting, auditing and financial disclosure in accordance with law.

d) Provide data related to the assets contributed to the Clearing Fund and the allocated profits of the clearing member at the request of the clearing member himself.

dd) Provide data related to the Clearing Fund at the request of the competent authority.

Best Regards!