What is cancellation of voluntarily clearing membership at Vietnam Securities Depository?

What is cancellation of voluntarily clearing membership at Vietnam Securities Depository?

In Article 4, Regulations on clearing members of derivatives at the Vietnam Securities Depository, issued together with Decision 84/QD-VSD in 2022, there are provisions on cancellation of voluntarily clearing membership at Vietnam Securities Depository is as follows:

1. Clearing members voluntarily apply for cancellation of clearing members according to the provisions of Point a, Clause 1, Article 28 of Circular No. 58/2021/TT-BTC dated July 12, 2021 of the Ministry of Finance guiding a Articles of Decree No. 158/2020/ND-CP dated December 31, 2020 of the Government on derivative securities and derivative securities market (hereinafter referred to as Circular 58/2021/TT-BTC) send VSD dossier including:

a) A written request for cancellation of clearing membership, made according to Form 08/PS-TVBT attached to this Regulation.

b) Plan to handle position balance, margin assets on proprietary trading accounts and customer accounts of clearing members.

2. Dossier of request for cancellation of voluntary clearing membership shall be made in 1 original set and sent to VSD in person or by post.

3. Within 07 working days from the date of receiving the application for cancellation of the voluntary clearing membership:

- In case the dossier is complete and valid: VSD sends a written notice to the clearing member about stopping the provision of clearing and settlement services for derivative securities transactions and allowing the procedures to cancel the status of the clearing member. 

- In case the dossier is incomplete and invalid: VSD has a written request to the clearing member to amend and supplement the dossier. In case of refusal, VSD must reply in writing and clearly state the reason.

4. From the time of cessation of providing clearing and settlement services for derivatives transactions according to the written notice specified in Clause 3 of this Article, VSD only performs the following operations for clearing members:

a) Offsetting for reciprocal transactions to close positions, pay daily position profit and loss or contract performance payment for existing positions on the account.

b) Transfer of position settlement and deposit at the request of the client from a clearing member whose status has been canceled to a replacement clearing member.

c) Notify and compare with clearing members about the balance of positions and escrow assets on each customer's account.

5. Within 02 working days from the date of receiving VSD's notice of position balance, margin assets on each customer's account as prescribed at point c, clause 4 of this Article, clearing member is responsible for coordinating with VSD to compare and confirm information about position balance, margin assets on each customer's account. In case there is a discrepancy, the clearing member shall send a written notice to VSD for verification and comparison.

6. Within 01 working day from the date VSD issues a document on the cessation of provision of clearing and settlement services for derivatives transactions, clearing members must disclose information about carrying out the procedures. cancel the clearing member status in order to carry out the procedures for closing or finalizing the client's position and margin assets to another clearing member and closing off all of his own trading positions. The time for VSD to make a transfer to finalize positions and escrow assets at the request of customers is up to 30 days from the date of service stoppage. Records of account settlement at the request of customers are specified in the Regulation on clearing and settlement of derivatives transactions at VSD.

7. After the time limit specified in Clause 6 of this Article, for positions and escrow assets of customers that have not been settled, clearing members are responsible for agreeing, establishing replacement clearing members and informing them. 

8. VSD prepares a list of customers who have not yet settled their positions and escrow assets to transfer information to clearing members to open accounts for customers instead. This list does not include accounts that are violating margin usage ratios, position limits; inability to pay; there is a dispute over escrow assets and civil obligations between the customer and the clearing member that the clearing member has confirmed with VSD.

9. Clearing members are responsible for closing mandatory positions and returning escrow assets (if any) to customers whose accounts are in violation of margin usage ratio, position limit; inability to pay; there is a dispute over escrow assets and civil obligations between the customer and the clearing member that the clearing member has confirmed with VSD.

10. Within 03 working days from the date of receiving the list of accounts provided by VSD as prescribed in Clause 8 of this Article, the replacement clearing member shall open a margin account for each customer and register Sign account information with VSD for VSD to make the transfer.

11. The order and procedures for transferring and closing positions and deposits are specified in the Regulation on clearing and settlement of derivatives transactions at VSD.

12. VSD issues a Decision to cancel the clearing member status and return the assets contributed to the Clearing Fund to the clearing member in accordance with the Regulations on management and use of the Clearing Fund for the derivative securities market at VSD and disclose information to the market after clearing members complete the following tasks:

a) Finalize proprietary trading accounts (if any) and settle all accounts of clients opened at clearing members or complete the transfer of all positions and margin assets of clients to clearing members replace.

b) Fully fulfill obligations to VSD as prescribed.

What are forms of handling violations for clearing members at the Vietnam Securities Depository? 

In Article 5, the Regulations on clearing members of derivatives at the Vietnam Securities Depository, issued together with Decision 84/QD-VSD in 2022, stipulates forms of handling violations for clearing members at the Vietnam Securities Depository as follows:

1. VSD applies the following forms of handling of violations to clearing members:

a) Reminder;

b) Reprimand;

c) Suspension of clearing and settlement of derivative securities transactions of clearing members;

d) Cancellation of mandatory clearing membership.

2. The form of handling of violations as prescribed at Points b, c and d, Clause 1 of this Article will be announced on the website of VSD and reported to the SSC. Clearing members who are handled for violations are responsible for publishing information on the clearing member's own website.

3. The handling of violations specified at Points a, b and c, Clause 1 of this Article does not apply to clearing members who are in the process of canceling clearing members' status.

In what cases does the Vietnam Securities Depository issue a written reminder to clearing members? 

In Clause 1, Article 6 of the Regulations on clearing members of derivatives at the Vietnam Securities Depository, issued together with Decision 84/QD-VSD in 2022, there are regulations on the cases in which Vietnam Securities Depository issue a written reminder to clearing members as follows:

1. VSD issues a written reminder to clearing members in the following cases:

a) Failing to contribute fully and/or fail to contribute on time to the Clearing Fund as notified by VSD;

b) Failure to remedy the violation of regulations on the ratio of using escrow assets before the deadline for deposit payment within the day as prescribed in the Regulation on clearing and settlement of derivatives transactions at VSD with the amount from 02 accounts or less;

c) Within 01 month, there are 02 violations of position limit regulations on investor's account;

d) Failing to complete the reduction of the number of futures contracts exceeding the position limit within 02 working days from the date of receiving the notice of violation from VSD, except for the case of exceeding the position limit due to re-determination of the position limit;

dd) Insolvency with the deficit amount not exceeding the usable margin balance of the clearing member itself at the time of determining the insolvency (including the deposit on the insolvent clearing member's account and self-trading margin);

e) Failing to fully and on time pay service charges related to clearing and settlement of derivatives transactions according to the notice of VSD.

g) Failing to notify or notify VSD later than the prescribed time limit of changes in registration information of clearing members (in case VSD's approval is not required) specified in Article 3 of this Regulation.

Best Regards!