What is opening a deposit account and a margin securities account for clearing members at the Vietnam Securities Depository?

What is opening a deposit account and a margin securities account for clearing members at the Vietnam Securities Depository?

According to Article 3 of the Regulation on clearing and settlement of derivative securities transactions at the Vietnam Securities Depository, promulgated together with Decision 61/QD-VSD in 2022, stipulating opening a deposit account and a margin securities account for clearing members at the Vietnam Securities Depository is as follows:

After clearing members complete the member registration procedure with VSD, VSD opens member deposit accounts (including self-trading margin deposit account, customer margin deposit account, payment deposit account) at the paying bank and member's margin securities account at VSD as prescribed in Clauses 1, 2, 3, Article 12 of Circular 58/2021/TT-BTC.

What are registration and deregistration of trading account information, margin securities accounts for investors at the Vietnam Securities Depository? 

Pursuant to Article 4 of the Regulation on clearing and settlement of derivative securities transactions at the Vietnam Securities Depository, promulgated together with Decision 61/QD-VSD in 2022, on registration and deregistration of trading account information, margin securities accounts for investors at the Vietnam Securities Depository as follows:

1. Investors trading derivatives shall open a trading account at a derivatives trading member in accordance with the provisions of Articles 5 and 6 of Circular 58/2021/TT-BTC and be opened escrow deposit account by a clearing member and escrow account at clearing members as prescribed in Article 10 of Circular 58/2021/TT-BTC.

In case an investor opens a trading account at a derivatives trading member who is not a clearing member, the investor must open a margin account at a clearing member appointed by the trading member.

2. Clearing member registers information on margin account for derivatives transactions, trading accounts of investors who are customers of clearing members with VSD to monitor and manage margin assets and fulfill payment obligations for positions on each investor's trading account. In case the investor does not have or does not use the underlying securities trading account for margin trading, the clearing member must update the account opening information for the investor on the system. VSD's depository account under the guidance of VSD's Regulation on securities depository activities before registering this account to be used as a derivatives trading account, a securities depository account.

3. After receiving all information on registration of trading account and investor's trading account from clearing member, VSD will notify clearing member about successful account registration and notify the clearing member. The Hanoi Stock Exchange lists information on investors' trading accounts so that investors can trade derivatives on the next trading day.

4. At the request of investors, clearing members shall register with VSD the total transaction account information as prescribed in Clauses 4, 5, 6, Article 6 of Circular 58/2021/TT-BTC. The application file for registration of general transaction account information shall comply with Clauses 5 and 6 of this Article.

5. An application file for registration of general trading account information for a securities investment fund management company includes:

a. Certificate of registration of general trading account information of clearing members;

b. A copy of the written request for the clearing member to open a general trading account of the securities investment fund management company;

c. Certified copy of establishment and operation license of the securities investment fund management company.

6. An application file for registration of general trading account information for a securities company established in a foreign country includes:

a. Certificate of registration of general trading account information of clearing members;

b. A copy of the written request for the clearing member to open a general trading account of the securities company established abroad;

c. Copy of Certificate of registration of trading codes issued by VSD to carry out securities brokerage activities.

7. Clearing members are responsible for the accuracy of registration dossiers for general trading account information. VSD will process the application for registration of total transaction account information within 01 working day from the date of receipt of the complete and valid application (based on the postmark or the date of signing and receipt on the official dispatch book at VSD).

8. In case the investor cancels registration of the information of the clearinghouse account at a clearing member, the investor must concurrently close the derivatives trading account at the derivatives trading member. VSD will only confirm the cancellation of the investor's account information registered on the system after the investor or clearing member has completed the payment obligation, closed or transferred full position and transfer of margin (if any).

9. VSD keeps track of investor's trading account information based on information updated by clearing members on VSD's system according to the guidance on updating information on opening and closing securities trading accounts of investors in VSD's Regulation on securities depository activities. The management and adjustment of derivatives investor information is carried out on the principle of being identical with investor information on VSD's system according to the guidance in VSD's Regulation on securities depository activities.

10. Registering, unregistering trading account information, investor's checking account deposited before 3:30 p.m. daily will be handled by VSD on the same day, cases sent after 3:30 p.m. daily will be handled by VSD on next work.

11. The process of registration and de-registration of information on trading accounts and checking accounts of investors with VSD is carried out in accordance with Appendix 1 issued together with this Regulation.

What is initial margin at the Vietnam Securities Depository and what is calculation for it?

In Clause 1, Article 5 of the Regulation on clearing and settlement of derivative securities transactions at the Vietnam Securities Depository, promulgated together with Decision 61/QD-VSD in 2022, providing for initial margin at the Vietnam Securities Depository is as follows:

1. Initial Margin (IM)

a. Initial margin is the minimum margin value that a clearing member must pay to VSD for positions in the name of the clearing member that are expected to be opened before trading, except for reciprocal transactions of the same trading account. Based on the method guided by VSD, clearing members themselves calculate the initial margin value for the positions expected to open to submit to VSD according to the initial margin ratio announced by VSD in accordance with the provisions of point dd of this Clause. The method of determining the initial margin ratio and initial margin value is guided in Appendix 2 to this Regulation.

b. Clearing members may make an initial deposit in cash and/or securities, but must ensure that  the ratio of cash margin to the total value of margin assets on each investor's account at any time is not less than the minimum margin in cash is regulated by VSD and published on the website of VSD, in accordance with the provisions of Point c, Clause 1, Article 21 of Circular 11/2016/TT-BTC dated 19/01/ 2016 by the Ministry of Finance, except for the case of bond deposit for delivery when implementing the Government bond futures contract as prescribed at point b, clause 2.2 of this Article.

c. In case a clearing member makes a deposit with securities, securities approved by VSD as collateral must satisfy the conditions specified in Article 6 of this Regulation.

d. VSD determines the initial margin for future contracts and government bond future contracts based on the following factors:

- Movement of the transaction price of the futures contract or the underlying index (applicable to the index futures contract), or the price of government bonds/government bond indexes (applicable to the futures contracts of government bonds) during the minimum observation period is 90 trading days assessed by the quantitative risk method VaR;

- The maturity date of the futures contract.

D. Periodically on the 0 1, 10 and 20 of each month , VSD redefine the initial margin rate. In case the above-mentioned days coincide with a holiday or a public holiday, the re-determining time is the next working day.

Initial margin rate is published on VSD's website at least 02 working days before application.

In case of necessity, VSD has the right to re-evaluate the initial margin rate based on actual market fluctuations and takes effect from the working day following the announcement date.

Best Regards!