What is suspension of clearing and settlement of derivative securities transactions of clearing members at the Vietnam Securities Depository?

What is suspension of clearing and settlement of derivative securities transactions of clearing members at the Vietnam Securities Depository?

In Article 8 of the Regulation on members clearing derivatives at the Vietnam Securities Depository, issued together with Decision 84/QD-VSD in 2022, there is a provision on suspension of clearing and settlement of derivative securities transactions of clearing members at the Vietnam Securities Depository are as follows:

1. VSD issues a decision to suspend clearing and settlement of derivative securities transactions of clearing members in the cases specified at Points a, b, c, d, dd, e, g and h Clause 1 Article 27 of Circular 58/2021/TT-BTC .

2. VSD issues a decision to suspend clearing and settlement of derivative securities transactions of clearing members after obtaining approval from the SSC in the following cases:

a) Clearing members fail to fully pay service charges related to clearing and settlement of derivative securities transactions within 30 days from the deadline for payment according to the notice of VSD.

b) The clearing member has been reprimanded by VSD for violating the provisions of Point m, Clause 1, Article 7 of this Regulation but continues to fail to comply with VSD's request within the time limit specified in the reprimanding decision.

3. The period of suspension of clearing and settlement of derivative securities transactions of clearing members is specified in VSD's suspension decision but is 90 days maximum from the date VSD issues the decision. Particularly for the case that clearing members are suspended by the State Securities Commission from providing clearing and settlement services for derivatives transactions, the suspension time shall comply with the suspension time of the State Securities Commission.

4. Order and procedures for suspension

a) Within 01 working day from the date of arising of violations as prescribed in Clause 1 of this Article, VSD shall issue a decision to suspend the clearing member for violations.

b) The suspension of clearing and settlement of derivative securities transactions of a clearing member includes the suspension of trading in order to open a new position in the clearing member's name on the entire trading account except for the execution of counter-trades to close existing positions, daily position profit and loss settlement and contract performance settlement for existing positions. On a case-by-case basis, the General Director of VSD decides that a suspended clearing member must settle part or all of the client's proprietary position.

c) Within 10 days from the date of suspension, the clearing member is responsible for disclosing information, notifying the client and carrying out the transfer procedures for position closing and deposit as required (if required). Have).

d) The order and procedures for transfer of position finalization and deposit as required at Point c of this Clause shall comply with the provisions of the Regulation on clearing and settlement of derivatives transactions at VSD.

5. VSD considers and decides to resume clearing and settlement of derivatives transactions for clearing members only after clearing members have overcome all acts leading to the suspension of operations.

What are cases of cancellation of the compulsory clearing membership at the Vietnam Securities Depository?

In Clause 1, Article 9 of the Regulation on members clearing derivatives at the Vietnam Securities Depository, issued together with Decision 84/QD-VSD in 2022, there are provisions on cases of cancellation of the compulsory clearing membership at the Vietnam Securities Depository are as follows:

1. VSD cancels the compulsory clearing membership in the cases specified in Clause 2, Article 28 of Circular 58/2021/TT-BTC.

What are procedures for cancellation of compulsory clearing membership at the Vietnam Securities Depository? 

In Clause 2, Article 9 of the Regulation on members clearing derivatives at the Vietnam Securities Depository, issued together with Decision 84/QD-VSD in 2022, there are regulations on procedures for cancellation of compulsory clearing membership at the Vietnam Securities Depository are as follows:

2. Order and procedures for cancellation of compulsory clearing membership:

2.1. VSD sends a written notice to the clearing member notifying the termination of providing clearing and settlement services for derivative securities transactions and requesting to carry out procedures to cancel the compulsory clearing member status within 01 working day from:

a) At the end of the time limit for suspension of clearing and settlement of derivatives transactions according to the suspension decision of VSD, the clearing member has not yet been able to remedy all the acts leading to the suspension of operations.

b) VSD has received a document from the State Securities Commission of Vietnam allowing to carry out procedures for termination of the provision of clearing and settlement services for derivatives transactions according to the provisions of Clause 4, Article 12 of Decree No. 158/2020/ND-CP or the State Securities Commission's document requesting the clearing member to carry out procedures for termination of the provision of clearing and settlement services for derivative securities transactions as prescribed in Clause 2, Article 13 of Decree 158/2020 /ND-CP.

c) VSD receives the decision of the Stock Exchange on canceling the membership of derivatives trading of that clearing member.

2.2. From the time of service suspension according to the written notice specified in Clause 2.1 of this Article, VSD only performs the following operations for clearing members:

a) Offsetting for reciprocal transactions to close positions, make daily profit and loss payments or contract performance payments 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.

2.3. Within 02 working days from the date of receipt of VSD's notice on position balance and margin assets on each customer's account as prescribed at point c, clause 2.2 of this Article, clearing members are responsible for responsible for coordinating with VSD to compare and confirm information on position balance and 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.

2.4. Within 01 working day from the date VSD issues a document on the cessation of providing derivative securities trading clearing and settlement services, clearing members must disclose information about conducting the procedures for cancellation of securities transactions. way of clearing members to close or settle positions, deposit customers to other clearing members and settle all their proprietary positions. The time required by VSD to make a transfer of position settlement and deposit at the request of the customer is up to 30 days from the date of service termination. Records of account settlement at the request of customers are specified in the Regulation on clearing and settlement of derivatives transactions at VSD.

2.5. After the time limit specified in Clause 2.4 of this Article, for positions and escrow assets of customers that have not been settled, clearing members are responsible for agreeing, setting up replacement clearing members and notifying them. In case a member cannot establish a replacement clearing member, VSD will send a written appointment of a replacement clearing member to take over positions and margin assets of customers. The clearing member is responsible for notifying the client of the replacement clearing member.

2.6. The following tasks, VSD and clearing members shall comply with the provisions of Clauses 8, 9, 10, 11, 12, Article 4 of this Regulation.

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