Vietnam: Activities of commercial banks and branches of foreign banks from July 01, 2021 according to the securities laws

Activities of commercial banks and branches of foreign banks from July 01, 2021 according to the securities laws (Image from the Internet)

On June 30, 2024, the Governor of the State Bank of Vietnam issued Circular 34/2024/TT-NHNN regulating the re-issuance of Licenses, supplementation of operational contents into Licenses and organization, operations of commercial banks, foreign bank branches, representative offices in Vietnam of foreign credit institutions, and other foreign organizations having banking activities.

Activities of commercial banks and branches of foreign banks from July 01, 2021 according to the securities laws

Article 13 of Circular 34/2024/TT-NHNN of the State Bank of Vietnam regulates activities according to securities laws of commercial banks, foreign bank branches as follows:

- Commercial banks, foreign bank branches are permitted to engage in the purchase, and sale of debt instruments of the Government of Vietnam, Government-guaranteed bonds, and local government bonds in the securities market when the License issued by the State Bank to commercial banks, foreign bank branches includes the content of purchasing and selling debt instruments of the Government of Vietnam, Government-guaranteed bonds, local government bonds or the content of purchasing and selling Treasury bills, negotiable instruments, Government bonds, State Bank bills, and other negotiable instruments in the money market; purchase and sale of Government bonds.

- Commercial banks, foreign bank branches are permitted to provide clearing and settlement services for securities transactions in accordance with point a, clause 4, Article 56 of the Securities Law 2019 of Vietnam, custodian banking activities, and securities depository activities as regulated by securities laws when the License issued by the State Bank to commercial banks, foreign bank branches includes such activities and commercial banks, foreign bank branches meet the conditions as per securities laws and securities market laws as follows:

+ For the activities of providing clearing and settlement services for securities transactions as stipulated in point a, clause 4 of Article 56 of the Securities Law 2019: commercial banks and branches of foreign banks are required to obtain a Certificate of Eligibility for providing clearing and settlement services for securities transactions from the State Securities Commission and be approved by the Vietnam Securities Depository and Clearing Corporation to become clearing members.

+ For banking supervision activities as regulated by securities laws: commercial banks are required to obtain a Certificate of Registration for securities custody activities from the State Securities Commission.

+ For securities custody activities: commercial banks and branches of foreign banks are required to obtain a Certificate of Registration for securities custody activities from the State Securities Commission and be approved by the Vietnam Securities Depository and Clearing Corporation to become custody members.

- The document adding activity content to the license of commercial banks and branches of foreign banks for providing clearing and settlement services for securities transactions as regulated in point a, clause 4 of Article 56 of the Securities Law 2019 is an approval document issued by the State Bank in accordance with securities laws.

- Regarding activities related to securities, the securities market, commercial banks, and branches of foreign banks, they shall be carried out in accordance with securities laws, securities market regulations, and relevant laws and regulations.

More details can be found in Circular 34/2024/TT-NHNN of the State Bank of Vietnam, which takes effect from July 1, 2024.

To Quoc Trinh

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