Vietnam: Principles in management of clients’ securities depository accounts for depository members (new)

According to Article 18 of the Circular No. 119/2020/TT-BTC of the Ministry of Finance of Vietnam, depository members (DMs) must manage clients’ securities depository accounts according to the following principles:

- DMs must open a detailed securities depository account for each client and separately manage assets for each client;

- Securities deposited by clients at DMs are assets owned by clients and managed separately from assets of DMs;

- DM may only use securities in a client's securities depository account in the following cases:

+ DM is a securities company that deals with securities on a client's account in margin trading in accordance with law or deals with securities on a client's account in accordance with agreement between the client and DM or other organization or individual, or otherwise deals with securities on the client's account in accordance with the client's written order or authorization;

+ A DM is a clearing member (CM) who processes securities in a client's clearing margin account to ensure the solvency of securities transactions, return used support sources and compensate for financial losses in case that client defaults on securities transactions.

- DMs have the responsibility to promptly and fully notify arising benefits related to deposited securities to clients;

- The DM is responsible for updating daily information on opening and closing securities depository accounts of clients at DM to the Vietnam Securities Depository and Clearing (VSDC) and comparing information on balance of securities depository account of each client at the DM with the client's securities ownership data at VSDC on the basis of the client's securities ownership data provided by VSDC to the DM. The updating of account information and balance reconciliation shall comply with VSDC's regulations on depository activities.

The Circular No. 119/2020/TT-BTC of the Ministry of Finance of Vietnam takes effect from February 15, 2021.

Ty Na

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