Vietnam: The entire contracts must be determined the settlement risk value at the end of a trading day

According to Article 10 of the Circular No. 91/2020/TT-BTC of the Ministry of Finance of Vietnam, at the end of a trading day, the securities-trading organization shall determine the settlement risk value of the following contracts and transactions:

- Time deposits at credit institutions, certificates of deposit issued by credit institutions;

- Securities borrowing agreement in accordance with regulations of law;

- Securities sale contracts which contain commitments to redeem securities in accordance with regulations of law;

- Securities purchase contracts which contain commitments to resell securities in accordance with regulations of law;

- Listed securities margin lending and purchase contracts in accordance with regulations of law;

- Firm commitment underwriting agreement signed with other organizations in an underwriting syndicate in which the securities-trading organization is the principal underwriter;

- Receivables of clients in securities trading business;

- Receivables from mature bonds, valuable papers, mature debt instruments for which payment has not been paid;

- Assets the lime limit for transfer of which has expired, including securities in trading activities of the securities-trading organization and securities of clients in securities brokerage;

- The contracts, transactions, payments other than those specified in Points a, b, c, d, dd, e, g of this Article; receivables from debt trading with partners other than the Vietnam Asset Management Company (VAMC) and the Vietnam Debt and Asset Trading Corporation (DATC).

For the contracts specified in Points a, b, c, d, dd and g, Clause 1 of this Article, the settlement risk value before the deadline for transfer of securities, cash and contract liquidation shall be determined as follows:

Settlement risk value = Value of assets with potential settlement risk x Settlement risk coefficient by partner

+ The settlement risk coefficient by partner shall be determined according to credit ratings of trading partner(s) under the rules prescribed in Appendix III enclosed herewith;

+ The value of assets with potential settlement risk shall be determined according to Appendix IV hereof. The stock dividends, bond yields and the value of preferred rights whenever they arise (applicable to securities), or deposit interests, loan interests and other surcharges (applicable to credits) shall be included in the value of assets with potential settlement risk.

Note: For firm commitment underwriting agreement signed with other organizations in an underwriting syndicate in which the securities-trading organization is the principal underwriter, the settlement risk value equals 30% of the remaining value of unpaid underwriting agreements.

View more details at the Circular No. 91/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from January 01, 2021.

Le Vy

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