Conditions for provision of securities clearing and settlement services in Vietnam

Conditions for provision of securities clearing and settlement services in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Conditions for provision of securities clearing and settlement services in Vietnam

Specifically, in Article 151 of Decree 155/2020/ND-CP, Conditions for provision of securities clearing and settlement services are as follows:

- The service provider must be a securities company, commercial bank or FBB that is granted the certificate of securities depository registration by SSC. The commercial bank or FBB shall also satisfy conditions for provision of securities clearing and settlement services under credit institution laws.

- Charter capital and equity requirements:

+ A direct clearing member shall have charter capital or equity of at least 1000 billion VND (for commercial banks and FBBs) or at least 250 billion VND (for securities companies);

+ A general clearing member shall have charter capital or equity of at least 7000 billion VND (for commercial banks and FBBs) or at least 900 billion VND (for securities companies);

- liquidity ratio requirements:

+ For securities companies: fully make provisions as per regulations, ratio of debt to equity according to the latest annual financial statement must not exceed 05 and liquidity ratio must be at least 260% in 12 consecutive months before the month in which the application for the certificate of eligibility to provide securities clearing and settlement services is submitted;

+ For banks and FBBs: satisfy the capital adequacy ratio requirements according to credit institution laws in the last 12 months before the month in which the application for the certificate of eligibility to provide securities clearing and settlement services is submitted.

- The provision of securities clearing and settlement services must be approved by the GMS or Board of Members or the company’s owner.

- The service provider is not undergoing re-organization, dissolution, bankruptcy, put under control, special control, suspension or termination under decision of a competent authority.

2. Application for the certificate of eligibility to provide securities clearing and settlement services in Vietnam

According to Clause 1, Article 152 of Decree 155/2020/ND-CP, an application for the certificate of eligibility to provide securities clearing and settlement services shall contain:

- The application form No. 45 in the Appendix attached to Decree 155/2020/ND-CP;

Application for the certificate of eligibility to provide securities clearing and settlement services

- A decision of the GMS, Board of Members or the company’s owner to provide securities clearing and settlement services;

- The latest audited annual financial statement and examined half-year financial statement; the report on liquidity ratio of the last 12 months (for securities companies) or written commitment to maintain a minimum capital adequacy ratio under credit institution laws in the last 12 months (for commercial banks and FBBs);

- A written approval issued by SBV for provision of securities clearing and settlement services by the commercial bank or FBB under credit institution laws.

3. Cases of termination of provision of securities clearing and settlement services in Vietnam

SSC shall terminate the provision of securities clearing and settlement services for up to 12 months in the following cases:

- The establishment and operation license, certificate of registration of securities depository is revoked, or SBV issues a notification that the commercial bank or FBB fails to satisfy conditions for provision of securities clearing and settlement services prescribed by credit institution laws;

- The service provider does not apply for clearing member registration within 12 months from the day on which SSC issues the certificate of eligibility to provide securities clearing and settlement services;

- The causes of suspension are not eliminated within the suspension period;

- The termination is voluntary.

(Clause 2, Article 153 of Decree 155/2020/ND-CP)

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