Conditions to be appointed as a clearing bank by SSC in Vietnam

Conditions to be appointed as a clearing bank by SSC in Vietnam (Internet image) 

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

1. What are clearing banks?

According to Clause 1, Article 69 of the Law on Securities 2019, clearing banks include SBV and commercial banks that provide payment services for securities transactions on the securities transaction system.

2. Conditions to be appointed as a clearing bank by SSC in Vietnam

According to Clause 2, Article 69 of the Law on Securities 2019, in order to be appointed as a clearing bank by SSC, a commercial bank shall have:

- The license for establishment and operation in Vietnam prescribed by law;

- A charter capital of over 10.000 billion VND;

- Profit in the last 02 years;

- Satisfactory capital adequacy ratios prescribed by banking laws;

- Technical facilities qualified for payment transactions and connected to the system of VSDCC;

- A payment and offsetting system connected to the payment and offsetting system of SBV; and

- Technical facilities capable of retention of transaction information for at least 10 years and provision of such information for SSC or VSDCC within 48 hours upon request.

3. Rights and obligations of clearing banks in Vietnam 

According to Clause 3, Article 69 of the Law on Securities 2019, a clearing bank has the following rights and obligations:

- Separate payments for securities transactions on the securities transaction system from other payments of the bank in accordance with regulations of law on securities and the securities market;

- Comply with reporting regulations and fill other obligations prescribed by law;

- Maintain fulfillment of the conditions specified in Section 2.

4. General regulations on clearing banks in Vietnam

General regulations on clearing banks under Article 166 of Decree 155/2020/ND-CP are as follows:

- A clearing bank shall be SBV or a commercial bank specified in Article 69 of the Law on Securities 2019.

- Obligations of a commercial bank acting as a clearing bank:

= Maintain fulfillment of the conditions specified in Section 2;

= Grant loans to insolvent clearing members to assist in securities settlement;

= Pay compensation to VSDCC and clearing members for the costs and losses that are caused by the clearing bank’s failure to pay for securities transactions;

= Submit reports periodically, in an ad hoc manner or when requested by SSC on fulfillment of the conditions specified in Section 2;

= Disclose information and fulfill other obligations as prescribed by law.

- SSC shall carry out periodic and ad hoc inspection of the fulfillment of conditions and obligations of clearing banks.

A clearing bank that fails to maintain fulfillment of conditions or fails to fulfill conditions by the deadline imposed by SSC, fails to fulfill its obligations or ensure safe operations, SSC is entitled to select another capable bank as clearing bank.

The clearing bank shall be responsible for securities settlement and fulfillment of obligations related to securities settlement until a substitute clearing bank is appointed.

- The transfer of securities settlement function from a commercial bank to SBV shall be carried out under decisions of the Prime Minister.

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