Guidelines for opening a securities depository account in Vietnam

Guidelines for opening a securities depository account in Vietnam​ (Image from the Internet)

1. Principles of securities deposits in Vietnam

The principles for securities deposits according to Article 13 of Circular 119/2020/TT-BTC are as follows:

- Securities deposited by clients at the Vietnam Securities Depository and Clearing Corporation are handled based on the principle that clients deposit their securities with depository members, who then redeposit these securities with the Vietnam Securities Depository and Clearing Corporation.

- Depository members receive client securities as authorized parties to carry out securities deposit operations. To deposit securities, clients must sign a securities deposit account agreement with the depository member.

- The Vietnam Securities Depository and Clearing Corporation receives securities deposits from depository members and organizations opening direct accounts. To deposit securities, depository members and organizations opening direct accounts must open securities deposit accounts in the name of depository members or direct account opening organizations at the Vietnam Securities Depository and Clearing Corporation.

2. Guidelines for opening a securities depository account in Vietnam

According to Article 14 of Circular 119/2020/TT-BTC, the guidelines for opening a securities depository account in Vietnam are as follows:

- Depository members must open a securities deposit account at the Vietnam Securities Depository and Clearing Corporation to carry out transactions involving their securities. Each depository member is allowed to open only one securities deposit account at the Vietnam Securities Depository and Clearing Corporation and is not permitted to open securities deposit accounts at other depository members, except for the following cases:

+ Depository members opening a securities deposit account at a fund establishment member to conduct transactions related to an exchange-traded fund;

+ A depository member that is a securities company which has ceased to be a member of the Vietnam Stock Exchange is allowed to open a securities deposit account at other depository members to handle remaining securities on the proprietary trading account;

+ A depository member that is not a clearing member opening a securities deposit account at a clearing member for the purpose of managing clearing margin assets and carrying out securities transaction settlements for the depository member;

+ A depository member that is a securities company issuing covered warrants may open an additional securities deposit account at the Vietnam Securities Depository and Clearing Corporation to conduct hedging activities for covered warrants;

+ A depository member that is a market maker may open an additional securities deposit account at the Vietnam Securities Depository and Clearing Corporation to perform market-making activities.

- Direct account opening organizations are permitted to open a securities deposit account at the Vietnam Securities Depository and Clearing Corporation.

- Opening a securities deposit account for investors, issuers of depositary receipts abroad:

+ At each depository member, investors are limited to opening only one securities deposit account;

+ Foreign investors open securities deposit accounts in accordance with relevant legal regulations;

+ Issuers of depositary receipts abroad may open a securities deposit account after being granted a trading code for securities.

- Each securities investment fund, securities investment company is allowed to open only one securities deposit account at one custodian bank, a single supervising bank, in accordance with relevant legal regulations.

- The fund management company must open separate securities deposit accounts for the company and for each securities investment fund it manages. In the case of portfolio management, at each custodian bank, the fund management company can open two securities deposit accounts on behalf of the fund management company, representing entrusting investors (one securities deposit account for domestic entrusting customers and one securities deposit account for foreign entrusting investors).

- Foreign fund management company branches in Vietnam are permitted to open two securities deposit accounts at a depository member, including one securities deposit account for themselves and one securities deposit account to manage the investment portfolio for foreign investors.

- Foreign securities companies are permitted to open two separate securities deposit accounts at a depository member, including one securities deposit account for themselves and one securities deposit account for the company's clients.

- Insurance enterprises may open two securities deposit accounts to separately manage investments from owner’s equity funds and from insurance premium funds when investing in the stock market. In cases where an insurer is over 50% owned by foreign investors, securities deposited in securities deposit accounts from the owner’s equity fund are subject to legal regulations regarding foreign ownership in the securities market.

- Foreign investment funds, foreign investment organizations managed by multiple fund management companies, foreign government investment organizations, or entities from international financial organizations to which Vietnam is a member can open multiple securities deposit accounts based on the principle that one trading code for securities granted equates to one securities deposit account at the custodian bank.

- Where the custodian bank where an investor opens a securities deposit account is not a clearing member, the investor must open a securities deposit account at a clearing member for the purpose of managing clearing margin assets and executing securities transaction settlements.

- Opening a securities deposit account at the Vietnam Securities Depository and Clearing Corporation is carried out according to the regulations on securities deposit activities of the Vietnam Securities Depository and Clearing Corporation.

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