Procedures for issuing Certificate of eligibility to provide clearing and settlement services for derivatives transactions in Vietnam

Procedures for issuing Certificate of eligibility to provide clearing and settlement services for derivatives transactions in Vietnam​ (Image from Internet)

1. Procedures for issuing Certificate of eligibility to provide clearing and settlement services for derivatives transactions in Vietnam

According to Article 10 of Decree 158/2020/ND-CP, the dossier, order, and procedure for issuing a Certificate of eligibility to provide clearing and settlement services for derivatives transactions are as follows:

- The application dossier for the Certificate of eligibility to provide clearing and settlement services for derivatives transactions includes:

+ Application form for the Certificate of eligibility to provide clearing and settlement services for derivatives transactions according to Form No. 04 in the Appendix issued together with Decree 158/2020/ND-CP;

+ Resolution of the General Meeting of Shareholders, Members' Council, or Decision of the Owner on carrying out the activities of providing clearing and settlement services for derivatives transactions;

+ Audited financial statements for the last 2 financial years and the most recent half-yearly financial statement reviewed (in the case of applying for the Certificate of eligibility to provide clearing and settlement services for derivatives transactions after June 30); Report on financial safety ratios in the last 12 months (for securities companies) or documents proving compliance with the minimum capital safety ratio requirement (for commercial banks, foreign bank branches);

+ Internal control procedure, risk management procedure for providing clearing, and settlement services for derivatives transactions;

+ Written approval from the State Bank of Vietnam regarding the provision of clearing and settlement services for securities transactions by commercial banks and foreign bank branches as per the law regulations on credit institutions.

- Documents in the application dossier as specified in Clause 1, Article 10 of Decree 158/2020/ND-CP are exempted if such documents have already been submitted to the State Securities Commission as per reporting and information disclosure regulations.

- The application dossier is prepared in 01 original set. In cases where documents are copies, they must be copies from the original register or certified copies. This dossier is submitted to the State Securities Commission either directly, by postal mail, or via the online public service system as per guidance from the Minister of Finance.

- Within 05 working days from the date of receiving the dossier, the State Securities Commission will issue a written request to the securities company, commercial bank, foreign bank branch to amend or supplement the dossier (if necessary).

- Within 15 days from the date of receiving a complete and valid dossier, the State Securities Commission shall issue the Certificate of eligibility to provide clearing and settlement services for derivatives transactions. In case of rejection, the State Securities Commission must respond in writing and clearly state the reason.

- Within 12 months from the date of being granted the Certificate of eligibility to provide clearing and settlement services for derivatives transactions, the organization providing these services must complete membership registration. If failing to register for membership, the State Securities Commission will issue a decision to revoke the Certificate of eligibility to provide clearing and settlement services for derivatives transactions.

2. Regulations on mandatory termination of clearing and settlement services for derivatives transactions in Vietnam

The mandatory termination of clearing and settlement services for derivatives transactions is regulated in Article 13 of Decree 158/2020/ND-CP as follows:

- An organization providing clearing and settlement services for derivatives transactions is forced to cease operations in the following cases:

+ After the period of suspension for providing clearing and settlement services for derivatives transactions, if the violations leading to the suspension are not remedied;

+ Dissolution, bankruptcy, temporary suspension of operations, or withdrawal of the establishment and operational license; or no longer engaging in derivative securities brokerage; or division, separation, merger, consolidation where the new organization formed post-division, separation, merger, consolidation does not meet one of the business conditions specified in Clauses 2, 3, Article 9 of Decree 158/2020/ND-CP.

- Within 30 days from the date the organization is required to terminate the provision of clearing and settlement services for derivatives transactions, the State Securities Commission shall issue a written request for the organization to carry out the procedures for termination of such services.

- Upon receiving the written notice from the State Securities Commission on the mandatory termination of clearing and settlement services for derivatives transactions, the organization must comply and apply related regulations as prescribed in Clauses 5, 6, Article 7 of Decree 158/2020/ND-CP.

- Within 05 working days from the completion of procedures specified in Clause 3, Article 13 of Decree 158/2020/ND-CP, the organization must submit a report dossier to the State Securities Commission on the outcome according to Clause 6, Article 12 of Decree 158/2020/ND-CP.

- Within 05 working days from receiving the report dossier on the outcome of the termination procedures, the State Securities Commission will issue a decision to revoke the Certificate of eligibility to provide clearing and settlement services for derivatives transactions.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE