Requirements for issuance of certificate of eligibility to provide clearing and settlement services in Vietnam

Requirements for issuance of certificate of eligibility to provide clearing and settlement services in Vietnam (Internet image)

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

1. Requirements for issuance of certificate of eligibility to provide clearing and settlement services in Vietnam  

Requirements for issuance of certificate of eligibility to provide clearing and settlement services according to Article 9 of Decree 158/2020/ND-CP are as follows:

- Securities companies, commercial banks and FBBs are allowed to provide clearing and settlement services only after obtaining certificate of eligibility to provide clearing and settlement services from SSC;

+ A securities company is licensed to make clearing and settlement for its own derivative transactions and derivative transactions of its clients, and provide derivative clearing and settlement services for non-clearing members and their clients;

+ A commercial bank or FBB shall only make clearing and settlement for its own derivative transactions.

- In order to be issued with certificate of eligibility to provide clearing and settlement services, a securities company is required to meet the following requirements:

+ It has been issued with certificate of securities depository registration;

+ It has been licensed to provide derivative brokerage;

+ Meet the following charter capital and equity requirements:

++ For a direct clearing member: Maintain the charter capital or equity of at least VND 900 billion;

++ For a general clearing member: Maintain the charter capital or equity of at least VND 1.200 billion;

+ It has maintained a working capital ratio of at least 260% in the last continuous 12 months; a debt-to-equity ratio shown in the latest financial statements of not exceeding 05 times; and have sufficiently contributed to provisions as prescribed by law;

+ It has incurred no loss in the last 02 years;

+ Its latest audited annual financial statements and latest reviewed financial statements (in case an application for certificate of eligibility to provide clearing and settlement services is submitted after June 30) have received unqualified opinions from the accredited audit organizations;

+ It has met internal control and risk management requirements in accordance with regulations of law on operations of securities companies;

+ It is not following procedures for reorganization, dissolution or bankruptcy; it is not subject to any decision on suspension of business operations issued by competent authorities.

- In order to be issued with certificate of eligibility to provide clearing and settlement services, a commercial banks or FBB is required to meet the following requirements:

+ Meet the requirements for provision of clearing and settlement services as regulated in the law on credit institutions;

+ Have a minimum charter capital or equity of VND 5.000 billion (for a commercial bank) or allocated capital of at least VND 1.000 billion (for an FBB);

+ Have satisfactory capital adequacy ratios as prescribed by the Law on credit institutions in the last 12 months;

+ Meet the requirements in Points a, h Clause 2 of Article 9 of Decree 158/2020/ND-CP.

2. Application and procedures for issuance of certificate of eligibility to provide clearing and settlement services in Vietnam

Application and procedures for issuance of certificate of eligibility to provide clearing and settlement services in Vietnam according to Article 10 of Decree 158/2020/ND-CP are as follows:

- An application for certificate of eligibility to provide clearing and settlement services consists of:

+ The application form made using Form No. 04 in the Appendix enclosed with Decree 158/2020/ND-CP;

+ The resolution of the General Meeting of Shareholders, Board of Members or the owner’s decision on provision of derivative clearing and settlement services;

+ The audited financial statements of the last 02 fiscal years and the latest reviewed mid-year financial statements (in case an application for certificate of eligibility to trade derivatives is submitted after June 30); the prudential ratio reports in the last 12 months (for a securities company) or documents proving the satisfaction of capital adequacy ratios (for a commercial bank or FBB);

+ Internal control and risk management procedures for derivative clearing and settlement services;

+ SBV’s approval given to the commercial bank or FBB for provision of derivative clearing and settlement services in accordance with regulations of law on credit institutions.

- The documents specified in Clause 1 of Article 10 of Decree 158/2020/ND-CP are not required if they have been sent to SSC in accordance with regulations on reporting and information disclosure.

- A full set of original application documents is required. If a copy of document is submitted, it must be a copy extracted from master register or a certified copy. The application shall be submitted to SSC directly, by post or through the online public service system as regulated by the Minister of Finance.

- Within 05 business days from the receipt of the application, SSC shall request the applicant in writing to revise the application (if necessary).

- Within 15 days from the receipt of the adequate and valid application, SSC shall issue the certificate of eligibility to provide derivative clearing and settlement services. If an application is refused, SSC shall provide written reasons for such refusal.

- Within 12 months from the date of issuance of the certificate of eligibility to provide derivative clearing and settlement services, the certificate holder is required to apply for clearing member registration.

If it fails to follow procedures for clearing member registration, SSC shall issue a decision to revoke the certificate of eligibility to provide derivative clearing and settlement services.

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