Suspension period of derivative trading activities of trading members in Vietnam

Suspension period of derivative trading activities of trading members in Vietnam (Internet image)

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

1. Cases of suspension of derivative trading activities of trading members in Vietnam

According to Clause 1, Article 19 of Circular 58/2021/TT-BTC, VNX shall suspend a part or all of derivative trading activities of trading members in the following cases:

(i) The trading member’s derivative brokerage or derivative proprietary trading activities are suspended under SSC’s decision;

(ii) The trading member’s clearing and settlement for derivative transactions (in case the trading member is also a clearing member) are suspended under VSDCC’s decision;

(iii) The general clearing member that is providing clearing and settlement services for the trading member has their clearing and settlement for derivative transactions suspended or their membership canceled under VSDCC’s decision (in case the trading member is a non-clearing member);

(iv) The trading member seriously and systematically violates their obligations as specified in VNX’s regulations;

(v) Other cases specified in VNX’s regulations;

(vi) Other cases reported by VNX and approved by SSC.

2. Suspension period of derivative trading activities of trading members in Vietnam

Suspension period in the cases specified in Section 1 is as follows:

- With regard to the case specified in (i) of Section 1, the suspension period is that of derivative trading activities decided by SSC;

- With regard to the case specified in (ii) of Section 1, activities of the trading member shall be suspended until they are allowed to restore their clearing and settlement activities by VSDCC;

- With regard to the case specified in (iii) of Section 1, activities of the trading member shall be suspended up to 90 days or until they are provided with clearing and settlement services by another substitute clearing member (whichever comes first);

- With regard to the case specified in (iv) of Section 1, the maximum suspension period is 90 days;

- With regard to the cases specified in (v) and (vi) of Section 1, the suspension period shall comply with VNX’s regulations.

(Clause 2, Article 19 of Circular 58/2021/TT-BTC)

3. Activities of trading members in Vietnam

Specifically, in Article 17 of Circular 58/2021/TT-BTC, the activities of trading members are as follows:

- A non-clearing member must enter into a clearing and settlement entrustment contract with a general clearing member. The contract must comply with regulations and laws in force and shall, inter alia, have the primary contents specified in Form 01 in the Appendix enclosed +with Circular 58/2021/TT-BTC.

Closing, transfer of margin and positions in case of replacement of the general clearing member shall comply with VSDCC’s regulations.

- Trading members must enter into contracts for trading account opening with their clients. The contract for trading account opening must comply with regulations and laws in force and shall, inter alia, have the primary contents specified in Form 02 in the Appendix enclosed with Circular 58/2021/TT-BTC.

- Non-clearing members shall frequently verify, check and review as well as adequately and promptly update and provide information about transactions and other relevant information for general clearing members. Any information about investors and their trading accounts (if any) must be adequately and punctually provided for SSC, VSDCC, HNX and VNX at their written request.

-. The trading member must immediately stop receiving trading orders from the client, except matched sale-purchase transactions, and close the client’s trading account immediately after completing the liquidation of that client’s positions if the client is found to open a trading account in one of the following cases:

+ The client violates the provisions of Clause 2 Article 6 of Circular 58/2021/TT-BTC;

+ The client is a minor;

+ The client has limited legal capacity; is incapacitated; has difficulty in controlling his/her own behaviors; is serving an imprisonment sentence or is banned by the court from holding certain positions or doing certain works.

- Trading members shall only receive matched sale-purchase transactions from clearing members or clients of clearing members that are insolvent and perform other activities at the request of HNX, VSDCC and SSC.

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