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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No.
87/2007/QD-BTC
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Hanoi,
October 22, 2007
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DECISION
ISSUING REGULATIONS ON REGISTRATION, DEPOSITORY, CLEARING
AND SETTLEMENT OF SECURITIES
THE MINISTER OF FINANCE
Pursuant to the Law on
Securities 70/2006/QH11 of the National Assembly dated 29 June 2006;
Pursuant to Decree 77/2003/ND-CP of the Government dated 1 July 2003 on the
functions, duties, powers and organizational structure of the Ministry of
Finance;
On the proposal of the Chairman of the State Securities Commission;
DECIDES:
Article 1. To
issue with this Decision the Regulations on Registration, Depository, Clearing
and Settlement of Securities.
Article 2. This
Decision shall be of full force and effect fifteen (15) days from the date of
its publication in the Official Gazette, and shall replace Decision
60/2004/QD-BTC of the Minister of Finance dated 15 July 2004 issuing the
Regulations on Registration, Depository, Clearing and Settlement of Securities.
Article 3. The
Chairman of the State Securities Commission, the Head of the Office of the Ministry
of Finance, heads of relevant units under the Ministry of Finance, directors of
Securities Depository Centres, depository members and other related parties
shall be responsible for implementation of this Decision.
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FOR THE MINISTER
OF FINANCE
DEPUTY MINISTER
Tran Xuan Ha
REGULATIONS
ON REGISTRATION, DEPOSITORY, CLEARING AND SETTLEMENT OF
SECURITIES
(Issued with Decision 87/2007/QD-BTC of the Minister of Finance dated 22
October 2007)
Chapter I.
GENERAL PROVISIONS
Article 1.
Governing scope
These Regulations govern the
principles for and contents of registration, depository, clearing and
settlement of securities applicable to Securities Depository Centres
(hereinafter abbreviated to the SDC), to members of a SDC, to issuing
organizations, to paying banks and to clients who register and deposit
securities.
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In these Regulations, the
following terms shall be construed as follows:
1. Securities certificates means
securities issued in the form of a physical certificate which records
information about legal ownership of the securities holder.
2. Securities book entry means
securities issued in the form of a book entry or electronic data. Information
about legal ownership of the securities holder shall be recorded in the
register of securities holders.
3. Register of securities
holders means the book which records information about securities holders and
is prepared by the issuing organization and registered with the SDC.
4. Securities holder means the
person whose name appears in the register of securities holders at the SDC.
5. Securities certificate or
account means a written document issued by the issuing organization to a
securities holder and recording a serial number in order to certify information
about ownership of the securities at any specified time.
6. Member of the SDC (member)
means a depository member and a member who opens a direct account at the SDC.
7. Bilateral clearance means the
method of clearing securities transactions which have been matched during the
same day between any two trading parties with respect to the one type of
securities, in order to determine the net monetary sum and securities which
must be settled by both parties.
8. Multilateral clearance means
the method of clearing securities transactions which have been matched during
the same day between all trading parties with respect to the one type of
securities, in order to determine the net monetary sum and securities which
must be settled by both parties.
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10. Bailment of securities means
bringing securities to the SDC for central depository in order to conduct
trading of such securities.
11. Valuable papers comprise
both short term and long term valuable papers used in currency market
transactions between the State Bank with depository clients as regulated by the
Governor of the State Bank.
12. Paying bank means any bank
selected by the State Securities Commission (hereinafter abbreviated to SSC) in
order for a SDC and members of a SDC to open a payment account at such bank to
facilitate monetary payments for securities transactions conducted on the Stock
Exchange (hereinafter abbreviated to SE) or on a Securities Trading Centres
(hereinafter referred to as STC) and for other payment activities.
13. Valid application file means
a file containing all the documents and with all items fully declared as
required by the regulations.
Chapter II
REGISTRATION OF
DEPOSITORY OPERATIONS
Article 3.
Conditions for registration of a securities depository operation
Any securities company or
commercial bank wishing to register a securities depository operation must
satisfy the conditions stipulated in article 48 of the Law on Securities.
Article 4. Application
files for registration of a securities depository operation and of a branch
providing securities depository services
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(a) Request for registration of
the securities depository operation, on the standard form issued in Appendix
01-LK to these Regulations.
(b) Copy licence for
establishment and operation.
(c) Explanation of the material
and technical facilities adequate for the operation, on the standard form in
Appendix 02-LK to these Regulations.
(d) Audited financial statements
for the most recent year, unless the securities company is newly established.
2. A securities company or
commercial bank shall lodge the following application file with the SSC in
order to register a branch providing securities depository services:
(a) Copy certificate of
registration of the securities depository operation of the securities company
or commercial bank issued by the SSC.
(b) Request for registration of
a branch proving securities depository services, on the standard form in
Appendix 03-LK to these Regulations.
(c) Explanation of the material
and technical facilities adequate for the operation at the branch, on the
standard form in Appendix 02-LK to these Regulations.
(d) Power of attorney [from the
securities company or commercial bank] to the branch to provide services, on
the standard form in Appendix 04-LK to these Regulations.
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1. The time-limit for the SSC to
issue a certificate of registration of a securities depository operation to a
securities company or commercial bank shall be fifteen (15) days from the date
on which the SSC receives a valid application file. In a case of refusal, the
SSC shall provide a written explanation of its reasons.
2. The time-limit for the SSC to
provide approval for the branch of a securities company or of a commercial bank
to provide securities depository services shall be ten (10) days from the date
the SSC receives a valid and complete application file. In a case of refusal,
the SSC shall provide a written explanation of its reasons.
3. A securities company or
commercial bank must conduct procedures to register members at the SDC and to
commence its operation within a time-limit of twelve (12) months from the date
on which it is issued with a certificate of registration of its securities
depository operation.
4. The securities company or
commercial bank must conduct procedures to register its branch depository
members with the SDC within a time-limit of three (3) months from the date on
which approval is provided for the branch to provide securities depository
services.
Article 6. Suspension
and revocation of a certificate of registration of a securities depository
operation
1. Any suspension or revocation
of a certificate of registration of a securities depository operation shall be
implemented in accordance with article 51 of the Law on Securities.
2. The SSC shall provide a
written notice terminating the depository operation of the branch of a
securities company or of a commercial bank in the following circumstances:
(a) The certificate of
registration of the securities depository operation of the securities company
or commercial bank has been revoked.
(b) Failure to conduct
procedures for registration of branch depository members with the SDC as
stipulated in article 5.4 of these Regulations.
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Chapter
III
MEMBERS OF SECURITIES
DEPOSITORY CENTRES
Article 7. Conditions
for registration of depository members
1. A securities company or
commercial bank must satisfy all the following conditions in order to register
as a depository member of a SDC:
(a) Having a certificate of
registration of its securities depository operation issued by the SSC.
(b) Having at least one member
of the Board of Executors who is allocated with responsibility for securities
depository, registration, and clearing activities.
(c) Having staff who have
participated in professional training courses held by the SDC.
(d) Having professional rules
and a system of material facilities and software which meets the requirements
of the SDC.
2. The branch of a securities
company or commercial bank must satisfy all the following conditions if it
wishes to register to provide securities depository services:
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(b) Having received approval
from the SSC for its securities depository operation.
(c) Having a power of attorney
from the securities company or commercial bank to the branch to provide the
services, on the standard form in Appendix 04-LK to these Regulations.
3. Depending on the specific
conditions, the SDC may provide other rules on conditions for approving
depository members and branch depository members after such rules have been
approved by the SSC.
Article 8. Registration
of depository members and of depository member branches
1. The SDC shall provide
specific rules on registration of depository members and of depository member
branches.
2. The SDC must report to the
SSC on registration of depository members and of depository member branches
within one (1) working day of issuance of a certificate to a depository member
or of grant of approval to a branch.
Article 9. Registration
of members opening a direct account
1. The following institutions
shall be permitted to register as members opening a direct account at the SDC:
(a) The State Bank.
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(c) The State Capital Investment
Corporation (SCIC).
(d) Credit institutions and
insurers participating in the bond market held by the Stock Exchange [and/or] a
Securities Trading Centre.
(e) Foreign [i.e. overseas]
Depository Centres.
(f) Other entities as stipulated
by the SDC.
2. A member opening a direct account
being the State Bank shall open an account in order to deposit securities being
all types of valuable papers owned by the State Bank and by depository clients
of the State Bank in order to facilitate currency market transactions.
3. The members opening a direct
account as stipulated in sub-clauses (b), (c) and (d) of clause 1 above shall
open accounts in order to deposit securities which they themselves own, and
they shall be permitted to use the depository, registration, clearing and
settlement services of the SDC.
4. The SDC shall provide rules
on the procedures for registration of members opening a direct account at the
SDC.
Article 10.
Services contract between the SDC with a member
1. The SDC shall provide
services to its members on the basis of a contract signed by the SDC with a
member, and the contract shall contain the following main particulars:
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(b) The responsibilities of the
SDC and of the member of the SDC.
(c) Dispute resolution
provisions.
(d) Provisions on termination of
the contract.
2. The SDC shall provide rules
on the specific detailed contents of a services contract between the SDC with a
member.
Article 11.
Temporary suspension of the operation of a member
The SDC shall temporarily
suspend the operation of a member, after obtaining approval from the SSC, in
the following circumstances:
1. The member has regularly
breached the rules of the SDC.
2. In the case of deficiencies
or shortcomings which have caused serious loss to clients.
Article 12.
Circumstances in which a certificate of registration of membership of the
SDC will be revoked
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1. The member voluntarily
terminates its status as a member and the SDC approves.
2. The member fails to remedy
breaches at the expiry of a period of temporary suspension, at the request of
the SDC and SSC.
3. The member's licence for
establishment and operation has been withdrawn.
4. A member fails to maintain
all the conditions for registration of its securities depository operation as
stipulated in article 48 of the Law on Securities throughout the process of the
operation (applicable to a depository member)..
5. In a case of demerger, merger,
consolidation, conversion, dissolution or bankruptcy.
6. The member registered but
failed to commence operation as stipulated in article 5.3 of these Regulations.
7. The member breached the
membership rules of the SDC, including contractual breach of the services
contract between the SDC and the member leading to termination of membership
status.
8. The SSC revoked the member's
certificate of registration of its securities depository operation as
stipulated in article 51.2 of the Law on Securities (applicable to a depository
member).
Article 13.
Circumstances in which a certificate of registration of a branch member of
the SDC will be revoked
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1. The depository member
voluntarily requests termination of the branch depository operation, and the
SDC agrees.
2. The depository member
terminates the branch operation at the request of a competent authority.
3. The branch depository member
breached the rules of the SDC and failed to remedy the breach despite a written
reminder or warning from the SDC.
Chapter IV
SECURITIES REGISTRATION
Article 14.
Securities registration at the SDC
1. The following types of
securities must be registered at the SDC:
(a) Securities of public
companies and of listed organizations.
(b) Government bonds listed on
the Stock Exchange or a Securities Trading Centre.
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(d) Fund investment certificates
listed on the Stock Exchange.
(e) Other types of securities
which must be registered at the SDC pursuant to an agreement reached between
the SDC and the issuing organization.
2. Securities shall be
registered at the SDC in the form of entry into a register.
3. The SDC shall issue a code
number for securities which are registered with it, and this code number shall
be uniformly used when listing at the Stock Exchange or a Securities Trading
Centre.
Article 15.
Information on registered securities, and entities eligible to lodge an
application file for registration at the SDC
1. Issuing organizations shall
register the following information about their securities with the SDC:
(a) Information about the
issuing organization.
(b) Information about the
securities being issued.
(c) Information about the list
of securities holders.
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(a) Issuing organizations with
listed securities shall conduct procedures to register their securities
directly with the SDC.
(b) Unlisted public companies
shall register their securities via a depository member being a securities
company.
3. The SDC shall provide specific
rules on the items regulated in clauses 1 and 2 of this article.
Article 16.
Management of information about registered securities
1. The SDC shall centrally
manage information about registered securities or shall delegate this function
to a depository member by signing a contract with such member to represent the
SDC in conducting management.
2. The SDC shall provide
specific rules on management of information about registered securities in
accordance with the following principles:
(a) Any change in the
information about registered securities must be implemented in accordance with
the rules of the SDC on management of information.
(b) The SDC shall stipulate the
maximum time-limit for amending information about ownership of securities after
they have been registered with the SDC.
(c) Issuing organizations shall
be entirely responsible for the accuracy, completeness and promptness of
information about securities which they register with the SDC.
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1. The SDC may supply services
to an issuing organization on the basis of a contract in order for the SDC to
represent the issuing organization in conducting the work of managing
information about securities holders and in exercising rights of such holders.
The contract shall contain the following main particulars:
(a) Details of the services
being provided.
(b) Responsibilities of the SDC
and of the issuing organization.
(c) Dispute resolution provisions.
(d) Provisions on termination of
the contract.
2. The SDC shall provide
detailed rules on the contents of services contracts between the SDC and
issuing organizations.
Article 18.
Transfer of ownership of securities
1. Transfer of ownership of
securities registered at the SDC shall be conducted in accordance with the
following principles:
(a) An owner of securities which
have been registered at the SDC but not yet deposited and who wishes to
transfer ownership of such securities must arrange for depository at the SDC in
order for the securities to be purchased and sold on the Stock Exchange or a
Securities Trading Centre.
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- Donation or bequeathing of
securities in accordance with civil law.
- Trading of an odd parcel of
securities as stipulated in the law on securities and securities market.
- When an issuing organization
redeems preferential shares of its staff on termination of a labour contract.
- On demerger, merger,
consolidation or capital contribution by shares to establish an enterprise or
restructuring the financial management regime of an enterprise in accordance
with the civil law, the Law on Enterprises and the Law on Securities.
- In other cases of transfer of
ownership as decided by the director of the SDC after obtaining approval from
the SSC.
2. The time of effectiveness of
a transfer of ownership of securities at the SDC shall be as regulated in
article 54.2 of the Law on Securities.
3. The SDC shall provide rules
on the application file and procedures for transfer of ownership of registered
securities.
Article 19.
Cancellation of registration of securities
1. Registration of securities at
the SDC shall be cancelled in the following cases:
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(b) Securities of a public
company have been registered at the SDC but the company no longer satisfies the
conditions for public company status and requests cancellation of registration.
(c) An issuing organization
other than a public company voluntarily cancels registration of the securities.
2. The SDC shall provide rules
on the procedures for cancellation of registration of securities.
Article 20.
Exercise of the rights of securities holders
1. An issuing organization may
authorize the SDC to conduct procedures to exercise the following rights of
securities registered at the SDC, and the issuing organization shall be
entirely responsible for any decisions relating to the exercise of such rights
of the securities holders:
(a) Voting rights.
(b) The right to receive bond
principal and interest and share dividends in money.
(c) The right to receive
dividends in shares or bonus shares.
(d) The right to purchase
additionally issued shares.
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(f) The right to change the name
of, or to split or consolidate shares.
(g) Other rights as stipulated
by law.
2. Only people whose names
appear on the last date for registration in the register of securities holders
kept by the SDC shall be permitted to receive rights arising from such
securities.
3. The last date for
registration means the date fixed by the issuing organization or by the SDC on
the basis of authorization from the issuing organization to certify the list of
holders entitled to rights, and consistent with the provisions of law.
4. The SDC, depository members
and issuing organizations shall be responsible to exercise rights of holders of
securities registered [and/or] deposited at the SDC, and they shall be
responsible, within the scope of their liability, for loss caused to securities
holders due to failure to correctly comply with the provisions on exercise of
the rights of securities holders in these Regulations, or in the professional
rules of the SDC on registration, depository, clearing and settlement of
securities.
5. The SDC shall provide rules
on procedures for exercise of the rights of securities holders.
Chapter V
SECURITIES DEPOSITORY
Article 21.
Principles for securities depository
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2. A depository member shall
receive securities for deposit from clients in the member's capacity as the
person authorized by the client to conduct the professional operation of
registration, depository, clearing and settlement of the securities. A client
must sign a contract to open a securities depository account with the
depository member in order to deposit securities.
3. The SDC shall in turn receive
the deposit of securities from depository members in the former's capacity as
the entity authorized by the member to conduct professional activities relating
to the operation of registration, depository, clearing and settlement of
securities. A member must open a securities depository account in the name of
such member with the SDC, in order to redeposit securities.
Article 22.
Opening a securities depository account
1. A member of the SDC must open
a securities depository account at the SDC in order to trade deposited
securities. Each member of the SDC may only open one such account, and may not
open a second securities depository account with another depository member.
2. An investor shall only be
permitted to open one unique account with a depository member, except in the
following cases:
(a) A fund management company
must open a separate securities depository account for the company and a
separate account for each fund which the company manages. If a fund management
company manages an investment portfolio, then it must open two depository
accounts in the name of such company at a depository bank on behalf of
entrusting investors (one account for domestic entrusting investors, and one
account for foreign entrusting investors).
(b) A foreign investor being a
foreign securities company established in accordance with foreign law shall be
permitted to open two separate securities depository accounts with a depository
member in order to manage the securities belonging to the company itself and
the securities belonging to clients of the company.
(c) A one hundred per cent
(100%) foreign owned insurer must open two securities depository accounts with
the one depository member in order to separately manage investment items from
capital owned by the company and investment items from insurance premiums when
such company invests on the securities market.
3. Investors being foreign
organizations and individuals shall be permitted to open a securities
depository account with a depository member after they have registered a
securities trading number in accordance with law.
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Article 23.
Securities depository accounts of members at the SDC
1. The types of securities
depository accounts of members at the SDC shall comprise:
(a) Securities trading account.
(b) Account for temporary
suspension of transactions.
(c) Pledge account.
(d) Impounding account.
(e) Account for transactions
awaiting payment.
(f) Escrow account awaiting
withdrawal.
(g) Account awaiting trading.
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(i) Other accounts in accordance
with law.
2. The securities depository
accounts stipulated in clause 1 of this article shall be classified as follows:
(a) Securities depository
accounts of the depository member itself.
(b) Securities depository
accounts for domestic clients of the depository member.
(c) Securities depository
accounts for foreign clients of the depository member.
3. Any security depository
account of a depository member opened at the SDC must contain the following
particulars:
(a) Serial number of the
account.
(b) Name and address of the
depository member.
(c) Quantity, type and code of
the deposited securities.
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(e) Other necessary information.
Article 24.
Management of securities depository accounts at the SDC
1. The SDC shall manage
securities depository accounts in accordance with the following principles:
(a) Securities deposited with
the SDC are assets belonging to clients, and must be managed separately from
assets of the SDC.
(b) The SDC must not use
securities of clients for the benefit of the SDC or of third parties.
2. The SDC shall only make
accounting entries in securities depository accounts when the source documents
are original, complete and valid vouchers.
3. The total balances in
securities depository accounts of clients opened with depository members must
continually be matched against the balance of the securities deposited by
members in the accounts which such members have opened with the SDC.
4. A member must immediately
notify the SDC of any change or error in information about the securities
deposited in securities depository accounts.
5. The SDC must immediately notify
a member if it discovers an error in the information about securities in
securities depository accounts of such member, in order for the latter to make
the appropriate corrections.
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1. Securities depository
accounts of clients opened with depository members shall comprise the following
[types]:
(a) Securities trading accounts.
(b) Accounts for temporary
suspension of transactions.
(c) Pledge accounts.
(d) Impounding accounts.
(e) Accounts for transactions
awaiting payment.
(f) Escrow accounts awaiting
withdrawal.
(g) Accounts awaiting trading.
(h) Accounts for amending
transactions.
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2. Any securities depository
account of a client opened with a depository member must contain the following
particulars:
(a) Serial number of the
securities depository account.
(b) Name and address of the
account owner.
(c) Identity card number in the
case of a Vietnamese client and passport number in the case of a foreign
client, and number of business registration certificate or of establishment
licence in the case of a client which is an organization.
(d) Quantity of securities,
their type and code number.
(e) Quantity of increased or
decreased securities, and the reason why.
(g) Other necessary information.
Article 26.
Management of securities depository accounts opened with depository members
1. A depository member must
manage the securities depository accounts of clients in accordance with the following
principles:
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(b) Securities deposited by a
client with a depository member remain assets belonging to the client and must
be managed separately from assets of the depository member.
(c) A depository member must not
use securities in the securities depository account of a client for the benefit
of such member or of a third party.
(d) The depository member shall
be responsible to promptly and fully notify the client of any rights arising in
relation to the deposited securities.
(e) A depository member shall be
responsible to continue to discharge obligations owing to its client in a case
where the client closes its account and transfers it to a new member but rights
being the receipt of money and securities continue to be allocated to the
account of the former depository member.
2. A depository member must send
each client a list of the securities in the client's depository account within
one (1) business day of receipt of a request from the client.
3. Clients shall be responsible
to immediately notify their depository member if there is any change or error
in information about the securities depository account of such client with the
member.
Article 27.
Effectiveness of deposit of securities
1. The deposit of securities
shall take effect at the SDC as from the time the SDC makes the appropriate book
entry in the relevant securities depository account of the depository member
opened at the SDC.
2. The accounting or transfer of
securities by book entry between securities depository accounts of members or
of clients at the SDC shall have the same legal effect as a physical transfer
of securities recognized by law.
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Article 28.
Bailment of securities
1. The bailment of securities by
clients with the SDC shall be implemented in accordance with the following
principles:
(a) Clients may bail their
securities with the SDC via the depository member with whom they have opened an
account.
(b) A depository member shall be
responsible to conduct procedures to receive securities bailed by a client and
to rebail them with the SDC within one (1) business day from the date of
receipt of a valid securities bailment application file from the client.
(c) The SDC shall be responsible
to process the securities bailment application file within one (1) business day
from the date of receipt of a valid file from the member.
(d) The SDC shall provide rules
on the application file and procedures for bailment of securities by members
with the SDC.
2. Any member or client who
invalidly bails securities, or who bails securities which are forged or stolen
or which contain insufficient information as required, shall be entirely
responsible for bailment of such number of securities and must pay compensation
to parties suffering loss arising from the bailment.
Article 29.
Withdrawal of securities
1. A client shall only be
permitted to request withdrawal of securities within the scope of [i.e. below
or equal to] the number of the securities the client owns in the depository
account, except where securities are currently impounded or pledged.
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3. The SDC shall be responsible
to process withdrawal of securities within one (1) business day from the date
of receipt of a valid application file from the member.
4. The client shall have the
right to rescind its request for withdrawal of the securities in the period of
time awaiting actual withdrawal.
5. The SDC shall withdraw
securities by taking out the same form of securities which the issuing
organization registered at the SDC.
6. The SDC shall provide rules
on procedures for withdrawal of securities at the SDC.
Article 30.
Transfer of securities
1. The SDC may transfer [remit]
deposited securities other than via the central trading system of the
Stock Exchange or a Securities
Trading Centre in the following circumstances:
(a) Trading of an odd parcel of
securities as stipulated by the law on securities and securities market.
(b) Closure of an account of one
depository member by transferring it to an account of another depository
member.
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(d) Remittance in order to
provide assistance and to provide a securities loan.
(e) Remittance in order to
realize securities which have been pledged in accordance with a pledge
contract.
(f) Donation or bequeathing
securities in accordance with the civil law.
(g) Demerger, merger,
consolidation or capital contribution by shares to establish an enterprise or
restructuring the financial management regime of an enterprise in accordance
with the civil law and the Law on Enterprises.
(h) An issuing organization
redeems preferential shares of its staff on termination of a labour contract.
(i) The depository member in the
place where the client has opened the account has its membership status
rescinded, or its certificate of depository operation revoked or its status as
a depository member rescinded by the SDC.
(k) Other cases of transfer of
ownership as decided by the director of the SDC after obtaining approval from
the SSC.
2. A depository member must
lodge the application file for transfer of securities with the SDC within one
(1) business day of the date on which the member receives a request for
transfer from the client.
3. The SDC shall be responsible
to process an application file for transfer of securities within one (1)
business day from the date of receipt of the valid application file from the
member in cases stipulated in sub-clauses (a), (b), (c), (d) and (e); and
within a maximum of five (5) business days in the case of a transfer as stipulated
in sub-clauses (f), (g), (h), (i) and (k) of clause 1 above.
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5. In the case of purchases and
sales implemented via the trading system of the Stock Exchange or a Securities
Trading Centre, the [remittance or] transfer of securities in order to make
payment for the transaction shall be implemented in accordance with the
provisions on clearing and settling securities in Chapter VI of these Regulations.
Article 31.
Pledge and discharge of a pledge of securities
1. A pledge of securities
centrally deposited at the SDC shall be implemented on the basis of a pledge
contract and the securities must be registered for trading at the SDC in
accordance with current regulations on registration of security transactions.
2. Any authorization made by the
pledgor and pledgee to a depository member in the latter's capacity as the
third party managing the pledged securities shall be implemented in accordance
with the provisions in the securities pledge contract signed between the
parties. The parties may request the discharge of all or a part of the pledged
securities.
3. Any pledge or discharge of a
pledge of securities of a client of a depository member shall be conducted at
that depository member where an account has been opened. The SDC shall
implement the pledge or discharge of a pledge of securities on the basis of a
list of the pledged securities and shall discharge the pledge on receipt of
confirmation from the pledgee.
4. A pledge of securities shall
only take effect after the SDC has made the book entries for transfer of
securities from the securities trading account of the member for the pledgor to
the pledged securities account of the same member.
5. The discharge of a pledge of
securities shall take effect when the SDC makes a book entry transferring the
securities from the pledged securities account to the trading securities
account of the member of the pledgor.
6. A depository member must
lodge the application file for pledge or discharge of a pledge of securities
with the SDC within one (1) business day from the date of receipt of a valid
request from the client. The SDC shall be responsible to process the
application for pledge or discharge of a pledge of securities within one (1)
business day from the date of receipt of a valid application file from the
member.
7. The SDC shall provide rules
on the procedures for pledge, for discharge of a pledge of securities, and for
registration of security transactions.
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SECURITIES CLEARING AND
SETTLEMENT
Article 32.
Clearing and settling securities transactions
1. The SDC shall conduct
settlement on the basis of multilateral or unilateral clearance of each
transaction of listed securities and of each transaction of unlisted securities
of a public company.
2. The SDC shall conduct
clearance separately for each type of securities, separately for the brokerage
account of a domestic client, separately for the brokerage account of a foreign
client, and separately for the self-trading account of a depository member.
3. The SDC shall conduct
settlement of the purchase and sale of listed securities based on the trading
results supplied by the Stock Exchange or Securities Trading Centre.
4. In the case of purchase and sale
of unlisted securities of a public company, the SDC shall conduct settlement of
the transaction based on the results of trading by the investor held at the
public company and remitted to the SDC via the Securities Trading Centre.
5. The Director of the SDC shall
make a decision on application of methods of settlement at the SDC after
receiving approval from the SSC.
6. The SDC shall provide rules
on the order and procedures for settling securities transactions held on the
Stock Exchange and Securities Trading Centres.
Article 33.
Settlement of transactions by members
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2. The depository bank shall
conduct settlement of a transaction in a case where a client opens a securities
depository account with a depository member being a commercial bank and the
client places a trading order via a securities company.
3. In a case where a depository
member fails to correctly implement the principles on management and clearance
of transactions in accordance with law, resulting in a deficiency of money or
securities in order to conduct settlement, then such depository member shall be
obliged to settle such transaction in lieu of the client.
Article 34.
Comparing and verifying transactions
1. The SDC shall be responsible
to notify the results of trading to depository members after the SDC receives
such results from the Stock Exchange or Securities Trading Centre.
2. A depository member shall be
responsible to conduct a detailed comparison of the transaction between the original
order retained by the member and the trading results notified by the SDC, and
shall be responsible to re-verify the results with the SDC.
Article 35.
Rectifying errors after trading of listed securities
1. The SDC shall conduct
post-trading rectification in the following cases:
(a) A depository member being a
securities company places an incorrect order from a client such as providing
the incorrect account number of the client, the incorrect type of securities,
or the incorrect price; or places an order for purchase when it should have
been an order for sale or vice versa, provides the incorrect number of
securities, or the wrong settlement date and the wrong settlement method.
(b) The member of the SDC failed
to check the ratio of deposited securities as required by the regulations
resulting in a shortfall of securities or money in order to conduct settlement
of the transaction.
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(a) In a case where the
depository member rectifying the error has a self-trading account, the trading
order of a client shall be rectified by the SDC to become a self-trading order
of the depository member.
(b) In a case where the
depository member rectifying the error does not have a self-trading account,
the SDC shall open an assisting account for the member in order to
provisionally account for the number of securities which such member must
receive or pay for in order to make the rectification. This regime shall be implemented
as follows:
- On receipt of securities as a
result of the rectification, the depository member shall be obliged to
immediately sell them at the next trading session in order for the SDC to close
the assisting account.
- When a depository member is obliged
to refund the number of securities lent or received by way of assistance, then
the depository member shall be permitted to maintain the assisting account up
until discharge of this obligation to the party which lent the securities or
provided them by way of assistance.
3. In the case of any error not
covered by the cases stipulated in clause 1 above, the Director of the SDC
shall have authority to deal with such error after obtaining approval from the
SSC.
4. The SDC shall provide rules
on the application file, order and procedures for rectifying errors after
trading of listed securities.
Article 36.
Obligations of parties involved during rectification of errors after
trading
1. Parties to a transaction
shall be responsible for errors which they cause within the scope of their
powers and responsibilities. A depository member shall be responsible, within
the scope of its powers and responsibilities, for [rectification of] errors
after trading by clients.
2. If the error of a securities
company results in the client of a depository member being a commercial bank
[i.e. the commercial bank is the client] lacking the securities necessary in
order to conduct settlement, then the commercial bank shall be permitted to
refuse to settle the transaction. If in this case the depository member is the
securities company then it shall be liable to make payment for the incorrect
transaction.
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4. Repayment of the securities
or repayment of the assistance may be made by the securities themselves or by
money, depending on the agreement reached between the depository member with
the lender or the person providing assistance with the securities.
5. The SDC shall provide rules
on making loans of and assistance by providing securities, and on repayment
thereof, as between parties in order to rectify errors.
Article 37.
Measures to remedy insolvency in settling transactions of listed securities
1. A member of the SDC shall be
responsible to remedy its inability [insolvency] to settle a transaction of
listed securities.
2. If a member is unable to
remedy its inability [insolvency] to settle a transaction of listed securities,
the SDC shall apply the following measures:
(a) In a case where the member
lacks the monetary funds necessary for settlement, the Settlement Assistant
Fund shall be used or a request shall be made to a paying bank to make a loan.
(b) In a case where there are
insufficient securities to conduct settlement, the defaulting member shall be
requested to lend other securities or a request shall be made to another member
to make a loan of securities.
3. The SDC shall provide rules
on the order and procedures for remedying inability to settle a transaction of
[listed] securities.
Article 38.
Remedying inability to conduct settlement by paying money
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(a) In the case of a depository
member, both measures shall apply namely receipt of money from the Settlement
Assistant Fund and receipt of a loan from a paying bank. The SDC shall
stipulate the ceiling limit on use of funds to assist payment, depending on the
actual level of funds in the Settlement Assistant Fund.
(b) The regime of receipt of
monetary assistance in the form of a loan from a paying bank shall apply to a
member opening a direct account.
2. The SDC shall regulate the
establishment, management and use of the Settlement Assistant Fund after
obtaining approval from the SSC.
3. A depository member must sign
an agreement on receipt of monetary assistance from a paying bank to settle a
securities transaction, and such agreement shall contain the following main
particulars:
(a) Interest rate, which must
not exceed the interest rate for use of the Settlement Assistant Fund.
(b) Term of the loan.
(c) Method of securing repayment
of the loan, consistent with the relevant provisions of law.
4. Any member which lacks the
ability to pay money in order to conduct settlement shall be responsible for
all fees and losses arising, and shall be subject to a penalty as stipulated by
law.
Article 39.
Remedying inability to pay securities in order to conduct settlement
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(a) From other members of the
SDC.
(b) From a client.
(c) From other legal sources.
2. The SDC shall provide rules
on the order and procedures for receipt of a loan or assistance in the form of
securities in order to ensure discharge of the obligation to settle.
Article 40.
Rescission of settlement of listed securities transactions
1. If a member still lacks the
ability to settle a transaction after application of the stipulated measures,
the SDC shall have the right to rescind settlement of such transaction.
2. Any depository member whose
settlement of a transaction has been rescinded shall be liable for all losses
arising to the client and shall be liable to the other members involved as a
result of failure to settle the transaction.
3. The SDC shall be responsible
to notify the Stock Exchange or Securities Trading Centre of transactions for
which settlement has been rescinded, in order for the latter entities to
announce the relevant information.
Article 41.
Dealing with errors in trading of securities of unlisted public companies
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2. If it is discovered that a
member's account contains insufficient money or securities in order to conduct
settlement of trading of securities of an unlisted public company, the SDC
shall deal with such transaction in accordance with the professional rules of
the SDC.
3. Any member whose settlement
of a transaction has been rescinded by the SDC pursuant to clauses 1 and 2 of
this article shall be liable for loss caused to the client and other members.
4. The SDC shall provide rules
on the order and procedures for dealing with errors in trading of securities of
unlisted public companies.
Chapter
VII
PAYING BANKS
Article 42.
Conditions applicable for a bank to be a paying bank
[The following conditions shall
apply in order for a bank to be a paying bank:]
1. The bank is a Vietnamese
commercial bank.
2. The bank has paid up charter
capital of above three thousand (3,000) billion dong.
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4. The bank has a credit risks
system which satisfies the prudential requirements stipulated by the State
Bank.
5. The bank has a system of physical
and technical facilities which ensure settlement of transactions and which are
able to be connected to the system of the SDC. The bank has an undertaking with
the SSC to provide loans to ensure payment for settlement of transactions in
the case where a member lacks the ability to conduct settlement.
Article 43.
Application file for registration as a paying bank
An application file for
registration as a paying bank shall be lodged with the SSC and shall comprise:
1. Request for registration as a
paying bank.
2. Document setting out
information about the bank, including the bank's ability to satisfy the
criteria stipulated in article 42 of these Regulations.
3. Copy decision on
establishment and operation of the commercial bank.
4. Copy undertaking with the SSC
to provide loans to ensure payment for settlement of transactions in the case
where a depository member lacks the ability to conduct settlement.
5. Other relevant data.
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The SSC shall issue a decision
approving or refusing to accredit a bank to act as a paying bank within a
time-limit of fifteen (15) days from the date of receipt of a complete and
valid application file. In a case of refusal, the SSC shall provide a written
explanation of its reasons.
Article 45.
Rescission of status as a paying bank
1. In the case where a paying
bank fails to maintain the conditions stipulated in article 42 of these
Regulations on ensuring payment for settlement of securities transactions, or
in a case where a paying bank fails to rectify a situation of an unsatisfied
condition within the time-limit stipulated by [in a request from] the SSC, the
SSC shall have the right to rescind such bank's status as a paying bank and to
select another commercial bank which satisfies the conditions to act as a
paying bank.
2. Any paying bank whose status
as such is rescinded shall remain wholly liable to discharge all obligations
relating to its operation of settlement of securities [transactions] for
clients.
Article 46.
Rights and obligations of paying banks
1. Paying banks shall have the
following rights:
(a) To appoint the head office
or a branch to act as co-ordinator in settlement of securities transactions.
(b) To require the SDC and
members of the SDC to comply with their undertakings on payment as made between
the parties and to supply the information necessary in order to conduct
settlement of transactions.
(c) To collect fees for the
provision of services in accordance with law.
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(a) To make full payment on time
for securities transactions conducted on the Stock Exchange or a Securities
Trading Centre.
(b) To provide monetary
assistance to members of the SDC when the members lack funds to conduct
settlement of securities as stipulated by law.
(c) To sign contracts on the
principle of ensuring that borrowing members will have the funds to conduct
settlement of securities transactions. The clauses in these contracts shall be
written on the principles applicable to credit loans, ensuring fairness as
between members.
(d) To comply with the regimes
on information and reporting and on confidentiality of information in
accordance with current laws.
(e) To ensure they have the
technical and material facilities and the staff necessary in order to ensure
monetary payment so as to settle securities transactions.
Chapter
VIII
RIGHTS AND OBLIGATIONS
OF RELEVANT PARTIES
Article 47.
Rights and obligations of issuing organizations:
1. To comply with the law and
regulations on registration of securities and to exercise rights of holders of
securities which have been registered at the SDC.
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3. To supply to the SDC
information and other necessary data, promptly and accurately, to enable
registration of securities to be conducted and to enable the exercise of rights
as stipulated or on receipt of a written request from the SDC. To be wholly liable
for the contents of information supplied to the SDC.
4. To be liable for losses
caused to the SDC and to securities holders, except in cases of force majeure.
5. To pay fees for services
provided by the SDC in accordance with regulations of the Ministry of Finance.
6. Other rights and obligations
as stipulated by the SDC.
Article 48.
Rights and obligations of [depository] members of the SDC:
1. To comply with the rights and
obligations stipulated in clauses 2 and 3 of article 47 of the Law on Securities.
2. Other rights and obligations
as stipulated by law and by the rules of the SDC.
Article 49.
Rights and obligations of the SDC:
The SDC shall have the rights
and obligations stipulated in articles 45 and 46 of the Law on Securities.
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REPORTING REGIME
Article 50.
Periodical reporting
1. Each month, the SDC must
provide to the SSC a report on the securities depository operation of the SDC,
and including a report on the ownership status of foreign investors in
accordance with Appendices 5 to 12 inclusive issued with these Regulations.
2. Each month, members of the
SDC must send the SDC a report on their securities depository operation in
compliance with the provisions in the rules of the SDC on registration,
depository, clearing and settlement of securities.
3. On a monthly, quarterly and
annual basis, paying banks must report to the SSC on the clearing and
settlement operation of such paying bank in accordance with the standard form
set out in Appendix 13 to these Regulations.
4. The time-limits for providing
the above-mentioned reports shall be regulated as follows:
(a) Monthly reports shall be
sent to the SSC within the first ten (10) days of the following month.
(b) Quarterly reports shall be
sent to the SSC within the first twenty (20) days of the first month of the
following quarter.
(c) Annual reports shall be sent
to the SSC within the first ninety (90) days of the following year.
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Article 51.
Extraordinary reports
1. The SDC must report to the
SSC within 24 hours of occurrence of the following events:
(a) A file or data relating to
any operation being registration, depository, clearing or settlement of
securities is lost.
(b) Any operation being
registration, depository, clearing or settlement of securities is frozen
partially or wholly.
(c) On the discovery of forged
securities.
2. A depository member must
notify the SSC no later than 24 hours after changing the member of the Board of
Executives who is responsible for the securities depository operation of such
depository member.
3. A paying bank must
immediately notify the SSC and the SDC if its settlement operation is frozen
partially or wholly.
Article 52.
Providing reports pursuant to a request
1. In addition to the cases
requiring periodical and extraordinary reports as stipulated in articles 50 and
51 of these Regulations, in necessary cases in order to protect the general
interest and the interests of investors, the SSC may request the SDC,
depository members or paying banks to provide a report on such entity's
securities registration, depository, clearing and settlement operations.
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Chapter X
INSPECTIONS,
SUPERVISION, AND DEALING WITH BREACHES
Article 53.
Inspections and supervision
1. Depository members and their staff
shall be subject to supervision by the SDC, and shall also be subject to
inspection and supervision by the SSC consistent with current laws.
2. The SDC and paying banks
shall be subject to inspection and supervision by the SSC, consistent with
current laws.
Article 54.
Dealing with breaches by members
The SDC may apply the following
forms in dealing with breaches by members, depending on the level of the breach
of the professional rules of the SDC:
1. Written reminder.
2. Warning and announcement on the
website of the SDC.
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4. Rescission of certificate of
membership, or of certificate of depository membership of a branch.
Article 55.
Dealing with breaches
Any breach of the provisions in
these Regulations shall be dealt with in accordance with current laws.
Chapter
XI
ORGANIZATION OF
IMPLEMENTATION
Article 56.
Implementing provision
1. A Securities Depository
Centre shall provide specific rules on the order and procedures for
registration, depository, clearing and settlement of securities, consistent
with these Regulations.
2. The Minister of Finance shall
make a decision on any amendments or additions to these Regulations.