Announcing new clearing and settlement regulations, removing the "pre-funding" bottleneck for foreign organizations

The regulations on clearing and settlement of securities transactions at the Vietnam Securities Depository and Clearing Corporation have been renewed, preparing for the trading session on November 4 when Circular 68 officially takes effect.

Announcing new clearing and settlement regulations, removing the "pre-funding" bottleneck for foreign organizations

The regulations on clearing and settlement of securities transactions at the Vietnam Securities Depository and Clearing Corporation have been renewed, preparing for the trading session on November 4 when Circular 68 officially takes effect.

Foreign institutional investors can make stock purchases without having to have sufficient funds when placing orders from the trading session on November 4.

The Board of Members of Vietnam Securities Depository and Clearing Corporation (VSDC) recently signed Decision No. 48/QD-HDTV on promulgating the Regulations on clearing and settlement of securities transactions at VSDC, replacing the Regulations on clearing and settlement of securities transactions at VSDC issued together with Decision No. 15/QD-HDTV dated August 10, 2023.

The new regulations were issued to amend and supplement the securities transaction payment process to meet the regulations on allowing foreign institutional investors to purchase shares without requiring sufficient funds when placing orders in Circular No. 68/2024/TT-BTC as well as to make the content of the regulations more complete and stricter.

According to the new content of the Regulation, foreign investors who are organizations can make transactions to buy shares without requiring sufficient funds when placing orders (referred to as foreign institutional investors) according to the provisions of Article 9a of Circular No. 120/2020/TT-BTC amended and supplemented by Circular No. 68/2024/TT-BTC.

No later than 16:30 on T+1 , the depository member (TVLK) confirms the ability to ensure/not ensure the ability to pay for stock purchase transactions that do not require sufficient funds when placing orders of foreign institutional investors (FIIs); confirms sufficient funds/insufficient funds to pay for securities transactions for the payment obligations of TVLK to the remaining customers.

In case of confirmation of insufficient funds for payment/inability to ensure payment, no later than 17:00 on T+1 , TVLK is responsible for sending VSDC a notice of insufficient funds/list of PR investor accounts that do not ensure payment.

In case the investor lacks payment, no later than 09:30 on T+2, the securities company (for investors opening a depository account at a securities company), the custodian bank (for investors opening a depository account at a custodian bank) shall send VSDC a written notice requesting/refusing payment and transferring the transaction lacking money to the proprietary account of the securities company (SC) where the investor places the order for clearing and payment.

VSDC shall not transfer payment obligations in cases where the depository member fails to send or sends a request for transfer of payment obligations/notice of refusal to pay for a transaction with insufficient funds in the wrong form or not within the time limit prescribed in the regulations and shall be handled as for transactions with insufficient funds not of the investor. Specifically, according to Circular 120/2020/TT-BTC, for transactions with delayed payment due to insufficient funds, VSDC shall transfer all securities in the sale transaction corresponding to the purchase transaction with insufficient funds to the investor's pending payment account on the selling side.

In addition to the revised payment flowchart to comply with the new regulations in Circular No. 68/2024/TT-BTC, the new regulations also amend and supplement the regulations on post-transaction error correction records. In which, the Order Slip is replaced by Order Proof. In case the securities company does not receive orders directly, it must prepare a document showing the customer's order information with information such as Investor's name, order account number, securities code, type of buy/sell order, quantity and price of order, form of order, time of order receipt (day, hour, minute). The securities company where the investor places the order prepares, signs and is responsible for the accuracy and honesty of the content of the document.

The new regulation adds a method of sending scanned documents via email (from the TVLK email registered with VSDC to VSDC's email) for documents on post-transaction error correction, error handling, payment deadline extension, payment capacity confirmation, and payment obligation transfer. This is to help coordinate the processing of business operations more conveniently and quickly. TVLK sends the original to VSDC within 3 consecutive working days thereafter.

The above regulations on clearing and settlement of securities transactions shall take effect from November 2, 2024. Clearing and settlement activities for securities transactions established on the securities trading system before the effective date of these regulations shall be implemented according to the new regulations.

Circular 68/2024/TT-BTC was issued by the Ministry of Finance on September 18, 2024, amending and supplementing a number of articles of circulars regulating securities transactions on the securities trading system; clearing and settlement of securities transactions; operations of securities companies and information disclosure on the stock market. This is a circular that directly removes the bottleneck related to the ability of foreign institutional investors to purchase shares without requiring sufficient funds (Non Pre-funding solution - NPS) and officially provides a roadmap for information disclosure in English.

The changes in the Circular are considered an important step to remove the "bottleneck" to meet the standards for upgrading the stock market from frontier to secondary emerging according to FTSE Russell criteria. After 45 days of promulgation, Circular 68/2024/TT-BTC took effect from November 2.

Source: https://baodautu.vn/cong-bo-quy-che-bu-tru-va-thanh-toan-moi-go-nut-that-pre-funding-cho-to-chuc-ngoai-d229079.html