Circular No. 11/2016/TT-BTC guiding certain provisions of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 on derivative securities and the derivative securities market

MINISTRY OF FINANCE -------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------------
Number: 11/2016/TT-BTC	Hanoi, January 19, 2016

 

CIRCULAR

GUIDELINES FOR CERTAIN PROVISIONS OF THE GOVERNMENT DECREE NO. 42/2015/NĐ-CP OF MAY 5, 2015 ON DERIVATIVE SECURITIES AND DERIVATIVE SECURITIES MARKETS

Pursuant to the Securities Law dated June 29, 2006;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Securities Law dated November 24, 2010;

Pursuant to Government Decree No. 58/2012/NĐ-CP dated July 20, 2012, detailing and guiding the implementation of certain provisions of the Securities Law and the Law Amending and Supplementing Certain Provisions of the Securities Law;

Pursuant to Government Decree No. 60/2015/NĐ-CP dated June 26, 2015, amending and supplementing certain provisions of Government Decree No. 58/2012/NĐ-CP dated July 20, 2012, detailing and guiding the implementation of certain provisions of the Securities Law and the Law Amending and Supplementing Certain Provisions of the Securities Law;

Pursuant to Decree No. 42/2015/NĐ-CP dated May 5, 2015 of the Government on derivative securities and the derivative securities market;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013, promulgated by the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Chairman of the State Securities Commission;

The Minister of Finance issues this Circular guiding certain provisions of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 on derivative securities and derivative securities markets.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular guides certain provisions of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 on derivative securities and derivative securities markets, including:

a) Derivative securities products include: stock index futures contracts, government bond futures contracts;

b) Market activities for derivative securities include: trading, clearing, settlement of derivative securities transactions;

c) Activities of derivative securities business organizations, clearing members, trading members, market makers.

2. The subjects to which this Circular applies include:

a) Stock exchange;

b) Central Depository Corporation;

c) Derivative securities business organization;

d) Service provider for clearing and settlement of derivative securities transactions;

e) Clearing member, trading member, market maker;

f) Investors and related organizations and individuals.

Article 2. Interpretation of Terms

In addition to terms already defined in Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 on derivative securities and derivative securities markets (hereinafter referred to as Decree No. 42/2015/NĐ-CP), in this Circular, the following terms shall be understood as follows:

1. Netting is the process of determining net positions to calculate financial obligations of parties involved in transactions.

2. Offset Transaction is the opening of a new buy (or sell) position to reduce a previously opened sell (or buy) position.

3. Reference price is the price determined by the Stock Exchange and used as the basis for determining the highest price (ceiling price) and the lowest price (floor price) within a trading day.

4. Settlement Price (is the matched trade price of futures contracts between investors through the stock exchange's trading system.Daily Settlement Price

5. is the price determined at the end of each trading day to calculate daily gains or losses of open positions. (Final Settlement Priceis the price determined on the last trading day to determine payment obligations when fulfilling contracts.

6. Margin Value (includes the balance on the margin deposit account and the value of the collateral security portfolio determined based on market prices and discount rates according to the rules of the Central Depository Corporation.Broker Client

7. is an investor who conducts derivative securities transactions through the brokerage activities of a trading member. Clearing and Settlement Client

8. is a trading member that does not clear and the broker clients of this member who have entrusted clearing and settlement of derivative securities transactions to a designated clearing member. Open Interest

9. of a derivative security at a point in time is the volume of derivative securities still outstanding at that time, which has not been liquidated or settled. Margin Deposit

10. is the act of a party with obligations depositing a sum of money or acceptable collateral to ensure the obligation to settle derivative securities transactions. Initial Margin Deposit

11. is the margin deposit made before executing a derivative securities transaction. Maintenance Margin Requirement

12. is the minimum margin value that a party with obligations must maintain and is calculated by the Central Depository Corporation for the number of derivative securities on a trading account. Cash Margin Ratio

13. is the ratio between the value of cash margin and the total value of required margin. Stock Index Futures Contract

14. (hereinafter referred to as stock index futures) is a futures contract based on an underlying asset being a stock index. Government Bond Futures Contract

15. is a futures contract based on an underlying asset being a government bond or a hypothetical bond with certain basic characteristics of a government bond. Clearing and Settlement Agreement

16. is an agreement between a clearing member and the Central Depository Corporation to perform clearing and settlement activities for derivative securities transactions under the name of the clearing member with the Central Depository Corporation. Derivative Securities Trading Settlement Bank

17. (hereinafter referred to as settlement bank) is a commercial bank managing the margin deposit accounts of the Central Depository Corporation and serving the settlement of funds for derivative securities transactions where the Central Depository Corporation is the central counterparty. Trading Account

18. is an account opened at a trading member to conduct derivative securities transactions for clients. Margin Account

19. is an account opened for investors and clearing members to manage margin assets and underlying assets for transfer, daily profit and loss accounting, and contract execution. Derivative Securities Business Organization

20. is a securities business organization licensed to operate derivative securities; commercial banks, foreign bank branches licensed to provide clearing and settlement services for derivative securities transactions. Contract Execution

21. is the performance by the parties to a futures contract of purchasing or selling the underlying asset or settling the difference between the daily settlement price and the settlement price, final settlement price according to the terms of the contract and the rules of the Central Depository Corporation. Clearing Member Position

22. includes the position of the investor and the position of the clearing member, specifically as follows: is the act of the parties participating in futures contract transactions executing the purchase or sale of the underlying asset or settling the difference between the end-of-day settlement price and the settlement price according to the terms of the contract and the regulations of the Securities Depository Center.

23. Position in the name of the clearing member includes the position of the investor and the position of the clearing member, specifically as follows:

a) Position in spot transactions and market-making transactions (if any) of the clearing member;

b) Position of the clearing member's brokerage clients;

c) Position of the clearing member's client accounts for clearing and settlement.Supplement

Chapter II

DERIVATIVE SECURITIES PRODUCTS

Article 3. Futures Contract on Index

1. The underlying asset of the futures contract on index is the stock index (hereinafter referred to as the base index), designed by the Stock Exchange based on principles for constructing and managing indices issued by the Stock Exchange after being approved by the Securities Commission.

2. Upon maturity, the futures contract on index shall be settled in cash according to the regulations promulgated by the Securities Depository Center after being approved by the Securities Commission.

Article 4. Futures Contract on Government Bonds

1. The underlying asset of the futures contract on government bonds is:

a) Government bonds traded on the market; or

b) A hypothetical government bond with certain basic characteristics of government bonds. The Securities Commission establishes the basic characteristics of government bonds, designs the hypothetical bond, and reports to the Ministry of Finance for approval before implementation.

2. Upon maturity, the futures contract on government bonds shall be settled in cash or by transferring the underlying asset according to the regulations of the Securities Depository Center. The method of settlement must be clearly specified before listing.

3. The Stock Exchange cooperates with the Securities Depository Center to determine and publish on their websites:

a) A list of bonds that can be transferred, principles for determining and conversion factors for each bond (for futures contracts on government bonds settled by transferring the underlying asset);

b) A list of bonds used to determine the final settlement price, principles for determining and weightings of each bond in the list (for futures contracts on government bonds settled in cash).

4. The determination and publication of information about the bonds stipulated in Clause 3 of this Article shall be carried out according to the regulations of the Stock Exchange and the Securities Depository Center. The Stock Exchange cooperates with the Securities Depository Center to determine the final date for closing the list of bonds that can be transferred or used to determine the final settlement price. After that date, the Stock Exchange and the Securities Depository Center may not adjust the aforementioned lists of bonds.

Article 5. Listing and Organizing Derivative Securities Trading

1. The Stock Exchange cooperates with the Securities Depository Center to determine the contents of derivative securities according to point a, b Clause 2 Article 6 of Decree No. 42/2015/NĐ-CP; implements the listing and organization of derivative securities trading after obtaining approval from the Securities Commission in accordance with the law.

2. The Stock Exchange may temporarily suspend trading of one or several types of derivative securities or temporarily suspend trading of all derivative securities on the market when any of the following situations occur:

a) The value of the underlying asset cannot be determined due to the suspension of trading in the underlying market;

b) The underlying security is suspended from trading;

c) An unforeseen event such as natural disasters, fire, or technical failures in the trading system, clearing system, or settlement system occurs;

d) Other cases according to the regulations of the Stock Exchange.

3. The Stock Exchange shall disclose information within twenty-four (24) hours from the occurrence of the event leading to the temporary suspension of trading. Trading activities must be restored immediately within twenty-four (24) hours from when the events causing the temporary suspension have been resolved.

4. In case errors occur during trading on the market, the correction of trading errors shall be carried out according to the regulations of the Stock Exchange and the Securities Depository Center. If the correction of errors leads to exceeding position limits, the trading members and clients must execute offsetting transactions on the next trading day to reduce positions according to the regulations of the Securities Depository Center.

Chapter III

TRADING AND SETTLEMENT OF DERIVATIVE SECURITIES

Article 6. Securities Derivatives Trading Activities

1. To conduct securities derivatives trading, investors must open a securities derivatives trading account with a trading member and a margin account with a designated clearing member. In cases where an investor already has a regular securities trading account opened at a securities company that is also a securities derivatives trading member, the investor may use such trading account to conduct securities derivatives trading after opening a margin account with a designated clearing member.

2. Investor trading activities shall be carried out as follows:

a) Investors' trading orders are matched with each other on the stock exchange's trading system. After the order is matched, the investor is considered to have entered into a securities derivatives contract and is fully responsible for fulfilling all obligations arising from the contract;

b) Prior to placing a trading order, during the holding period, and when executing the contract, the investor must ensure the maintenance margin level according to the requirements of the clearing member, in compliance with the provisions of this Circular;

c) The investor must maintain their position within the position limit set by the Securities Depository Center's regulations. If the position exceeds the limit, the investor is responsible for conducting offsetting transactions to reduce the position, and to supplement margin (if necessary) within the time frame stipulated by the Securities Depository Center's regulations.

Article 7. Investor Trading Accounts

1. Investors must sign a contract to open a securities derivatives trading account with a trading member. Foreign investors must register a securities trading code in accordance with the laws governing foreign investment activities in the securities market before opening a securities derivatives trading account.

2. Investors may open multiple securities derivatives trading accounts based on the principle that only one (01) trading account can be opened at each trading member, corresponding to each trading account, the investor may open a margin account with a designated clearing member in accordance with the provisions of Article 8 of this Circular. A fund management company may open one securities derivatives trading account for each entrusted investor named after the company at a trading member.

3. A securities company with a certificate of eligibility for proprietary securities derivatives trading but not a securities derivatives trading member may open a trading account at a trading member and a margin account with a designated clearing member to invest in securities derivatives in accordance with this Circular. A securities company established abroad may open one (01) account for proprietary securities derivatives trading activities and one (01) account for securities derivatives brokerage activities for other foreign investors.

Article 8. Investor Margin Accounts

1. The clearing member opens a separate deposit margin account at a bank and a securities margin account for each investor to manage collateral assets and fulfill payment obligations for positions on the investor's trading account. Non-clearing members and clients of non-clearing members open a securities margin account at a common clearing member.

2. An investor's deposit margin account and securities margin account may only be used for the following activities:

a) Receiving and returning collateral assets to the investor;

b) Receiving daily interest or paying daily losses from the investor's position; making payments upon contract execution; receiving bank deposit interest payments at agreed rates between the clearing member and the bank;

c) Receiving or transferring underlying assets when executing the contract (in cases of settlement through underlying asset transfer) for the investor's position.

3. When conducting securities derivatives trading, the investor must deposit margin with the clearing member as follows:

a) The investor is responsible for submitting full initial margin for the entire anticipated position to be opened with the clearing member prior to trading, except for offsetting transactions;

b) The investor must maintain margin for their position and must top up margin when the value of the collateral assets falls below the required maintenance margin level or the deposit margin balance does not meet the required maintenance margin ratio in cash as stipulated by the clearing member. Depending on market conditions, the clearing member may require the investor to top up margin during the trading session (intra-day margin);

c) The investor may withdraw excess collateral assets if the value of the collateral assets exceeds the required maintenance margin level specified by the clearing member;

d) When submitting initial margin or topping up margin, the clearing member may require the investor to deposit margin entirely in cash or allow the investor to use part of the collateral assets as securities according to the cash margin ratio specified by the clearing member but not lower than the cash margin ratio stipulated by the Securities Depository Center's regulations.

4. Securities selected by the clearing member to allow investors to submit as collateral assets must meet the following criteria:

a) They must be securities included in the list of acceptable collateral securities published by the Securities Depository Center pursuant to Article 22 of this Circular;

b) They must not be collateral assets in transactions governed by civil law regarding collateral transactions, including shares purchased in margin trading; they must not be assets currently frozen by state management organizations in accordance with relevant laws or not be assets currently being lent out under applicable laws;

c) They must meet other criteria set by the clearing member.

Article 9. Settlement activities of investors

1. Derivatives securities trading settlement activities include position profit and loss settlement and contract execution settlement, specifically as follows:

a) In the case of position profit and loss settlement: The value of the position profit and loss settlement amount is determined daily based on open positions on the investor's trading account and the difference between the end-of-day settlement price compared to the end-of-day settlement price of the previous trading day; or compared to the settlement price (for newly opened positions within the day); or the difference between the transaction price and the end-of-day settlement price of the previous trading day (for early position closure cases). Among these prices, they are published on the electronic information website of the Securities Exchange.

b) In the case of settlement upon contract performance:

- For settlement contracts in the form of cash: Investors receive profit amounts or pay loss amounts, determined based on the number of executed contracts and the difference between the final settlement price and the end-of-day settlement price of the previous trading day;

- For settlement contracts in the form of transferring underlying assets: The selling investor must transfer the underlying asset and the buying investor must make payment according to the terms stipulated in the contract.

2. Settlement is conducted through the investor’s margin deposit account and margin securities account. Settlement activities are carried out by the Securities Depository Center and clearing members in accordance with the provisions of Article 19 of this Circular.

Chapter IV

ORGANIZATIONS ENGAGING IN AND PROVIDING DERIVATIVES SECURITIES SERVICES

Section 1. ORGANIZATIONS ENGAGING IN DERIVATIVES SECURITIES

Article 10. Registration for derivatives securities business

1. Securities organizations may engage in derivatives securities business after being granted a Certificate of Eligibility for Derivatives Securities Business by the State Securities Commission. Conditions for obtaining a Certificate of Eligibility for Derivatives Securities Business include:

a) Being a securities organization that meets the conditions specified in Clause 1 of Article 4 of Decree No. 42/2015/NĐ-CP;

b) Fully establishing reserve funds as prescribed and not having losses in the two (02) most recent years; the available capital ratio must continuously reach at least 220% over the twelve (12) months immediately preceding the month of submitting the application for the Certificate of Eligibility for Derivatives Securities Business;

c) Annual financial statements of the most recent fiscal year have been audited and semi-annual financial statements of the most recent period have been reviewed by an approved auditing organization. The audit opinion on these financial statements must be unqualified, with no exceptions or qualifications.

2. Documents for applying for a Certificate of Eligibility for Derivatives Securities Business include:

a) An application for a Certificate of Eligibility for Derivatives Securities Business in accordance with the guidelines of the State Securities Commission;

b) Minutes of meetings, Resolutions of the Shareholders' Meeting, Board of Directors, or Decisions of the owner regarding the implementation of derivatives securities business;

c) Valid documents proving that the securities organization meets the requirements stipulated in Clause 1 of this Article;

d) A list attached to the file of personal information of the General Director (Managing Director), Deputy General Director (Deputy Managing Director) responsible for operations and staff for each derivatives securities business activity in accordance with the guidelines of the State Securities Commission;

đ) Business processes, internal control procedures, risk management procedures applicable to planned derivatives securities activities;

e) A presentation on technical infrastructure, information technology infrastructure with appropriate systems (trading system; settlement, payment system) for derivatives securities business and service operations.

3. The documents as stipulated in Clause 2 of this Article shall be prepared in one (01) original set accompanied by an electronic information file. The original set of documents shall be directly submitted to the State Securities Commission or sent via postal service.

4. Within fifteen (15) days from the date of receiving complete valid documents as stipulated in Clauses 2 and 3 of this Article, the State Securities Commission shall issue a Certificate of Eligibility for Derivatives Securities Business. In case of refusal, the State Securities Commission must provide a written response stating the reasons.

5. After the State Securities Commission issues a Certificate of Eligibility for Derivatives Securities Business, the securities organization is responsible for amending and supplementing relevant provisions related to derivatives securities business in the Company Charter and submit it to the State Securities Commission after approval by the most recent Shareholders' Meeting, Board of Directors, or owner.

Article 11. Suspension and Termination of Derivative Securities Business Operations

1. The State Securities Commission shall decide to suspend for a maximum period of twelve (12) months one or more derivative securities business operations in cases as prescribed in Clause 1, Article 5 of Decree No. 42/2015/NĐ-CP.

2. A derivative securities business organization may only resume its business operations after having remedied all actions leading to suspension of its activities. In case such actions cannot be remedied within the suspension period, the derivative securities business organization shall be compelled to terminate its derivative securities business operations.

3. A derivative securities business organization shall terminate its derivative securities business operations when its Certificate of Eligibility for Derivative Securities Business is revoked. Such revocation shall be carried out in cases as prescribed in Clause 2, Article 5 of Decree No. 42/2015/NĐ-CP.

4. In the event of voluntary termination of operations, the derivative securities business organization must submit a request for termination of derivative securities business operations. The dossier shall include the following documents:

a) An application for termination of derivative securities business operations in accordance with the guidelines of the State Securities Commission;

b) Minutes of meetings, Resolutions of the Shareholders' General Meeting, Board of Members, or Owner's Decision regarding the termination of derivative securities business operations and approval of plans to address related issues;

c) Plans to handle outstanding derivative securities business contracts, including plans to deal with customer margin accounts and collateral.

5. The dossier as prescribed in Clause 4 of this Article shall be established in one (01) original copy accompanied by an electronic information file. The original dossier shall be directly submitted to the State Securities Commission or sent via postal service.

6. Within fifteen (15) days from the date of receipt of a complete and valid dossier, the State Securities Commission shall issue a document permitting the termination of derivative securities business operations. In case of refusal, the State Securities Commission must respond in writing and specify the reasons.

7. A derivative securities business organization shall be compelled to terminate its derivative securities business operations in cases as prescribed in Clause 4, Article 5 of Decree No. 42/2015/NĐ-CP.

8. Within thirty (30) days from the date the derivative securities business organization is compelled to terminate its derivative securities business operations as prescribed in Clause 7 of this Article, the State Securities Commission shall issue a document requiring the derivative securities business organization to proceed with the procedures for terminating its derivative securities business operations.

9. From the date of receipt of the document of the State Securities Commission as prescribed in Clauses 1, 6, and 8 of this Article:

a) Within twenty-four (24) hours, the derivative securities business organization shall be responsible for disclosing information on the suspension and termination of derivative securities operations; plans, deadlines, and schedules for handling outstanding contracts. The processing period must ensure that investors have a minimum of forty-five (45) days to manage their positions and transfer margin assets, but not exceeding sixty (60) days from the date of disclosure;

b) Within five (05) days, the derivative securities business organization shall notify each of its customers about the plan to handle contracts with them.

10. During the suspension period and while implementing the termination procedures, the derivative securities business organization shall be responsible for:

a) Implementing activities as prescribed in Clause 5, Article 5 of Decree No. 42/2015/NĐ-CP;

b) Ceasing proprietary trading of derivatives, except for offset transactions; ceasing execution of market-making transactions (if applicable);

c) Not entering into new derivative securities business contracts. For existing derivative securities business contracts still in effect:

- Cease accepting and executing client orders, except for offset transactions; cease accepting client margin deposits, except for additional margin deposits;

- Reconcile balances, settle client accounts; liquidate positions and return margin deposits to clients; negotiate, transfer rights, responsibilities, obligations, and margin accounts to replacement members. In the case where a derivative securities business organization is suspended, it must only implement this provision upon client request;

- Execute transactions at the request of the Securities Depository Center, Stock Exchange to reduce client positions.

d) Pay all outstanding taxes; continue paying off debts.

11. Within five (05) days from the end of the period for completing the termination procedures of derivative securities business operations, the derivative securities business organization shall submit a report dossier to the State Securities Commission, including the following documents:

a) A list of customers with full identification information, transaction account numbers, margin account numbers, and collateral asset portfolios on each account; reasons for inability to settle and handle remaining accounts (if not resolved);

b) Liquidation minutes, confirmed by the replacement clearing member, and documentation confirming the completion of transferring all customer accounts and margin assets (if applicable) to the replacement member;

c) Decision to withdraw membership status from the Stock Exchange (for trading members) and the Securities Depository Center (for clearing members).

12. Within ten (10) days from the date of receipt of the report dossier as prescribed in Clause 11 of this Article, the State Securities Commission shall issue a document permitting the termination of derivative securities business operations or make a decision to revoke the Certificate of Eligibility for Derivative Securities Business. In case of refusal, the State Securities Commission must respond in writing and specify the reasons.

13. Members of the Board of Directors or Board of Members, shareholders of the company, General Director or Managing Director, and the legal representative of derivative securities trading organizations shall be responsible for the truthfulness and accuracy of the application documents to terminate operations and the reports on the results of terminating derivative securities trading activities. In cases where the documents are inaccurate or fraudulent, these individuals shall jointly bear responsibility for paying off outstanding debts, unpaid taxes, and unresolved employee benefits, and shall individually bear legal responsibility for any consequences arising within five (05) years from the date of submission of the documents specified in Clause 11 of Article 13 of this Decree to the Securities Commission.

Section 2. ORGANIZATIONS PROVIDING SETTLEMENT AND CLEARING SERVICES FOR DERIVATIVE SECURITIES TRANSACTIONS

Article 12. Registration for Providing Settlement and Clearing Services for Derivative Securities Transactions

1. Securities companies, commercial banks, and foreign bank branches providing settlement and clearing services for derivative securities transactions must have been granted a Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions by the Securities Commission. The conditions for obtaining such a certificate include:

a) Meeting the requirements stipulated in Clause 2 of Article 4 of Decree No. 42/2015/NĐ-CP and at Point c of Clause 1 of Article 10 of this Circular;

b) Meeting the financial safety ratio after:

- For securities companies: fully establishing all required reserves according to regulations and not having losses in the two (02) most recent years; maintaining a minimum available capital ratio of 260% continuously for the twelve (12) months immediately preceding the month of submitting the application for the Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions;

- For commercial banks and foreign bank branches: meeting the capital adequacy ratio prescribed by laws on credit institutions for the twelve (12) months immediately preceding the month of submitting the application for the Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions.

2. The application documents for the Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions shall include:

a) An application form for the Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions in accordance with the guidelines of the Securities Commission;

b) Minutes of meetings, Resolutions of the Shareholders' Meeting, Board of Members, or Decisions of the owner regarding the implementation of the provision of settlement and clearing services for derivative securities transactions;

c) Valid documents proving that the securities company, commercial bank, or foreign bank branch meets the requirements set forth in Clause 1 of this Article;

d) Business processes, internal control procedures, and risk management procedures applicable to the provision of settlement and clearing services for derivative securities transactions planned to be implemented;

đ) A presentation on technical infrastructure, information technology infrastructure, and systems suitable for the provision of settlement and clearing services for derivative securities transactions (settlement and clearing systems).

3. The documents as stipulated in Clause 2 of this Article shall be prepared in one (01) original set accompanied by an electronic information file. The original set of documents shall be directly submitted to the State Securities Commission or sent via postal service.

4. Within fifteen (15) days from the date of receiving complete and valid application documents as stipulated in Clauses 2 and 3 of this Article, the Securities Commission shall issue the Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions. In case of rejection, the Securities Commission must provide a written response stating the reasons.

5. After the Securities Commission issues the Certificate of Eligibility to Provide Settlement and Clearing Services for Derivative Securities Transactions, the securities company and commercial bank shall be responsible for amending and supplementing relevant provisions in their company charters and bank regulations concerning derivative securities activities and submit them to the Securities Commission after they have been approved by the most recent Shareholders' Meeting, Board of Members, or owner.

Article 13. Suspension and Termination of Derivatives Securities Settlement and Transaction Services

1. The State Securities Commission decides to suspend for a maximum period of twelve (12) months the provision of derivatives securities settlement and transaction services in the following cases:

a) The application file for the issuance of a Certificate of Eligibility for Providing Derivatives Securities Settlement and Transaction Services contains forged documents or false information;

b) Conducting activities contrary to their purpose or not in accordance with the activities approved under the Certificate of Eligibility for Providing Derivatives Securities Settlement and Transaction Services;

c) Failing to comply with the provisions set out in point a, đ Clause 2, Article 4 of Decree No. 42/2015/NĐ-CP;

d) Failing to comply with the provisions set out in point c Clause 2, Article 4 of Decree No. 42/2015/NĐ-CP for six (06) consecutive months;

đ) Failing to meet financial safety and capital safety indicators as stipulated in point b Clause 1, Article 12 of this Circular for six (06) consecutive months.

2. A service provider of derivatives securities settlement and transaction services may only resume providing such services after fully rectifying all actions that led to the suspension of operations. If unable to rectify these actions within the suspension period, the service provider must cease providing derivatives securities settlement and transaction services.

3. A service provider of derivatives securities settlement and transaction services ceases providing such services upon revocation of the Certificate of Eligibility for Providing Derivatives Securities Settlement and Transaction Services. Revocation occurs in the following circumstances:

a) Voluntary cessation of operations;

b) Forced cessation of operations.

4. In the case of voluntary cessation of operations, the service provider of derivatives securities settlement and transaction services must submit an application for cessation of operations. The application includes the following documents:

a) An application for cessation of operations in accordance with the guidelines of the State Securities Commission;

b) Minutes of meetings, Resolutions of the Shareholders' Meeting, Board of Members, or Decisions of the owner regarding the cessation of operations and approval of measures to address related issues;

c) Measures to handle existing valid service provision contracts, including measures to handle customer accounts and collateral.

5. The dossier as prescribed in Clause 4 of this Article shall be established in one (01) original copy accompanied by an electronic information file. The original dossier shall be directly submitted to the State Securities Commission or sent via postal service.

6. Within fifteen (15) days from receipt of a complete and valid application, the State Securities Commission issues a document permitting the cessation of operations. In case of rejection, the State Securities Commission must provide a written response detailing the reasons.

7. A service provider of derivatives securities settlement and transaction services must cease operations in the following circumstances:

a) After the suspension period, still failing to rectify violations leading to the suspension;

b) Dissolution, bankruptcy, temporary cessation of operations, or revocation of establishment and operation licenses; or revocation of the central bank's approval for settlement and transaction services (for commercial banks and foreign bank branches); or revocation of the Certificate of Eligibility for Derivatives Securities Brokerage Activities or the Certificate of Eligibility for Providing Derivatives Securities Settlement and Transaction Services by the State Securities Commission; or division or separation where the entity formed after division or separation does not meet one of the business conditions specified in Clause 2, Article 4 of Decree No. 42/2015/NĐ-CP.

8. Within thirty (30) days from the date the service provider of derivatives securities settlement and transaction services is required to cease operations according to Clause 7 of this Article, the State Securities Commission issues a document requiring the service provider to proceed with the cessation procedures.

9. Service providers subject to suspension or termination must implement and apply relevant provisions as stipulated in Clause 9, Clause 10, and Clause 13, Article 11 of this Circular.

10. Within five (05) days from the end of the cessation procedure period, the service provider of derivatives securities settlement and transaction services submits a report to the State Securities Commission on the results of handling, including the following documents:

a) A list of customers with full identification information, trading accounts, collateral accounts, and collateral asset portfolios, positions on each account; reasons for inability to settle or process remaining accounts (if not yet resolved);

b) Liquidation minutes, confirmed by the substitute clearing member, and evidence of the completion of transferring all customer accounts and collateral (if applicable) to the substitute member;

c) Decision to revoke the status of a clearing member of the Securities Depository Center.

11. Within ten (10) days from the date of receiving the report file as prescribed in Clause 10 of this Article, the Securities Commission shall issue a document to terminate the provision of securities margin trading and settlement services or make a decision to revoke the Certificate of Eligibility for Providing Securities Margin Trading and Settlement Services. In case of refusal, the Securities Commission must provide a written response stating the reasons.

Section 3. ACTIVITIES OF TRADING MEMBERS AND STOCK EXCHANGE

Article 14. Rights and Obligations of Trading Members

1. Non-margin trading members must enter into a mandate agreement for margin trading and settlement with a common clearing member. The contract must include contents as guided by the Securities Commission. The finalization, transfer of margin deposits, and position transfers upon changing the common clearing member shall be carried out according to the regulations of the Securities Depository Center.

2. Trading members must enter into a contract to open trading accounts with customers. The content of the contract shall be implemented according to the guidance of the Securities Commission.

3. Trading members have the responsibility to regularly reconcile, review, update, and provide complete and timely information about transactions and other relevant information to the common clearing member. All information about investors and their trading accounts must be provided fully and promptly to the Securities Commission, the Securities Depository Center, and the Stock Exchange upon written request.

4. Trading members may not open trading accounts for the following customers:

a) Individuals under eighteen (18) years old;

b) Individuals without full civil capacity, currently serving a prison sentence, or prohibited from engaging in business activities by a court;

c) Directors (General Managers), Deputy Directors (Deputy General Managers), heads of departments, and other employees of trading members.

5. When discovering that a customer has opened a trading account under any of the circumstances stipulated in Clause 4 of this Article, the trading member must immediately stop accepting trading orders from such customer, except for offsetting transactions, and close the customer's account immediately after completing the liquidation of the customer's positions.

6. In the event that a clearing member or customer loses their ability to pay, at the request of the Stock Exchange, the Securities Depository Center, or the Securities Commission, the trading member shall be responsible for:

a) Stopping the acceptance and execution of trading orders from the clearing member or customer who has lost their ability to pay, except for offsetting transactions;

b) Carrying out other activities as required by the Securities Commission, the Stock Exchange, and the Securities Depository Center.

7. Implementing other rights and obligations as prescribed in Clause 1 and Clause 2 of Article 15 of Decree No. 42/2015/NĐ-CP and the regulations of the Stock Exchange.

Article 15. Acceptance, Execution of Orders, and Confirmation of Transaction Results

1. Trading members may accept trading orders from customers directly at the trading counter or remotely through telephone, fax, and other communication channels, or through the online trading system of the trading member. The trading order must be recorded with complete information at the time of receipt, by the order taker (order entry, order modification if necessary), and proof of the customer's order placement.

In the case of receiving orders through telephone or fax, confirmation with the customer must be made before entering the order into the system. In the case of receiving orders online, compliance with legal regulations on electronic transactions must be followed.

2. Trading members may only execute customer orders when the trading order contains complete information about the customer, trading account, trading date, derivative security code, order method, order type, transaction type, quantity, and transaction price according to the regulations of the Stock Exchange.

3. Trading members must refuse to accept customer orders in the following cases:

a) The customer has not deposited sufficient margin, except for offsetting transactions; or

b) The order exceeds the order limit; the order, together with other pending orders in the system of the same trading account, exceeds the cumulative order limit or leads to the customer's position on that account exceeding the position limit according to the regulations of the Stock Exchange and the Securities Depository Center (if applicable).

4. Within twenty-four (24) hours after the order has been executed, the trading member is responsible for confirming the transaction result with the customer according to the guidance of the Securities Commission.

5. Within twenty-four (24) hours after the customer's request and within three (03) days after the end of the month, the trading member must send the customer a statement of the trading account and a report on the trading situation on the customer's account. The content of the report shall be implemented according to the guidance of the Securities Commission.

Article 16. Market Maker Members

1. Market maker members must be honest and sincere when creating markets.

2. The types of derivative securities required to maintain liquidity and trading rules for market makers shall be implemented according to the market-making agreement and the regulations of the Securities Trading Exchange.

3. Market maker members may simultaneously conduct market-making transactions and proprietary trading but must ensure the principles set forth in the regulations of the Securities Trading Exchange.

4. Implement rights and obligations as stipulated in Clause 2 of Article 15 of Decree No. 42/2015/NĐ-CP.

Article 17. Management of Market-Making Activities

1. The Securities Trading Exchange has the right to terminate, refuse to sign, or refuse to extend contracts with market maker members based on the following factors:

a) The level of liquidity of each type of derivative security;

b) The financial capacity of the member;

c) The effectiveness of operations, quality of market making, and the degree of objectivity, honesty, and sincerity in market-making activities.

2. The Securities Trading Exchange has the right to suspend or terminate market-making contracts in cases where:

a) The member violates provisions regarding quotation responsibilities, market-making scale, quotation time, and other clauses leading to suspension or termination of the contract according to the regulations of the Securities Trading Exchange;

b) Other cases according to the regulations of the Securities Trading Exchange and the market-making contract.

3. Market maker members have the right to terminate market-making activities according to the provisions of the market-making contract signed with the Securities Trading Exchange.

4. Quarterly, the Securities Trading Exchange evaluates the effectiveness and quality of market-making activities of market maker members for each type of derivative security they provide market-making services for. The effectiveness and quality of market-making activities are evaluated based on quotation activities (quoted price spreads, quotation times, quotation volumes), transaction volumes, and other criteria according to the regulations of the Securities Trading Exchange.

Section 4. ACTIVITIES OF COUNTERPARTY MEMBERS AND SECURITIES DEPOSITORY CENTERS

Article 18. Counterparty Members

1. Counterparty members have the following rights and obligations:

a) To enter into settlement and payment contracts with the Securities Depository Center, and entrustment settlement and payment contracts with non-counterparty members. These contracts must include provisions clearly stating that the counterparty member acts as the authorized representative of brokerage clients and counterparty payment clients, standing in the name of their positions and bearing full responsibility for fulfilling all obligations of these clients towards the Securities Depository Center;

b) To manage separate accounts and collateral assets for each client; establish a system of tracking and summarizing complete information about positions, daily gains and losses, initial collateral value, maintenance margin requirements, collateral asset value and portfolio according to each investor's account;

c) To determine the initial collateral value, maintenance margin value, and cash collateral ratio but not lower than the corresponding values according to the regulations of the Securities Depository Center. Information about acceptable collateral assets, methods, and submission times for collateral must be publicly disclosed in detail on the counterparty member’s website;

d) Other rights and obligations as prescribed in Article 22 of Decree No. 42/2015/NĐ-CP and the regulations of the Securities Depository Center.

2. Depending on the severity of violations in settlement and netting activities, the Securities Depository Center may apply various forms of violation handling against counterparty members, including:

a) Warning letters;

b) Reprimand;

c) Suspension;

d) Termination of counterparty membership status.

3. Violations, procedures, and processes for handling violations by counterparty members shall be carried out according to the regulations of the Securities Depository Center.

4. The termination of counterparty membership status can only be implemented after the counterparty member has completed the transfer of positions and collateral to settle customer accounts, liquidate positions, and fulfill proprietary trading account obligations (if any), and has fully fulfilled obligations towards the Securities Depository Center.

Article 19. Settlement Activities and Securities Derivatives Transactions Settlement

1. The settlement of securities derivatives shall be carried out by the Securities Depository Center on each investor's account and clearing member's account based on the principle that positions of the same securities derivative with the same maturity date on the same account will be offset by the Securities Depository Center to determine the net position of securities derivatives on that account.

2. For daily profit and loss settlement activities, based on the end-of-day profit and loss results on each investor's account, the Securities Depository Center will settle funds separately for each investor's account and each clearing member to determine the value to be paid and received for each investor's account and clearing member. Daily profit and loss settlements are conducted through transfers to the clearing member's margin deposit account at the settlement bank.

3. For settlement activities upon contract execution, the Securities Depository Center will carry out settlement on the final settlement day according to the following principles:

a) In case of cash settlement: The Securities Depository Center calculates the settlement obligation separately for each investor and each clearing member. The clearing member who must pay must transfer sufficient funds into their clearing member account opened at the settlement bank to settle with the receiving clearing member through the Securities Depository Center. The receiving clearing member has the obligation to settle immediately with the purchasing investor after receiving payment from the Securities Depository Center;

b) In case of physical delivery settlement: the selling clearing member must deliver the full quantity and correct type of underlying asset as stipulated in the securities derivative contract into the purchasing clearing member's margin securities account as requested by the Securities Depository Center.

The purchasing clearing member can only receive the delivered assets after fully paying the required amount as requested by the Securities Depository Center, then immediately allocate it to the purchasing investor.

4. The Securities Depository Center shall issue regulations guiding the procedures and formalities for settlement, payment, and asset transfer when executing contracts, payment methods, and post-settlement payment timeframes, subject to approval by the State Securities Commission.

Article 20. Clearing Member Margin Accounts

1. The Securities Depository Center is responsible for opening margin deposit accounts in the name of the Securities Depository Center at the settlement bank (hereinafter referred to as the clearing member margin deposit account) and margin securities accounts at the Securities Depository Center (hereinafter referred to as the clearing member margin securities account) to manage collateral assets and fulfill settlement obligations for positions under the name of clearing members.

2. The clearing member margin deposit account at the settlement bank for each clearing member includes:

a) A proprietary trading margin deposit account to manage collateral for proprietary trading and market-making activities of the clearing member itself;

b) A customer margin deposit account to manage collateral for all customers of the clearing member;

c) A payment account to settle daily profit and loss positions, contract execution payments under the name of the clearing member, and other clearing member payment activities.

3. The clearing member margin deposit account and the clearing member margin securities account may only be used for the following activities:

a) Receiving and returning collateral to clearing members. Collateral on this account includes both the assets of customers used by the clearing member to secure the customer's own positions;

b) Receiving daily interest or settling daily losses for positions under the name of the clearing member; making and receiving payments upon contract execution; receiving bank deposit interest payments;

c) Receiving and transferring underlying securities when executing contracts (in cases of physical delivery settlement) for positions under the name of the clearing member.

4. The margin account for clearing members must be established to ensure separate management of the clearing member's assets from those of the Securities Depository Center; separate management of each clearing member's assets; and separation of clearing member assets from those of the clearing member's customers.

5. At any time, the Securities Depository Center has the right to request clearing members to provide detailed information about transaction accounts, margin accounts, the value and portfolio of collateral for each investor.

6. Funds and securities arising from exercising rights over collateral on the clearing member margin account will be allocated according to the regulations of the Securities Depository Center. The Securities Depository Center shall not conduct term deposits on clearing member margin deposits. Deposit interest will be returned to the clearing member at the non-term rate announced by the settlement bank.

7. The Securities Depository Center is responsible for establishing a comprehensive system to manage information on position changes, daily profit and loss positions, initial margin requirements, maintenance margin requirements, the value and portfolio of collateral for each investor's transaction account and clearing member.

8. The State Securities Commission selects commercial banks to act as settlement banks to provide payment services for securities derivatives transactions on the stock exchange according to criteria, procedures, and formalities prescribed by securities laws regarding registration, custody, settlement, and transaction settlement. The settlement bank has the following rights and obligations:

a) Establishing a margin deposit account management system as stipulated in this Circular;

b) Providing timely and complete information about activities and detailed balances on margin deposit accounts as requested by the Securities Depository Center and the State Securities Commission;

c) Other rights and obligations as prescribed by securities laws regarding registration, custody, settlement, and transaction settlement.

Article 21. Margin Deposits of Clearing Members

1. The margin deposits of clearing members with the Securities Depository Center shall be carried out as follows:

a) Clearing members must deposit initial margins with the Securities Depository Center for positions they intend to open before conducting transactions, except for offsetting transactions within the same trading account;

b) Clearing members must replenish margins when the total value of collateral does not meet the maintenance margin requirement calculated by the Securities Depository Center for all their positions, and may withdraw collateral if the value of collateral exceeds the maintenance margin requirement according to the regulations of the Securities Depository Center;

c) The margin ratio in cash shall be implemented according to the regulations of the Securities Depository Center, ensuring it is not less than 80%, except in cases where securities are pledged for delivery upon contract execution or where an investor holds a short position in a futures bond contract settled through asset transfer and pledges deliverable assets. The maintenance margin requirement for each investment portfolio on individual trading accounts of investors, and the total maintenance margin requirement for all positions under the name of clearing members, shall be calculated by the Securities Depository Center during trading sessions based on the initial margin value, combined position profit and loss, maximum price volatility assessment, correlation between positions, margin requirements for contracts executed via asset transfer, and other factors deemed necessary by the Securities Depository Center;

d) The Securities Depository Center shall determine and monitor in real-time the ratio between the maintenance margin requirement and the total value of collateral for each investor's and clearing member's account. If this ratio falls within the thresholds set by the Securities Depository Center's regulations, the Securities Depository Center has the right to warn the clearing member and apply one of the following measures:

- Requesting the Stock Exchange to suspend trading for related trading accounts, except for offsetting transactions;

- Requiring the clearing member (for proprietary trading accounts) or through the clearing member to request the investor (for investor accounts) to execute offsetting transactions to reduce positions and replenish collateral.

2. The determination of types of margins, methods of calculation, parameters of these methods, types of collateral accepted, procedures and timing for depositing or withdrawing collateral, initial margin ratios, cash margin ratios, implementation of rights related to pledged securities, and other relevant matters shall be carried out according to the regulations of the Securities Depository Center issued after approval by the State Securities Commission.

Article 22. Collateral Assets

1. Investors and clearing members may use money and securities that meet the conditions stipulated in Clause 2 of this Article to make collateral deposits.

2. Securities accepted by the Securities Depository Center and clearing members as collateral for derivative securities positions must satisfy the following conditions:

a) Included in the list of acceptable collateral securities of the Securities Depository Center;

b) Not subject to warning, control, or suspension of trading on the Stock Exchange; or securities of issuers undergoing liquidation, dissolution, bankruptcy, merger, or consolidation;

c) Not encumbered, frozen, or temporarily held at the Securities Depository Center;

d) Freely transferable and deposited in a trading securities account at the Securities Depository Center; being assets owned by the pledgor who is the investor or clearing member;

đ) Meeting other conditions according to the regulations of the Securities Depository Center.

3. The Securities Depository Center and clearing members are responsible for publishing lists of acceptable collateral securities and discount rates for each security on their electronic information websites. In case of changes to acceptable collateral securities, investors and clearing members are responsible for replacing them with money or other acceptable collateral securities as required by the Securities Depository Center and clearing members.

4. Management of collateral assets:

a) The Securities Depository Center and clearing members manage the collateral assets of clearing members and investors according to the provisions of Articles 25 and 26 of Decree No. 42/2015/NĐ-CP;

b) Clearing members may only use collateral assets on investors' margin accounts for collateral purposes, guaranteeing payment obligations, and executing payments for corresponding trading account positions; they may not use them to guarantee, support, or execute payments for other trading accounts, including those owned by the same investor; they may not use them as collateral or for other purposes or for third parties, except as provided in points d and đ of this clause; they may not use them as collateral for loans or for investment. Interest from deposits will be refunded to investors at the non-interest rate announced by the bank;

c) Investor collateral assets must be managed separately and cannot be considered as assets of the clearing member, even if they have been pledged on the clearing member's margin account. In the event of the clearing member's bankruptcy, investor collateral assets must be fully returned to the investor after completing the investor's own payment obligations;

d) In the event that an investor loses their ability to pay, the clearing member may use, sell, or transfer collateral without the investor's consent. One day prior to and after the handling of collateral, the clearing member must notify the investor in writing about the handling of collateral. The notification must clearly state the reasons, type of assets handled, method and expected time of handling (or already handled), and the expected value (or already realized).

đ) The Securities Depository Center has the right to use the collateral assets of investors and clearing members that have been submitted to the Securities Depository Center to support settlement for the positions of investors and clearing members in accordance with Clause 4 of Article 19 of Decree No. 42/2015/NĐ-CP.

e) During the period of collateral, investors and clearing members still have the right to receive rights and benefits arising from the collateral securities in accordance with corporate laws and securities laws. The handling of ensuring the interests of investors regarding collateral securities shall be carried out in accordance with the regulations of the Securities Depository Center.

5. During the period of collateral on the collateral account, investors and clearing members are not allowed to transfer, give, gift, mortgage, pledge, collateralize, or use the collateral assets for other purposes.

Article 23. Settlement Fund

1. The Settlement Fund is formed from contributions of clearing members in cash or securities approved by the Securities Depository Center for the purpose of compensating losses and completing derivative securities transactions under the name of clearing members in cases where clearing members or their investors lose their ability to pay. The contribution ratio to the Settlement Fund in cash shall be implemented according to the regulations of the Securities Depository Center after being approved by the State Securities Commission.

2. After the Securities Depository Center approves the registration principle for becoming a clearing member, the clearing member is obligated to contribute to the Settlement Fund at the initial minimum level.

3. Monthly, the Securities Depository Center reviews the scale of the Settlement Fund and determines the contribution obligations of each clearing member to the Settlement Fund based on transaction volume, price volatility in the market, financial obligations, risk levels, and other criteria:

a) In case the balance of contributions to the Settlement Fund exceeds the obligation to contribute, the clearing member will receive the difference.

b) In case the balance of contributions to the Settlement Fund is less than the obligation to contribute, the clearing member must make up the difference.

4. Clearing members are responsible for making extraordinary contributions to the Settlement Fund according to the regulations of the Securities Depository Center in the following situations:

a) The clearing member is placed in warning status under securities laws concerning financial safety and banking laws concerning capital safety;

b) The contributed assets of the clearing member are frozen or confiscated by competent state authorities or pursuant to court decisions;

c) Other cases reported by the Securities Depository Center and approved by the State Securities Commission.

5. Management of the Settlement Fund:

a) Each clearing member's assets contributed to the Settlement Fund belong to that clearing member and are managed separately from the Securities Depository Center's assets. The clearing member must sign a commitment allowing the Securities Depository Center full authority to use, including selling the contributed assets to fulfill the obligations of positions under the name of the clearing member;

b) For cash contributions, the Securities Depository Center opens a deposit account at a payment bank to manage the funds contributed by clearing members to the Settlement Fund;

For contributions in securities: The Securities Depository Center opens a securities account in its own name to manage the contributions in securities made by clearing members. Dividends, interest, interest rates, and other benefits arising from contributed securities must be returned to the clearing member after deducting related costs and taxes;

c) Interest generated from cash contributions to the Settlement Fund is allocated to clearing members proportionally to the amount and duration of their contributions after deducting related costs.

6. Repayment of the Settlement Fund

A clearing member can only be refunded the contributed assets to the Settlement Fund when their status as a clearing member is terminated or they are no longer a clearing member.

The repayment of the Settlement Fund is carried out after the Securities Depository Center has deducted payable amounts (debts) and amounts to be settled to fulfill the positions under the name of that member as stipulated.

7. The establishment, management, and use of the Settlement Fund shall be carried out in accordance with the regulations issued by the Securities Depository Center after being approved by the State Securities Commission.

Article 24. Handling cases of loss of payment capability

1. A clearing member or a client of a clearing member shall be deemed to have lost their payment capability if they fall under any of the following circumstances:

a) Failure to timely perform or fully perform obligations to cover losses from positions and payments upon contract execution as stipulated in the regulations of the Securities Depository Center;

b) Being declared bankrupt or undergoing bankruptcy proceedings according to the law on corporate bankruptcy;

c) Other cases as stipulated in the regulations of the Securities Depository Center.

2. The Securities Depository Center shall utilize the support sources provided for in Clause 1 of Article 27 of Decree No. 42/2015/NĐ-CP to ensure payment when a clearing member or a client of a clearing member loses their payment capability. The utilization of these support sources shall be carried out in the following sequence:

a) Utilizing the margin money of the clearing member who has lost their payment capability and the margin money of the client of the clearing member who has lost their payment capability;

b) In case the margin money is insufficient to cover the payment obligation, the Securities Depository Center may:

- Utilize the monetary contribution to the Settlement Fund of the clearing member who has lost their payment capability;

- Execute the sale of pledged assets and securities contributions to the Settlement Fund of the clearing member who has lost their payment capability through a designated trading member on the Stock Exchange at prices determined by the Securities Depository Center;

d) Utilizing the contributions of other clearing members in proportion as determined by the Securities Depository Center. In this case, the Securities Depository Center shall notify the relevant clearing members in detail about the use of the Settlement Fund on the day of use. The clearing member who has lost their payment capability shall be obligated to repay the entire amount of assets used from the Fund and pay interest to other clearing members at the rate determined by the Securities Depository Center but not exceeding 150% of the basic lending rate set by the State Bank;

đ) Utilizing the Risk Reserve Fund and other lawful capital sources of the Securities Depository Center as stipulated in the regulations of the Securities Depository Center.

3. In addition to utilizing the support sources provided for in Clause 2 above, the Securities Depository Center may implement the following measures:

a) Requesting the member to explain the reasons, provide all information related to the loss of payment capability, provide a list of clients, customer identification information, and information on the client's margin account;

b) Cooperating with the Stock Exchange to limit or prohibit the opening of new positions in the name of that member, except for offsetting transactions;

c) Requesting the member to liquidate their position in accordance with Clause 4 of Article 19 of Decree No. 42/2015/NĐ-CP;

d) Opening a trading account at the Stock Exchange to execute transactions to close the position of the clearing member who has lost their payment capability as stipulated in point a of Clause 4 of Article 19 of Decree No. 42/2015/NĐ-CP and implementing other activities and preventive risk measures as stipulated in Clause 4 of Article 19 and Article 28 of Decree No. 42/2015/NĐ-CP.

4. In the event that an investor loses their payment capability, the clearing member shall immediately report to the Securities Depository Center regarding the position and the list of pledged assets of that investor and may take appropriate handling measures, including:

a) Requiring the investor to perform or the clearing member to perform the closure of open positions and mandatory liquidation of those positions;

b) Suspending the acceptance of trading orders to open new positions from the related investor; simultaneously canceling unexecuted trading orders of that investor;

c) Using, selling, or transferring pledged assets of the investor to purchase or serve as collateral for loans to fulfill payment obligations for the investor's open positions. If insufficient, the clearing member must use their own assets to fulfill derivative securities contracts of the investor;

d) The investor shall be responsible for repaying the clearing member the full amount of temporarily advanced funds and bear all related costs incurred.Supplement

Chapter V

OBLIGATIONS TO REPORT AND DISCLOSE INFORMATION

Article 25. Obligation to Report and Disclose Information of Securities Derivatives Trading Organizations

1. Securities derivatives trading organizations shall submit to the State Securities Commission the following reports:

a) Reports on the status of brokerage and proprietary securities derivatives trading activities (if applicable); settlement and transaction clearing activities of securities derivatives (if applicable), in accordance with the guidelines of the State Securities Commission;

b) Other reports as prescribed by securities laws regarding the organization and operation of securities companies and investment fund management companies.

2. Securities derivatives trading organizations must disclose information simultaneously with reporting to the State Securities Commission the following events:

a) Changes in clearing members (if applicable);

b) Other cases as prescribed by securities laws regarding the organization and operation of securities companies and investment fund management companies, regarding disclosure of information on the securities market, and as required by the State Securities Commission.

Article 26. Obligation to Disclose Information of Securities Exchange

1. The securities exchange has the responsibility to disclose the following information:

a) Reference price, ceiling price, floor price, opening price, closing price for each session and trading day, agreed price (if applicable);

b) Best bid and ask prices and corresponding volumes for each type of securities derivative;

c) Other disclosures as directed by the State Securities Commission.

2. The securities exchange has the responsibility to maintain continuous publication of the quotation board on its electronic information website with the following information:

a) Codes of listed securities derivatives;

b) Reference price, ceiling price, floor price, execution price and volume of the most recent transaction, highest transaction price during the session, lowest transaction price during the session, closing price; three (03) best bid and ask prices;

c) Total executed volume;

d) Other information as directed by the State Securities Commission.

3. The securities exchange has the responsibility to disclose information about delisting and new listing of securities derivatives after approval by the State Securities Commission.

4. The securities exchange has the responsibility to disclose information about trading members and market makers:

a) Information on approval of new trading members and new market makers; suspension, termination of member status, market maker status;

b) Information on violations and penalties imposed on members and market makers (if applicable);

c) Other information as stipulated by the securities exchange regulations.

5. The securities exchange has the responsibility to disclose information on the operation of the securities derivatives market including:

a) Information on temporary suspension of securities derivatives market trading due to force majeure or abnormal trading signs; information on resumption of trading for securities derivatives contracts;

b) Information on changes in price fluctuation range, order limits, cumulative order limits (if applicable);

c) Information on amendments and supplements to the content of securities derivatives contracts after approval by the State Securities Commission;

d) Other information as required by the State Securities Commission.

6. The Central Depository provides necessary information for the securities exchange to publish daily information, including the following information:

a) End-of-day settlement price, final settlement price (if applicable);

b) Open position volume of each type of securities derivative from the previous trading day;

c) Other contents as directed by the State Securities Commission.

Article 27. Obligation to Report and Disclose Information of the Securities Depository Center

1. The Securities Depository Center shall regularly submit to the State Securities Commission the following reports:

a) Reports on the settlement and trading activities of derivative securities, usage of payment guarantee mechanisms, monitoring and handling violations of clearing members in accordance with the guidelines of the State Securities Commission;

b) Other reports as directed by the State Securities Commission.

2. The Securities Depository Center must report to the State Securities Commission within a maximum period of twenty-four (24) hours from the occurrence of the following extraordinary events:

a) A clearing member loses the ability to settle derivative securities transactions;

b) Suspension or termination of the status of a clearing member;

c) Other cases as prescribed by law and at the request of the State Securities Commission.

3. The Securities Depository Center has the responsibility to disclose the following information:

a) Issuing, revoking, suspending the status of clearing members; list of clearing members; information about violations of clearing members (if any);

b) Information about margin requirements, position limits, and other information as directed by the State Securities Commission.

Article 28. Deadline for Submission of Reports

1. For periodic reports

a) Within five (05) days from the end of the month for monthly reports;

b) Within twenty (20) days from the end of the quarter for quarterly reports;

c) Within forty-five (45) days from the end of the first six months of the year for semi-annual reports;

d) Within ninety (90) days from the end of the year for annual reports.

2. For reports on events that occur

a) Within twenty-four (24) hours for reports specified in Clause 2, Article 25; Clause 3, Clause 4, Clause 5, Article 26 of this Circular;

b) Within twenty-four (24) hours from the date of receipt of other reporting requests from the State Securities Commission.

3. Reports as stipulated in this Circular must be submitted along with electronic information files.

Chapter VI

IMPLEMENTING PROVISIONS

Article 29. Effective Date

This Circular takes effect from July 1, 2016.

Article 30. Implementation

1. The State Securities Commission, Stock Exchange, Securities Depository Center, organizations providing derivative securities services, trading members, clearing members, and other organizations and individuals related to derivative securities investment and trading activities and the derivative securities market in Vietnam are responsible for organizing its implementation.

2. Amendments and supplements to this Circular shall be decided by the Minister of Finance.

 

Place of Receipt: - Government Office; - Central Party Office and Party Committees; - General Secretary's Office; - National Assembly's Office; - President's Office; - Office of the Government Inspectorate for Anti-Corruption; - Ministries, agencies equivalent to ministries, and government agencies; - Central Agencies of Mass Organizations; - Provincial People's Councils and People's Committees under central jurisdiction; - Supreme People's Procuracy, Supreme People's Court; - State Audit Agency; - Official Gazette; - Department of Legal Drafting - Ministry of Justice; - Units under the Ministry of Finance; - Government website; - Ministry of Finance website; - To be filed: VT, SSC.

DEPUTY MINISTER DEPUTY MINISTER Tran Xuan Ha