Circular No. 12/2021/TT-NHNN on the organization of credit institutions and foreign bank branches purchasing and selling promissory notes, acceptance bills, deposit certificates, and bonds issued by other credit institutions and foreign bank branches within the country.

CIRCULAR

Regulations on credit institutions and foreign bank branches purchasing and selling promissory notes, bills of exchange, deposit certificates, and bonds issued by other credit institutions and foreign bank branches within Vietnam.

sell promissory notes, bills of exchange, deposit certificates, bonds issued by credit institutions,

and other foreign bank branches operating domestically

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010, and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Securities Law promulgated on November 26, 2019;

Pursuant to Decree No. 16/2017/NĐ-CP dated February 17, 2017, stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Article 1.

The Governor of the State Bank of Vietnam issues this Circular regulating the purchase and sale of promissory notes, bills of exchange, deposit certificates, and bonds issued by other credit institutions and foreign bank branches within Vietnam (hereinafter referred to as securities) that have not yet reached their maturity date and which the buyer receives ownership transfer without accompanying a commitment to resell or retain the right to reclaim (hereinafter referred to as the purchase and sale of securities).

d) Transfer of ownership of securities through asset disposal. Such transfer shall be carried out in accordance with the laws governing secured transactions.

2. This Circular does not regulate the following activities:

a) Purchasing and selling securities of credit institutions and foreign bank branches on the international market;

b) Purchasing and selling government-guaranteed bonds issued by credit institutions;

c) Issuing securities within the country by credit institutions and foreign bank branches; repurchasing and swapping bonds issued by the same credit institution;

d) Purchasing and selling securities with a term between credit institutions and foreign bank branches;

d) Transfer ownership of securities through the disposal of collateral assets. Such transfer of ownership shall be carried out in accordance with the law on secured transactions.

The seller and buyer of securities include the following entities:

2. Vietnamese organizations and individuals and foreign organizations and individuals conducting purchases and sales of securities with credit institutions and foreign bank branches.

2. The buyer and seller shall be responsible under the law for purchasing and selling negotiable instruments in accordance with the provisions of this Circular and relevant laws.

3. The currency used in transactions for purchasing and selling negotiable instruments shall be the Vietnamese Dong.

4. Securities for purchase and sale must be legally owned by the seller and have not yet reached their maturity date for full principal and interest repayment; the seller must commit that the securities are free from disputes, permitted for trading under the law, and are not currently being discounted or rediscounted.

6. Credit institutions and foreign bank branches may only purchase promissory notes, bills of exchange, and deposit certificates with remaining terms of less than 12 months. The remaining term is the period determined from the payment date specified in Clause 3, Article 4 of this Circular to the maturity date for full principal and interest repayment of such securities.

For negotiable instruments issued by consolidated finance companies and specialized finance companies, credit institutions and foreign bank branches may only purchase and sell with organizations (including credit institutions and foreign bank branches).

All transactions involving the purchase and sale of securities must be conducted in a form consistent with the relevant laws. Agreements on the purchase and sale of securities must include at least the following contents:

2. Name of the negotiable instrument; issuing credit institution or foreign bank branch; term of the negotiable instrument; maturity date for full principal and interest repayment of the negotiable instrument; face value of the negotiable instrument.

2. Name of the security; issuing credit institution or foreign bank branch; term of the security; maturity date for full principal and interest repayment of the security; face value of the security.

4. Amount of payment for purchasing the negotiable instrument.

5. Rights and obligations of the seller and buyer.

Article 5. Internal Regulations

1. Based on the provisions of the Law on Credit Institutions, this Circular, and relevant laws, credit institutions and foreign bank branches shall establish internal regulations on the purchase and sale of securities suitable for their management model, characteristics, business conditions, and ensuring safe operations for credit institutions and foreign bank branches.

3. Minimum internal regulations must include business procedures and risk management regulations for purchasing and selling negotiable instruments activities.

3. Internal regulations must minimally include business procedures and risk management provisions for the purchase and sale of securities.

Article 6. Implementation Provisions

a) Amend and supplement Clause 1 of Article 4 as follows:

"1. The purchaser of securities shall be organizations (including credit institutions and foreign bank branches), Vietnamese individuals, and foreign organizations and individuals, except in cases stipulated in Clauses 2, 3, and 4 of this Article."

b) Supplement Clause 4 to Article 4 as follows:

"4. For securities that are promissory notes, bills of exchange, or deposit certificates, credit institutions and foreign bank branches may only purchase securities with a term of less than 12 months."

The Director of the Office, Heads of the Monetary Policy Department, and Heads of units under the State Bank of Vietnam; credit institutions and foreign bank branches are responsible for implementing this Circular./.