Circular No. 16/2022/TT-NHNN on the custody and use of securities at the State Bank of Vietnam

CIRCULAR

Regulations on the registration and use of securities at the State Bank of Vietnam

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; the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

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

Pursuant to Decree No. 01/2011/NĐ-CP dated January 5, 2011 of the Government on the issuance of government bonds, government-guaranteed bonds, and local government bonds;

Pursuant to Decree No. 95/2018/NĐ-CP dated June 30, 2018 of the Government on the issuance, registration, registration custody, listing, and trading of government debt instruments on the securities market;

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

At the proposal of the Director of the Trading Department;

The Governor of the State Bank of Vietnam issues this Circular regulating the registration and use of securities at the State Bank of Vietnam.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular regulates the registration and use of securities at the State Bank of Vietnam (hereinafter referred to as the State Bank).

Article 2. Applicability

1. Units under the State Bank.

2. The Deposit Insurance of Vietnam, credit institutions, foreign bank branches, and other organizations as decided by the Governor of the State Bank (hereinafter referred to as members).

Article 3. Explanation of Terms

1. Securities are evidence confirming the obligation to repay between the issuer of the securities and the holder of the securities within a certain period, interest payment conditions, and other conditions. Securities include: securities in book-entry form (in the form of book entries or electronic data) and securities in certificate form.

2. Registration of securities at the State Bank is the activity of receiving deposits, preserving, transferring, and implementing rights related to the ownership of securities directly registered at the State Bank by members or registered at the customer account of the State Bank at the Vietnam Securities Depository and Clearing Corporation (hereinafter referred to as VSDC) to ensure the rights and interests related to securities of the holder and to perform certain transactions at the State Bank.

3. Transfer of securities among parties in the transaction using securities is the transfer of accounts for book-entry securities or the handover, counting, and recording into the accounting system for certificate securities. The transfer of securities may or may not include the transfer of ownership of the securities.

4. Self-trading account is an account opened by VSDC for its depositary members or organizations to manage securities owned by the depositary member or the organization itself.

5. Brokerage account is an account opened by VSDC for its depositary members or organizations to manage securities owned by the depositary member's customers or the organization's customers.

6. The State Bank's securities account includes the State Bank's securities account being managed and the State Bank's securities account deposited with VSDC.

The State Bank's securities account being managed is an internal account of the State Bank for registering securities owned by the State Bank.

The State Bank's securities account deposited with VSDC is a self-trading type account opened by VSDC upon request of the State Bank to register securities owned by the State Bank.

7. Customer account of the State Bank at VSDC is a brokerage type account opened by VSDC upon request of the State Bank to freeze and register securities owned by members to perform certain transactions at the State Bank.

8. Customer securities account deposited for registration is an account opened by the State Bank to monitor the registration of securities of members. The customer securities account deposited for registration includes the customer securities account deposited directly at the State Bank and the customer securities account deposited on the customer account of the State Bank at VSDC.

The customer securities account deposited directly at the State Bank is an account opened by the State Bank upon request of members to register securities directly at the State Bank.

The customer securities account deposited on the customer account of the State Bank at VSDC is an account opened by VSDC upon request of the State Bank to register securities of members at VSDC.

9. Customer securities account deposited for collateral purpose is an internal account of the State Bank opened for members to manage securities according to the collateral and margin requirements proposed by members when participating in certain money market transactions.

10. Customer securities account deposited for interbank lending credit purposes is an internal account of the State Bank opened for members to freeze securities in interbank lending transactions secured by collateral of securities among members on the interbank market.

Article 4. Conditions, denominations, and codes of securities to be deposited at the State Bank

1. Types of securities include:

a) State Bank Treasury Bills;

b) Government Bonds;

c) Government-guaranteed bonds for full repayment of principal and interest upon maturity;

d) Local government bonds used in transactions with the State Bank according to the Governor's decision during each period;

đ) Special bonds issued directly to credit institutions to sell non-performing loans at the market value of the Vietnam Asset Management Company;

e) Bonds issued by commercial banks in which the State holds more than 50% of the charter capital (excluding those commercial banks that have been compulsorily purchased); bonds issued by credit institutions (excluding specially supervised credit institutions) and other enterprises;

g) Other types of securities decided by the Governor of the State Bank during each period.

2. Conditions for securities

a) Legally owned by members;

b) Belonging to the types of securities specified in Clause 1 of this Article;

c) Not settled for principal and interest upon maturity;

d) Securities of the deposit receipt type at the State Bank must be intact, not torn, damaged, color changed, faded images, characters, numbers, not wrinkled, deteriorated, blurred, dirty, erased.

3. Denominations of securities

The denomination of securities deposited at the State Bank is 100,000 VND (one hundred thousand dong) or multiples of 100,000 VND (one hundred thousand dong).

For special securities directly managed by the State Bank and securities denominated in foreign currency, the denomination of securities shall be implemented in accordance with the provisions of the law for each type of security.

4. Codes of securities

Securities deposited at the State Bank are managed under a system of codes prescribed by VSDC and the State Bank (Trading Center). The State Bank manages securities uniformly under the international securities identification number (ISIN) system when necessary.

Article 5. Use of securities deposited at the State Bank

1. Securities used in money market operations include:

a) Open market operations;

b) Refinancing operations:

- Loans secured by collateral of State Bank securities to credit institutions and foreign bank branches;

- Discounting of State Bank securities to credit institutions and foreign bank branches;

- Other refinancing forms as prescribed by the State Bank;

c) Pledging securities to establish overdraft limits and overnight loans in interbank electronic payments;

d) Pledging and margining securities to establish net debt limits in interbank electronic payments;

đ) Pledging and margining securities to establish centralized payment limits;

e) Pledging and margining securities to establish electronic settlement limits through the Electronic Settlement System;

g) Pledging and margining securities to perform other operations as decided by the Governor of the State Bank during each period.

2. Securities used in special lending operations for specially supervised credit institutions.

3. Transactions involving securities deposited at the State Bank between members include:

a) Secured loans by pledging securities between members;

b) Purchase and sale of securities between members.

4. The State Bank receives applications and documents to process requests for using securities deposited at the State Bank no later than 15:30 on working days. After this time, requests for using securities deposited at the State Bank will be processed on the next working day. In cases where it is necessary to extend the application submission time, the State Bank will coordinate with members to agree on the submission time of that working day.

Chapter II

 SPECIFIC PROVISIONS

Section 1

DEPOSIT OF SECURITIES

Article 6. Opening a securities custody account

1. Documents for opening an account

To deposit securities with the State Bank, members as specified in Clause 2, Article 2 of this Circular shall prepare and directly send or send through postal service to the main office of the State Bank (one-stop service) one set of documents including:

a) A request to open a securities custody account according to Appendix 1a/LK issued together with this Circular (three copies);

b) A registration form for sample seals and signatures to be used for the securities custody account at the State Bank according to Appendix 1b/LK issued together with this Circular (three copies);

c) Documents proving that the member opening the securities custody account has been established and operates legally, including: articles of association, license for establishment and operation, business registration certificate, or other documents as prescribed by law;

d) Documents proving the legal representative's authority of the member opening the account (the State Bank's decision on approval of the proposed position, appointment decision) accompanied by their identity card, citizen identification card, or passport still valid;

đ) Appointment document or decision and identity card, citizen identification card, or passport still valid of the chief accountant or person in charge of accounting, transaction control personnel with the State Bank;

e) In case the legal representative, chief accountant delegates to another person (including delegation again if applicable), the member opening the securities custody account must provide the appointment decision of the delegatee and the power of attorney according to Appendix 7/LK issued together with this Circular, accompanied by the identity card, citizen identification card, or passport still valid of the delegatee. For the power of attorney for work delegated by the chief accountant, it must have the signature confirmation of the account holder's representative;

g) Members are not required to provide the documents stipulated in Points c, d, đ, e of Clause 1 of this Article if they have already provided them to the State Bank (Trading Department) when opening and using settlement accounts at the State Bank or in cases where personal information (ID number, citizen identification card number, or passport number) of the legal representative, chief accountant, or delegatee can be accessed from the National Population Database.

2. The documents specified in Points a, b of Clause 1 of this Article must be original and signed and stamped by the legal representative of the member opening the securities custody account; the documents specified in Points c, d, đ, e of Clause 1 of this Article must be certified copies issued from the original book, certified copies, copies presented with the original for comparison, or electronic copies certified from the original. If the documents in the application for opening a securities custody account are in a foreign language, they must be translated into Vietnamese and notarized or certified in accordance with the provisions of the law.

3. Within five working days from the date of receiving complete and valid documents for opening a securities custody account from the member, the State Bank (Trading Department) will open the securities custody account and notify the member of the account number and the start date of the securities custody account operations; in case the documents for opening a securities custody account from the member are incomplete or invalid, the State Bank (Trading Department) will notify the member to complete the documents; in case of refusal to open a securities custody account, the State Bank (Trading Department) will notify the member of the reasons.

Article 7. Changing Information of Deposit Accounts for Valuable Papers

1. When there is a change in the information of deposit accounts for valuable papers of members related to the documents in the account opening dossier as stipulated in Clause 1 of Article 6 of this Circular, within fifteen working days from the date the changed information occurs, the member must notify and submit the dossier and relevant legal documents to the State Bank (Trading Department), including:

a) Notification of changes in information about the deposit account for valuable papers opened at the State Bank according to Appendix 1c/LK issued together with this Circular (three copies);

b) A registration form for sample seals and signatures to be used for the securities custody account at the State Bank according to Appendix 1b/LK issued together with this Circular (three copies);

c) The documents specified in points c, d, đ, e of Clause 1 of Article 6.

2. The documents specified in points a and b of Clause 1 of this Article must be originals and signed and stamped by the legally authorized representative of the member opening the deposit account for valuable papers. The documents specified in point c of Clause 1 of this Article must be certified copies issued from the original book or notarized copies or copies presented along with the original for verification or electronic copies certified from the original. If the documents in the account opening dossier are in a foreign language, they must be translated into Vietnamese and notarized or certified in accordance with the provisions of the law.

Article 8. Depositing Valuable Papers

1. For valuable papers recorded in direct deposit accounts at the State Bank

a) In the case where the member deposits valuable papers listed in the category of valuable papers currently managed by the State Bank:

The member submits to the State Bank (Trading Department) the Application for Deposit of Valuable Papers according to Appendix 2a/LK issued together with this Circular and related documents (if any). Within one working day from the date of receipt of the Application for Deposit of Valuable Papers from the member, the State Bank (Trading Department) transfers the valuable papers into the Customer's Direct Deposit Account at the State Bank;

b) In the case where the member wins a bid to purchase valuable papers in trading sessions organized by the State Bank, the State Bank (Trading Department) transfers the winning bid valuable papers of the member into the Customer's Direct Deposit Account at the State Bank.

2. For valuable papers recorded in deposit accounts at VSDC

a) When there is a need to deposit valuable papers at the State Bank, the member transfers the valuable papers from their deposit account at VSDC to the Customer's Account opened at VSDC by the State Bank. Upon receiving notification from VSDC regarding the transfer of the member's deposit account, the State Bank records the changes in the Customer's Deposit Account for Valuable Papers;

b) In the case where the member wins a bid to purchase valuable papers in trading sessions organized by the State Bank as the issuing agent or the State Bank sells valuable papers, the State Bank sends VSDC bidding information so that VSDC can record the deposit of valuable papers.

3. For valuable papers in the form of certificates

The member submits to the State Bank (Trading Department or the State Bank branch in the province/city directly under the Central Government authorized by the Governor of the State Bank (hereinafter referred to as the State Bank branch in the province/city)) the Application for Deposit of Valuable Papers according to Appendix 2a/LK issued together with this Circular and all valuable papers in the form of certificates.

In the case where the member submits valuable papers in the form of certificates to the State Bank (Trading Department), within one working day from the date of completion of acceptance, counting, and verification of the legality and validity of the valuable papers, the State Bank (Trading Department) processes the deposit of valuable papers into the Customer's Direct Deposit Account at the State Bank.

In the case where the member submits valuable papers in the form of certificates to the State Bank branch in the province/city, within five working days from the date of completion of acceptance, counting, and verification of the legality and validity of the valuable papers in the form of certificates, the State Bank branch in the province/city returns the valuable papers to the State Bank (Trading Department). Within one working day from the date of completion of verification of the valuable papers, the State Bank (Trading Department) processes the deposit of valuable papers into the Customer's Direct Deposit Account at the State Bank.

Article 9. Principles for transferring ownership of negotiable instruments

1. For negotiable instruments directly deposited with the State Bank, the State Bank (Trading Department) shall transfer the ownership of negotiable instruments on the day the transaction occurs according to the following principles:

a) In cases where the State Bank is the buyer or the recipient of negotiable instruments when handling collateral assets, the negotiable instruments will be transferred from the customer's negotiable instrument account directly deposited with the State Bank or the negotiable instrument account deposited for pledge purposes of members to the State Bank's negotiable instrument account;

b) In cases where the State Bank is the seller, the negotiable instruments will be transferred from the State Bank's negotiable instrument account to the customer's negotiable instrument account directly deposited with the State Bank;

c) In cases of handling pledged assets in interbank lending transactions secured by negotiable instruments, the negotiable instruments will be transferred from the negotiable instrument account deposited for interbank credit purposes of the pledgor to the customer's negotiable instrument account directly deposited with the State Bank of the pledgee.

2. For negotiable instruments deposited on customer accounts of the State Bank at VSDC, the transfer of ownership of negotiable instruments shall be carried out by VSDC in accordance with securities laws, agreements between the State Bank (Trading Department) and VSDC according to the following principles:

a) In cases where the State Bank is the buyer or the recipient of negotiable instruments when handling collateral assets, the negotiable instruments will be transferred from the customer's negotiable instrument account deposited on the State Bank's customer account at VSDC to the State Bank's negotiable instrument account deposited at VSDC;

b) In cases where the State Bank is the seller, the negotiable instruments will be transferred from the State Bank's negotiable instrument account deposited at VSDC to the customer's negotiable instrument account deposited on the State Bank's customer account at VSDC;

c) In cases of handling pledged assets in interbank lending transactions secured by negotiable instruments, the negotiable instruments will be transferred from the pledgor to the pledgee within the State Bank's customer account opened at VSDC.

3. The State Bank shall carry out the transfer of ownership of negotiable instruments according to the Purchase and Sale Contract or the Notice of Auction Results in open market operations upon authorization by members. For discounting, pledging, margin trading of negotiable instruments, other forms of refinancing based on pledging negotiable instruments, and buying and selling negotiable instruments among members, the transfer of negotiable instruments shall be carried out in accordance with Articles 14, 15, 16, 17, and 18 of this Circular.

4. The State Bank (Trading Department) shall transfer the ownership of negotiable instruments in cases of splitting or merging financial institutions at the request of the member who is the owner of the negotiable instruments based on the Request for Transfer of Ownership of Negotiable Instruments according to Appendix 5/LK issued together with this Circular, accompanied by the State Bank's approval document regarding the splitting or merging of financial institutions and related documents (if any).

Financial institutions that are divided, merged, dissolved, or declared bankrupt must withdraw negotiable instruments in accordance with Article 11 of this Circular and close their negotiable instrument deposit accounts at the State Bank in accordance with Article 12 of this Circular before ceasing to exist. The State Bank (Trading Department) shall transfer the ownership of negotiable instruments according to the Request for Transfer of Ownership of Negotiable Instruments according to Appendix 5/LK issued together with this Circular and the State Bank's approval document regarding the division, merger, or dissolution of financial institutions or the Bankruptcy Declaration Decision of the People's Court and related documents (if any).

Article 10. Principal and interest payment for securities

1. For securities directly deposited with the State Bank

a) Securities of the book-entry type

When securities mature, the State Bank (Trading Department) shall check the completion of members' obligations to the State Bank in related securities transactions. If the member has fulfilled their obligations, procedures for principal and interest payments to the member shall be carried out. If the member has not fulfilled their obligations, provisions of Clause 4 of this Article shall apply.

b) Securities of the certificate type

When certificates-type securities reach maturity, if the member requests withdrawal of securities according to Article 11 of this Circular, the State Bank (Trading Department) shall check the completion of members' obligations to the State Bank in related securities transactions. If the member has fulfilled their obligations, the securities shall be returned to the member to process payment procedures at the issuer organization or its agent. If the member has not fulfilled their obligations, provisions of Clause 4 of this Article shall apply.

2. For securities deposited in customer accounts at the State Bank at VSDC

a) When periodic interest payment due date for interest-paying securities arrives, the State Bank (Trading Department) shall check the completion of members' obligations to the State Bank in related securities transactions. If the member has fulfilled their obligations, the State Bank (Trading Department) shall notify VSDC to confirm the list of members holding securities in customer accounts at the State Bank at VSDC so that VSDC can process interest payments for the members. If the member has not fulfilled their obligations, provisions of Clause 4 of this Article shall apply.

b) When securities reach maturity, the State Bank (Trading Department) shall check the completion of members' obligations to the State Bank in related securities transactions. If the member has fulfilled their obligations, the State Bank (Trading Department) shall notify VSDC to confirm that the related securities of the member in customer accounts at the State Bank at VSDC meet the conditions for principal and interest payments so that VSDC can process payments for the members. If the member has not fulfilled their obligations, provisions of Clause 4 of this Article shall apply.

c) The principal and interest payment for securities deposited in customer accounts at the State Bank at VSDC shall be carried out according to the agreement between the State Bank (Trading Department) and VSDC.

3. Interest and other income (if any) from securities during the period of ownership transfer from seller to buyer in term transactions on the money market shall be implemented according to the regulations of the State Bank.

4. In cases where members have not fulfilled their obligations to the State Bank, the State Bank (Trading Department) shall not release or retain the principal and interest of securities being used for these obligations. Handling of members who have not fulfilled their obligations shall be carried out according to the regulations of the State Bank for each transaction.

Article 11. Withdrawal of Valuable Instruments

1. Valuable Instruments Directly Deposited with the State Bank

When there is a need to withdraw valuable instruments of the direct deposit certificate type at the State Bank, the member shall submit to the State Bank (Trading Department) a request for withdrawal of valuable instruments according to Appendix 3/LK issued together with this Circular.

Within one (1) working day from the date of receipt of the member's request, the State Bank (Trading Department) shall check the completion of the member's obligations towards the State Bank in related transactions involving the use of valuable instruments. If the member has fulfilled their obligations, the State Bank (Trading Department) shall record the issuance of valuable instruments from the customer's account for direct deposit at the State Bank and return the valuable instrument type of certificate to the member. If the member has not fulfilled their obligations, it shall be handled in accordance with Clause 3 of this Article.

2. Valuable Instruments Deposited in Customer Accounts of the State Bank at VSDC

When there is a need to withdraw valuable instruments deposited in customer accounts of the State Bank at VSDC, the member shall submit to the State Bank (Trading Department) a request to transfer valuable instruments from the customer's account for deposit at the State Bank on the customer account of the State Bank at VSDC to the member's deposit account at VSDC.

Within one (1) working day from the date of receipt of the member's request, the State Bank (Trading Department) shall check the completion of the member's obligations towards the State Bank in related transactions involving the use of valuable instruments. If the member has fulfilled their obligations, the State Bank (Trading Department) shall request VSDC to transfer the member's valuable instruments from the customer account of the State Bank at VSDC to the member's deposit account at VSDC. If the member has not fulfilled their obligations, it shall be handled in accordance with Clause 3 of this Article.

3. In cases where the member has not completed their obligations towards the State Bank, the State Bank (Trading Department) will not release valuable instruments being used for these obligations. The handling of members who have not fulfilled their obligations shall be carried out in accordance with the regulations of the State Bank for each transaction.

Article 12. Closure of Valuable Instrument Deposit Account

1. When there is no need to deposit valuable instruments with the State Bank or before ceasing to exist due to division, separation, merger, consolidation, dissolution, or bankruptcy, the member shall prepare and directly submit or send through postal service to the main office of the State Bank (one-stop service department) a request to close the valuable instrument deposit account according to Appendix 4/LK issued together with this Circular.

2. Within five (5) working days from the date of receipt of the member's request, the State Bank (Trading Department) shall close the member's valuable instrument deposit account, request VSDC to close the corresponding valuable instrument deposit account on the customer account of the State Bank at VSDC, and notify the member.

3. In cases where a member undergoing division, merger, dissolution, or bankruptcy does not process the closure of the valuable instrument deposit account, the State Bank (Trading Department) shall close the member's account fifteen (15) working days from the date of receipt of the Governor's Decision on division, merger, dissolution, or the Bankruptcy Declaration Decision of the People's Court (if the account has no balance remaining).

Section 2

USE OF VALUABLE INSTRUMENTS IN MONEY MARKET OPERATIONS

MONEY MARKET

Article 13. Open market operations

1. The State Bank buys outright or buys on term securities

Based on the securities purchase and sale contract for the State Bank's term purchase transaction or the tender result announcement for the State Bank's outright purchase transaction, the State Bank (Trading Department) pays the purchase price for the securities and carries out the procedures to transfer ownership of the securities from the customer's securities account at the member's depositary to the State Bank's securities account for the auctioned securities.

For the State Bank's term purchase of securities transaction, on the maturity date of the contract, the member pays back the purchase price of the securities. After receiving the full amount of the repurchase price from the member, the State Bank (Trading Department) transfers ownership of the securities from the State Bank's securities account to the customer's securities account at the member's depositary.

2. The State Bank sells outright or sells on term securities

Based on the securities purchase and sale contract for the State Bank's term sale transaction or the tender result announcement for the State Bank's outright sale transaction, the member pays the purchase price for the securities and the State Bank (Trading Department) carries out the procedures to transfer ownership of the securities from the State Bank's securities account to the customer's securities account at the member's depositary.

For the State Bank's term sale of securities transaction, on the maturity date of the contract, the member resells the securities in the contract to the State Bank. Based on valid documentation, the State Bank (Trading Department) makes the payment to the member and transfers ownership of the securities from the customer's securities account at the member's depositary to the State Bank's securities account.

Article 14. Discounting of securities by the State Bank for members

1. After receiving a discount request for securities from a member, if the State Bank accepts the request, the State Bank (Trading Department) transfers ownership of the securities from the customer's securities account at the member's depositary to the State Bank's securities account for the accepted discounted securities.

2. If the State Bank accepts a term discount, the remaining term of the securities must be longer than the discount term.

After the member fulfills the commitment to repurchase the discounted securities, the State Bank (Trading Department) transfers ownership of the securities from the State Bank's securities account to the customer's securities account at the member's depositary.

Article 15. Refinancing operations collateralized by securities

1. After a member submits a refinancing loan application to the State Bank collateralized by securities and the State Bank accepts the request, the member transfers the securities as collateral to the State Bank. The State Bank (Trading Department) moves the securities from the customer's securities account at the member's depositary to the State Bank's securities account for the purpose of collateral for the member.

In the case of disbursement at the Trading Department: After completing the securities pledge, the Trading Department transfers the loan amount to the member's deposit account at the State Bank.

In the case of disbursement at the State Bank branch in the province/city: After completing the securities pledge, the Trading Department notifies the State Bank branch in the province/city where the loan disbursement will take place.

2. If a member requests to replace securities, based on the member's Securities Replacement Request Form according to Appendix 2b/LK issued with this Circular, the State Bank (Trading Department) conducts verification and accounting in accordance with the regulations ensuring the principle of releasing collateral after completing the new collateral addition.

3. If a member fully repays the principal and interest, based on the repayment request of the member and payment documentation, the State Bank (Trading Department) releases the collateral and transfers the securities from the member's collateral securities account to the customer's securities account at the member's depositary at the State Bank.

Article 16. Pledge and deposit of negotiable instruments to establish overdraft limits and overnight loans, net debt limits, centralized payment limits, and electronic settlement limits

1. After receiving the member's request for pledging or depositing negotiable instruments according to Appendix 2c/LK issued together with this Circular to establish overdraft limits, net debt limits, centralized payment limits, and electronic settlement limits, the State Bank (Trading Department) will check the validity and legality of the documents and transfer negotiable instruments from the member's customer securities account to the pledge securities account at the State Bank.

2. The State Bank (Trading Department) will release pledged or deposited negotiable instruments of members when such negotiable instruments reach their maturity date, or when members replace them with other negotiable instruments, or when members reduce or no longer need to maintain overdraft limits, net debt limits, centralized payment limits, and electronic settlement limits. Upon the member's request, the State Bank (Trading Department) will release negotiable instruments that have reached their maturity date, part or all of the pledged or deposited negotiable instruments, and transfer them from the pledge securities account to the member's customer securities account.

3. To release pledged or deposited negotiable instruments, members must submit to the State Bank (Trading Department) a request to exchange negotiable instruments according to Appendix 2b/LK issued together with this Circular or a request to release pledged or deposited negotiable instruments according to Appendix 2d/LK issued together with this Circular. The State Bank (Trading Department) will verify the completion of the member's obligations to the State Bank in related transactions. If the member has fulfilled their obligations, the State Bank (Trading Department) will proceed with the release procedures for negotiable instruments for the member.

In cases where members have not completed their obligations to the State Bank, the State Bank (Trading Department) will not release pledged or deposited negotiable instruments for these obligations. The handling of members who have not fulfilled their obligations will be carried out according to the regulations of the State Bank on pledging and depositing negotiable instruments to establish overdraft limits and overnight loans, net debt limits, centralized payment limits, and electronic settlement limits.

Section 3

NEGOTIATION OF SECURITIES AMONG MEMBERS

Article 17. Secured lending through pledge of negotiable instruments among members

1. Negotiable instruments used in secured lending transactions through pledge of negotiable instruments among members must be negotiable instruments that have not been used to guarantee the fulfillment of obligations in operations at the State Bank. These negotiable instruments must be held in custody at the State Bank, including direct custody at the State Bank or custody in the customer accounts of the State Bank at VSDC.

2. When a member (the pledgor) needs to pledge negotiable instruments to borrow funds from another member (the pledgee), the pledgor shall submit to the State Bank (Trading Department) one set of documents including:

a) A request for pledging negotiable instruments according to Appendix 6a/LK issued together with this Circular;

b) The pledge agreement between the pledgor and the pledgee (original).

3. The State Bank (Trading Department) will accept the documents, process the freeze of negotiable instruments, and transfer negotiable instruments from the member's customer securities account to the pledge securities account for interbank credit purposes of the pledgor.

4. During the pledge period, if the pledgee agrees in writing, the pledgor may request the State Bank (Trading Department) to extend the pledge period and/or exchange negotiable instruments currently frozen by the State Bank with other negotiable instruments held in custody at the State Bank. The State Bank will consider the pledgor's request after obtaining confirmation from the pledgee.

5. The State Bank will transfer negotiable instruments from the pledge securities account for interbank credit purposes to the member's customer securities account upon receipt of the pledgor's request to release negotiable instruments according to Appendix 6b/LK issued together with this Circular, accompanied by the pledgee's written confirmation agreeing to the release of negotiable instruments.

6. In cases where the pledgor cannot repay the full or partial principal and interest of the loan to the pledgee within five working days from the date of receiving a written request from the pledgee, the State Bank will proceed with the transfer of ownership of negotiable instruments from the pledgor to the pledgee based on the pledgee's written request without requiring the pledgor's (owner of the negotiable instruments) confirmation if both parties have agreed in the pledge agreement. If the pledge agreement does not specify the procedure for transferring ownership of negotiable instruments from the pledgor to the pledgee, the State Bank will only carry out the transfer of ownership of negotiable instruments from the pledgor to the pledgee based on the pledgee's written request with the pledgor's (owner of the negotiable instruments) confirmation and the settlement record between the two parties. If the pledgor fails to fulfill their obligation and does not confirm the use of collateral to settle the debt, the State Bank will not release negotiable instruments and will handle the collateral according to the law.

Article 18. Purchase and Sale of Valuable Papers among Members

1. For valuable papers directly deposited with the State Bank

a) Members may purchase and sell valuable papers that are directly deposited with the State Bank. The selling member submits to the State Bank (Trading Department) the Request for Transfer of Ownership of Valuable Papers according to Appendix 5/LK issued together with this Circular and the purchase and sale contract between both parties (original). The State Bank (Trading Department) transfers ownership of the valuable papers from the seller's customer deposit account to the buyer's account. The valuable papers will continue to be deposited at the State Bank unless the buyer requests otherwise;

b) In the case of term purchase and sale of valuable papers, the selling member submits to the State Bank (Trading Department) the Request for Transfer of Ownership of Valuable Papers according to Appendix 5/LK issued together with this Circular and the purchase and sale contract between both parties (original). The State Bank transfers ownership of the valuable papers from the term selling member to the term buying member.

On the maturity date of the contract, based on valid payment documents and the Request for Transfer of Ownership of Valuable Papers according to Appendix 5/LK issued together with this Circular submitted by the owner of the valuable papers (the term buying member), the State Bank (Trading Department) transfers ownership of the valuable papers from the term buying member to the term selling member. In other cases, the State Bank transfers ownership of the valuable papers according to the lawful agreement between the parties or as provided by law.

2. For valuable papers deposited at VSDC, members must withdraw the valuable papers from their accounts at the State Bank at VSDC before conducting the purchase and sale. The purchase and sale of valuable papers deposited at VSDC shall be carried out in accordance with the provisions of securities laws.

Chapter III

IMPLEMENTATION PROVISIONS

Article 19. Responsibilities of Units under the State Bank

1. Trading Department

a) Carry out bookkeeping for deposit, payment, interest collection, deposit fee collection, pledge, margin deposit, and transfer of ownership of valuable papers at the State Bank in accordance with regulations;

b) Implement transaction authorization on the State Bank's valuable paper deposit system for personnel of members participating in deposit operations and using valuable papers at the State Bank;

c) Provide members with the ability to check deposit balances and usage status of valuable papers through the network and statement of the customer deposit account at the State Bank;

d) Serve as the point of contact, coordinate with related units to handle difficulties and issues during the implementation of deposit operations and use of valuable papers at the State Bank;

đ) Sign agreements with VSDC regarding the use of VSDC services and electronic data transmission between the two parties in deposit operations and use of valuable papers at the State Bank.

2. Financial Accounting Department

Guide accounting for deposit transactions and use of valuable papers at the State Bank in accordance with this Circular.

3. Information Technology Department

a) Serve as the point of contact, coordinate with the Trading Department and related units to develop, install, maintain software programs related to and ensure the trading and communication infrastructure for deposit operations and use of valuable papers at the State Bank;

b) Issue digital signatures and access accounts for deposit operations and use of valuable papers at the State Bank.

4. Banking Inspection and Supervision Authority

a) Serve as the point of contact, coordinate with related units to handle administrative violations by members in accordance with this Circular and relevant laws;

b) Notify the Trading Department in the event of a member being divided, split, merged, consolidated, dissolved, or declared bankrupt.

5. Branches of the State Bank in provinces and centrally-administered cities where credit organizations and foreign bank branches are headquartered

a) Verify the legality and validity of valuable papers and retain certificate-type valuable papers for members whose headquarters are located within their jurisdiction upon delegation by the Governor of the State Bank;

b) Manage, monitor, and return certificate-type valuable papers according to notifications from the Trading Department.

Article 20. Responsibilities of Members

1. Provide and update fully and promptly files and documents as prescribed in this Circular and bear legal responsibility for the accuracy and legality of the data, documents, and files provided to the State Bank.

2. Fulfill commitments and make full and timely payments to the State Bank and other members according to signed contracts.

3. Authorize the State Bank to execute transfer of ownership of negotiable instruments in money market transactions.

4. Implement requirements notified by the State Bank related to money market transactions.

5. Pay service fees arising from the transfer of ownership of negotiable instruments as stipulated by the Ministry of Finance (if applicable).

Article 21. Transitional Provisions

1. Credit institutions, foreign bank branches, and organizations specified in Clause 2, Article 2 of this Circular that have accounts for depositing negotiable instruments at the State Bank shall continue to use such accounts to perform transactions as prescribed in this Circular.

2. Transactions related to negotiable instruments conducted before the effective date of this Circular shall continue to be carried out according to agreements previously signed between the parties involved.

Article 22. Effectiveness

1. This Circular takes effect from January 17, 2023.

2. From the date this Circular takes effect, Circular No. 04/2016/TT-NHNN dated April 15, 2016, issued by the Governor of the State Bank on the deposit and use of negotiable instruments at the State Bank shall cease to be enforced.

3. The Director of the Office, the General Manager of the Trading Department, heads of relevant units under the State Bank, the Deposit Insurance Corporation of Vietnam, and credit institutions and foreign bank branches shall be responsible for organizing the implementation of this Circular./.