Circular No. 23/2017/TT-BTC amends and supplements certain provisions of Circular No. 11/2016/TT-BTC dated January 19, 2016 guiding certain provisions of Decree No. 42/2015/NĐ-CP dated May 5, 2015 of the Government on derivative securities and the derivative securities market.

CIRCULAR

Amending and supplementing some articles of Circular No. 11/2016/TT-BTC dated January 19, 2016 guiding certain provisions of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 on derivative securities and the derivative securities market

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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 of the Government 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 providing for 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 amending and supplementing some articles of Circular No. 11/2016/TT-BTC dated January 19, 2016 guiding certain provisions of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 of the Government on derivative securities and the derivative securities market.

Article 1. Amending and supplementing some articles of Circular No. 11/2016/TT-BTC dated January 19, 2016 guiding certain provisions of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 of the Government on derivative securities and the derivative securities market as follows:

1. Supplement Clause 24 of Article 2 as follows:

"24. A trading account aggregate is a trading account of an investor where long and short positions of the same futures contract (with the same underlying asset and the same maturity month) are opened and maintained until the clearing member proposes netting based on agreement or at the request of the investor."

2. Point c Clause 2 of Article 6 is amended and supplemented as follows:

"c. Investors must ensure their position on the trading account within the limits set out in the regulations of the Vietnam Securities Depository. In case of exceeding the position limit, investors are responsible for executing offset transactions to reduce their position, and to top up margin (if necessary) within the time limit stipulated in the regulations of the Vietnam Securities Depository.

After the specified period, if the investor fails to complete the reduction of their position, the clearing member may execute offset transactions to close part or all of the investor's position. If the clearing member does not execute offset transactions to close the investor's position, the Vietnam Securities Depository may execute offset transactions to close part or all of the position of the investor registered under the clearing member."

4. Amending Clause 1 and Clause 2, Article 8 as follows:

"4. Investors are allowed to open trading accounts aggregate in the following cases:

1. A fund management company as provided for in Clause 2 of this Article may open one (01) trading account aggregate for domestic entrusted investors and one (01) trading account aggregate for foreign entrusted investors;
2. An overseas securities company as provided for in Clause 3 of this Article may open one (01) trading account aggregate to conduct brokerage activities for foreign investors;

c. Other cases as guided by the Vietnam Securities Depository."

4. Clause 1 of Article 8 is amended and supplemented as follows:

"1. The clearing member shall open a margin deposit account for each investor named under the clearing member according to the provisions of point a Clause 4 of Article 26 of Government Decree No. 42/2015/NĐ-CP and shall be responsible for managing the margin deposits separately for each investor. The margin deposit belongs to the investor and does not belong to the clearing member. The clearing member may use the margin deposit account of the investor according to the provisions of Clause 2 of this Article.

The clearing member shall open one (01) 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 shall open securities margin accounts with the clearing member."

5. Points a and b Clause 1 of Article 9 are amended and supplemented as follows:

"a) In the case of settlement of profit and loss positions:

- On the trading day before the final trading day, the value of the profit and loss settlement amount is determined daily based on the 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 the difference between the end-of-day settlement price compared to the settlement price (for positions just opened on that day); or the difference between the settlement price and the end-of-day settlement price of the previous trading day (for early closure of positions); or the difference between the closing settlement price and the opening settlement price (for opening and closing positions on the same trading day).

- On the final trading day, the value of the profit and loss settlement amount is determined based on the open positions on the investor's trading account and the difference between the final settlement price compared to the end-of-day settlement price of the previous trading day; or the difference between the final settlement price compared to the settlement price (for positions just opened on that day); or the difference between the settlement price and the end-of-day settlement price of the previous trading day (for early closure of positions); or the difference between the closing settlement price and the opening settlement price (for opening and closing positions on the final trading day).

These prices are published on the electronic information website of the Stock Exchange.

b) In the case of settlement upon contract performance:

- For contracts settled in cash: the contract settlement is completed when the profit and loss settlement of the final trading day is completed.

- For contracts settled through delivery of the underlying asset: the selling investor must deliver the underlying asset and the buying investor must make payment according to the terms of the contract and the Regulations of the Vietnam Securities Depository."

6. Amend point b, supplement point c Clause 3 of Article 19 as follows:

"b) In the case of settlement through the transfer of underlying assets: the clearing member selling must transfer the full quantity and correct type of underlying assets that can be transferred according to the derivative securities contract into the securities margin account of the clearing member as required by the Vietnam Securities Depository Center. The clearing member may use borrowed securities from the securities lending and borrowing system of the Vietnam Securities Depository Center for settlement in accordance with the regulations of the Vietnam Securities Depository Center."

The purchasing clearing member shall only receive the transferred asset after fully paying the amount as required by the Vietnam Securities Depository Center, then immediately allocate it to the purchasing investor;

c. In the case where the clearing member does not have sufficient funds or government bonds to transfer, the Vietnam Securities Depository Center may settle the government bond futures contract in cash form. In this case, the clearing member who does not have sufficient funds or government bonds to transfer shall be responsible for compensating the related clearing member through the Vietnam Securities Depository Center, with an amount not less than five percent (5%) of the contract value. The Vietnam Securities Depository Center shall specify the method of determining the compensation value and payment method.

7. Point d Clause 2 Article 24 is amended and supplemented as follows:

“d) Utilize contributions from other clearing members at a ratio determined by the Vietnam Securities Depository Center. In this case, the Vietnam Securities Depository Center shall notify the relevant clearing members in detail about the use of the clearing fund on the day of use. A clearing member who loses its ability to pay shall be obligated to repay the entire amount of assets used from the clearing fund and pay interest to other members at a rate determined by the Vietnam Securities Depository Center in accordance with current laws;”

8. Clause 5 Article 24 is added as follows:

“5. In the event that a clearing member loses its ability to pay and has been supported by the Vietnam Securities Depository Center in accordance with the settlement measures stipulated in Clauses 2 and 3 of this Article, the clearing member shall be responsible for repaying the Vietnam Securities Depository Center the entire portion of assets used from the clearing fund, risk reserve fund, and other sources to ensure settlement and bear all related costs incurred.”

9. Point a Clause 1 Article 28 is amended and supplemented as follows:

“a) Within ten (10) days from the end of the month for monthly reports;"

Article 2. Delete point b Clause 1 Article 28.

          Article 3. Implementation Provisions

1. This Circular takes effect from May 1, 2017.

2. The State Securities Commission, Stock Exchanges, Vietnam Securities Depository Center, derivative securities service business organizations, trading members, clearing members, and other organizations and individuals involved in derivative securities investment and trading activities and the derivative securities market in Vietnam shall be responsible for implementing this Circular.

3. Any amendments, supplements, or replacements to this Circular shall be decided by the Minister of Finance./.