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

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

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

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

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

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

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

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

No later than 4:30 p.m. on T+1 day , the depository member (TVLK) shall confirm the ability to ensure/not ensure payment for stock purchase transactions that do not require sufficient funds when placing orders of foreign institutional investors (FIIs); confirm sufficient funds/not sufficient funds to pay for securities transactions for the payment obligations of TVLK to the remaining customers.

In case of confirmation of insufficient funds for payment/unable to ensure payment ability, no later than 5:00 p.m. on T+1 day , TVLK is responsible for sending VSDC a notice of insufficient funds/list of NDTNPR accounts that do not ensure payment ability.

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

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

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

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

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

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

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

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