The State Securities Commission is finalizing the draft Circular amending and supplementing a number of articles of Circular No. 119/2020/TT-BTC and Circular No. 96/2020/TT-BTC which have been amended and supplemented by Circular No. 68/2024/TT-BTC. The draft has amended and supplemented a number of new regulations so that the registration, depository, clearing and settlement of securities transactions take place smoothly and safely, in line with the features of the KRX System and ensuring the upgrading criteria.
It is expected that this Circular will soon be submitted to the Ministry of Finance for consideration and promulgation under the simplified procedures. The promulgation of the Circular under the simplified procedures is very necessary to meet the expected official operation time of the KRX System in early May, when this system has many new features compared to the current system.
Will change regulations on securities registration and depository activities
According to information from the Drafting Committee, in the current system, the identification information of securities owners is the identification number (ownership registration number), the date of issue of valid documents issued by competent authorities of Vietnam or foreign countries to organizations and individuals owning securities, recorded by the Vietnam Securities Depository and Clearing Corporation (VSDC) to identify, monitor and manage information of securities owners on the VSDC system.
However, on the KRX System, the securities owner and investor identification information (SID) is a 15-character investor identification code automatically generated by the system for the investor based on the ownership registration number, date of issue of the ownership registration number and type of investor.
Therefore, to be consistent with the method of determining the identification information of the owner and investor of the KRX System, the new draft Circular will supplement the explanation of the term "identification information of the owner of securities, investor" according to the design features of the KRX System for depository members and VSDC to use consistently in the process of processing securities registration and depository records. Specifically, the draft supplements the definition: " Identification information of the owner of securities, investor is information determined based on the registration number, date of issuance of the registration number and type of investor when the depository member, issuer, or public company registers investor information on the system at the Vietnam Securities Depository and Clearing Corporation . The registration number is specified in the regulations of the Vietnam Securities Depository and Clearing Corporation" .
In addition, on the current system, VSDC simultaneously uses both paper documents and electronic transactions on the connection system between VSDC and members. Meanwhile, the KRX system has developed electronic processing features for all securities registration and depository operations.
Therefore, in order to exploit the new system features as well as meet the requirements of digital transformation according to the Government 's general policy, the draft Circular clearly stipulates the sending and receiving of electronic documents, the principles of processing members' business records with VSDC in accordance with the electronic business features on the new system and clearly stipulates the responsibilities of members to ensure the accuracy of information sent to VSDC.
Another new point is that in the current system, fractional shares and fractional shares arising from exercising rights on which account will be allocated to that account. However, on the KRX System, in case an investor has many accounts opened at many securities companies and these accounts all have the same securities code for exercising rights, the fractional shares and fractional shares arising from exercising rights will be allocated to the investor's uncustodial account at the issuer (which is the default account created by the KRX System for the investor). Accordingly, the draft circular will amend and supplement the regulations on the allocation of cumulative fractional shares to match the features of the KRX system.
In addition, regarding securities transfer activities, the current system allows the transfer of unrealized rights between accounts of the same investor even if the investor has sold all the securities. Meanwhile, the KRX System only allows the transfer of rights when there are original securities that have generated rights. Therefore, the draft will also amend and supplement the regulations on securities transfer and accompanying rights (if any) to comply with the KRX System and resolve practical problems.
In particular, the draft will also add a case of transferring ownership to handle the purchase of shares by foreign investors who are organizations that do not require sufficient funds when placing orders (Non-Prefunding transactions) when applying KRX and handling collateral to recover used money from the payment support fund because the KRX system does not allow backtracking or cancellation for transactions with insufficient funds.
Securities transaction clearing and settlement activities have many new features.
According to the Drafting Committee, the current clearing and settlement activities are not in accordance with the Central Clearing Counterparty (CCP) Mechanism and are implemented according to the provisions of Circular No. 05/2015/TT-BTC and Circular No. 68/2024/TT-BTC. Accordingly, the current regulations allow for the postponement and cancellation of payments for transactions lacking payment funds, there are no regulations on borrowing securities through the securities lending and borrowing system according to the order matching mechanism, and there are no regulations on eliminating default payments from the system. At the same time, the current regulations allow foreign institutional investors to only transfer money to the payment account of the depository member opened at the payment bank on the morning of T+2 when purchasing shares; and there is no division according to market areas related to VSDC members.
Meanwhile, the KRX system has other features such as: not allowing to reverse or cancel payments for transactions lacking payment funds that have completed error correction on T+1 day, transactions lacking funds on T+2 day; allowing to borrow securities through the securities lending and borrowing system according to the order matching mechanism to ensure sufficient securities for payment; defaulting to reject payments in some cases where the KRX system identifies insufficient input data fields; and dividing into 4 market areas, related to VSDC members (including depository members and clearing members).
Because of the above new points, the draft new Circular will amend the interpretation of the term "Market area" to comprehensively explain VSDC members because the current regulations only include clearing members but not depository members.
In addition, the draft will add Chapter IVa to guide the clearing and settlement of securities transactions when the CCP mechanism has not been implemented and is consistent with the KRX System. The contents of Chapter IVa are built on the basis of inheriting the relevant regulations in Circular No. 05/2015/TT-BTC and amending and supplementing new regulations to be consistent with the features of the KRX system and still meeting the criteria for upgrading the securities market as set out in Circular No. 68/2024/TT-BTC.
For stock purchase transactions of foreign investors who are organizations that do not require sufficient funds when placing orders, which are being implemented according to Circular No. 68/2024/TT-BTC, adjustments will be made to ensure compliance with the business processing activities of the KRX system and minimize differences in the application of Non-Prefunding transactions compared to the provisions of Circular No. 68/2024/TT-BTC.
Draft amendments to the regulations on the use and repayment of the payment support fund to meet the KRX system. Specifically, because the KRX system does not allow for extension of deadlines or elimination of payments for transactions with insufficient funds, in order to ensure safe and smooth transaction payment activities, the use of the payment support fund will be amended to support lending for the entire amount of the shortage arising on the payment date instead of only supporting lending within a certain limit as it is currently. The above payment support is implemented in the following order: using the contribution of the insolvent depository member itself, borrowing from the payment bank, using the contribution of other depository members.
To partially limit the risk in case a depository member becomes insolvent and uses the contributions of other depository members, the draft Circular stipulates that VSDC is allowed to freeze and sell securities on the self-trading account of the insolvent depository member, and securities received from transactions with insufficient funds.
At the same time, VSDC is required to request the payment bank to transfer the amount received from the securities sale transaction on the depository member's proprietary trading account to the payment support fund account to recover the amount that the insolvent depository member has used from the contribution of other depository members and to compensate for related costs. In addition, sanctions for violations such as suspension of securities transaction payment activities and suspension of member trading activities in case the member fails to repay the payment support fund usage on time are increased.
Source: https://baodautu.vn/sua-doi-quy-dinh-dang-ky-luu-ky-bu-tru-thanh-toan-san-sang-cho-krx-van-hanh-d269138.html
Comment (0)