Documents and procedures for registering as a special trading member according to the law

1. What is a special trading member in the derivatives market?

According to Article 3 of Decree 158/2020/ND-CP, special trading members in the derivatives market are regulated as follows:

Special trading members in the derivatives market (hereinafter referred to as special trading members) are commercial banks, Foreign bank branches approved by the Stock Exchange to become special trading members to trade derivative securities on Government bonds.

2. Can a commercial bank become a special trading member if it is in the process of merging?

According to the provisions of Clause 1, Article 23 of Decree 158/20220/ND-CP, the conditions for a commercial bank or foreign bank branch to register as a special trading member on the Stock Exchange include:

– Being a trading member special transactions in the Government bond market of the Stock Exchange;

– Obtain written approval from the State Bank to allow investment in derivative securities;

– Have a clearing and settlement trust contract with general clearing members in case of registration as a non-clearing member;

– Meet the requirements of the Stock Exchange on technology infrastructure information and business processes for derivatives transactions;

– Not in the process of consolidation, merger, or dissolution; is not under control, special control, suspension of operations, or temporary suspension of operations according to the decision of a competent authority.

Thus, a commercial bank registering as a special trading member on the Stock Exchange must not be in the process of consolidation, merger, or dissolution; is not under control, special control, suspension of operations, or temporary suspension of operations according to the decision of a competent authority. Therefore, your bank that is in the process of merging with Bank Y is not eligible to register as a special trading member on the Stock Exchange.

3. How are the dossiers and procedures for registering as a special trading member?

According to Article 23 of Decree 158/2020/ND-CP, the registration as a special trading member is regulated as follows:

– The dossier for registering as a special trading member includes:

+ Registration paper special trading members on the derivatives market according to Form No. 06 Appendix issued with this Decree;

+ Document of the State Bank of Vietnam permitting derivative securities investment;

+ Explanation of information technology infrastructure and business processes according to the instructions of the Stock Exchange;

+ Compensation trust contract clearing and settlement with general clearing members in case of registration as a non-clearing member.

– Special trading member registration dossier is made into 01 original set. In case the documents in the file are copies, they must be copies from the original book or certified. This dossier is sent to the Stock Exchange in person or by post.

– Within 07 working days from the date of receiving the special trading member registration dossier:

+ In case the dossier is complete and valid, the Stock Exchange will send a document requesting the organization registering for special trading membership to complete the facilities, system installation, and connection. software for transmitting and receiving transaction data, testing transactions and other transaction implementation work;

+ In case the dossier is not complete and valid, the Stock Exchange will issue a document requesting the organization registering special trading members to amend and supplement.

– Within 05 working days from the date the commercial bank or foreign bank branch completes the transaction preparation work, the Stock Exchange issues a Decision approving the status of special trading member and publishes information about the new member on the information disclosure medium of the Stock Exchange.

– The Stock Exchange refuses to approve the status of special trading member in the following cases:

+ The organization registering for membership does not meet the conditions to become a special trading member;

+ The membership registration dossier contains fake documents or has false information;

+ Commercial banks, foreign bank branches do not complete the procedures to be granted a Decision approving special trading membership within 90 days from the date the Stock Exchange sends a document to the commercial bank, foreign bank branch as prescribed in Clause 4 of this Article.

The Stock Exchange sends a document to the commercial bank, foreign bank branch registering to become a member, clearly stating the reason for refusal and disclosing information on the information disclosure medium of the Stock Exchange.

– Suspension Trading activities of special trading members, termination and cancellation of special trading member status, forms of handling violations of special trading members and other activities related to special trading members shall be carried out in accordance with the regulations of the Minister of Finance and the regulations of the Stock Exchange.

– Commercial banks and foreign bank branches can only re-register as special trading members after 02 years from date of voluntary cancellation of membership or 03 years from the date of mandatory cancellation of membership.