History
In the initial stage of organizing securities market, registration, depository, clearing and settlement functions are performed by Hanoi and Ho Chi Minh securities trading centers. Registration, depository, clearing and settlement system of the two securities trading centers are operated separately. Besides, services supplied by the system are mainly depository, clearing, settlement and corporate actions with reference to securities which are listed on and registered with the two centers. Performing the system under this model is not highly efficient and a waste of resources.
In order to increase efficiency in performance of the securities market in general and registration, depository, clearing and settlement system in particular, the Prime Minister issued Decision No. 189/2005/QD-TTg dated July 27th 2005 on establishing Vietnam Securities Depository (VSD). The establishment of VSD in the context that Vietnam Securities Market is developing rapidly is completely suitable with requirements from market practices and also with recommendations from international organizations as G30, IOSCO whereby each market shall have an independent central securities depository.
With the main function of supporting post-trade activities, the operation of VSD really helps to minimize costs and improve processing capacity of the whole market thanks to economy of scale.
Besides, by re-organizing functions among VSD, Stock Exchange and Securities Trading Center whereby post-trade services are separated from trading services undertaken by the Stock Exchange and the Securities Trading Center, each organization shall specialize much more in their own activities. In addition, scope and quality of supplied services are improved thanks to bettering organization and administration operation of each organization.
Organizational model of VSD
On July 27th 2005, the Prime Minister issued Decision No. 189/2005/QĐ-TTg on the establishment of VSD, the sole agent providing supporting services to complete transactions on Vietnam Securities Market.
On May 3rd 2006, VSD officially operated based on taking over all the securities registration, depository, clearing and settlement functions from Ho Chi Minh Securities Trading Center (currently Ho Chi Minh Stock Exchange) and Hanoi Securities Trading Center (currently Hanoi Stock Exchange).
On December 18th 2008, The Prime Minister issued Decision No. 171/2008/QD-TTg on the establishment of VSD based on the conversion and reorganization of the current VSD into a wholly state-owned limited liability company in conformity with the Securities Law.
On this basis, VSD officially changed organizational model into a wholly state-owned limited liability company on July 29th 2009.
Functions and tasks
As stipulated in Decision No. 189/2005/QD-TTg, VSD shall undertake securities registration, depository, clearing, settlement and provide supporting services in trading securities.
Functions and tasks of VSD are specified in Decision No. 1393/QD-BTC dated 4th June 2009 by the Minister of Finance on Organization Charter and Operation of VSD as followings:
1. Providing registration, depository, clearing and settlement services with reference to securities listed on stock exchanges, and securities of unlisted public companies as governed by applicable laws;
2. Allocating local securities codes and international securities identification numbers (ISINs) for securities listed on stock exchanges and securities of public companies;
3. Processing corporate entitlements of securities owners for issuers that are public companies, and those whose securities are listed on stock exchanges;
4. Acting as a dividend and bond interest payment agent for issuers;
5. Acting as a transfer agent and transferring ownership titles for transfers which do not arise from securities transactions as stipulated by applicable laws;
6. Providing registration and depository services, and acting as a transfer agent for other securities upon agreement with issuers;
7. Providing other services relating to securities registered with VSD to support securities transactions;
8. Applying risk control mechanisms, including management of the settlement compensation fund, to timely support depository members in case of their temporary default in order to ensure safety for the securities settlement system;
9. Supervising depository members’ activities to ensure their compliance with VSD’s business guidelines for protection of securities owners’ assets;
10. Managing foreign securities holdings as regulated by applicable laws;
11. Giving support to market development via provision of services relating to technical infrastructure and information with an aim to develop securities market;
12. Taking part in international cooperation programs in the field of securities and securities market as regulated by the State Securities Commission and the Ministry of Finance;
13. Implementing other functions and tasks upon the approval of the Ministry of Finance.