Clearing and settlement are final steps for finalizing the trading process. For the purpose of clearing and settlement, all data of trading results are sent to Vietnam Securities Depository (VSD) by exchanges when closing out stock-exchange session. Funds clearing is made for each clearing member by each market. For transactions of shares, fund certificates, bonds of listed companies or companies registering for trading, cash payment will be made on the basis that VSD shall implement gross clearing between the amount receivable and payable for transactions executed at the same time and with the same settlement method at stock exchanges. VSD applies the following methods of clearing and settlement for securities transactions:
- For bond: multilateral netting with T+1 settlement cycle.
- For shares and certificate:
Settlement for securities transaction is executed in accordance with the principle:
- Securities settlement is made by VSD in the form of book-entry transfer via depository accounts of selling and buying members; the settlement bank (Bank for Investment and Development of Vietnam) makes payment via cash accounts of custodian members opened at the Settlement bank, based on funds clearing results from VSD .
- Settlement for securities transactions is made in comply with the principle: securities delivery at VSD and cash transfer at the settlement bank shall be surely and simultaneously carried out following the “Delivery Versus Payment” principal (DVP). Accordingly, buyers and sellers must have sufficient money to fulfill settlement obligations. Therefore, it helps mitigate settlement risks for trading participants.
Processes and procedures of securities clearing and settlement are specified in the Guideline on Securities Clearing and Settlement issued together with Decision No.27/QĐ-VSD dated 22 April 2010 and Decision No.102/QĐ-VSD dated 14 July 2010 on amending and supplementing the Guideline on Securities Clearing and Settlement promulgated with Decision No.27/QĐ-VSD dated 22 April 2010 by Chief Executive Officer of VSD.
Guideline on Securities Clearing and Settlement (attached)
Decision on amending and supplementing the Guideline on Securities Clearing and Settlement (attached).