Integrated document No. 03/VBHN-NHNN dated January 07, 2025 Circular on prescribing credit institutions and foreign bank branches’ trading of deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches

CIRCULAR

PRESCRIBING CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES’ TRADING OF[1] DEPOSIT CERTIFICATES AND BONDS DOMESTICALLY ISSUED BY OTHER CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

The Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming into force from October 27, 2021, is amended by:

The Circular No. 59/2024/TT-NHNN dated December 31, 2024 of the Governor of the State Bank of Vietnam providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on amendments to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on Securities dated November 26, 2019;

Pursuant to the Government’s Decree No. 16/2017/ND-CP dated February 17, 2017 defining functions, tasks, powers and organizational structure of the State Bank of Vietnam (SBV);

At the request of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam (SBV) promulgates a Circular prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches[2].

Article 1. Scope

1. This Circular provides regulations on credit institutions and foreign bank branches’ trading of [3] deposit certificates and bonds which are domestically issued by other credit institutions and foreign bank branches (hereinafter referred to as “valuable papers”) and unmatured, whereby buyers receive the ownership to valuable papers without a commitment to re-sell or re-purchase those valuable papers or reserving rights of recourse (hereinafter referred to as “trading of valuable papers”).

2. The following activities shall not be subjected to the scope of this Circular:

a) Trading of valuable papers issued by credit institutions and foreign bank branches on the international market;

b) Trading of bonds issued by credit institutions under the Government's guarantee;

c) Domestic issuance of valuable papers by credit institutions and foreign bank branches; credit institutions’ repurchase and swap of bonds they issued;

d) Repo or reverse repo transactions in valuable papers between credit institutions and foreign bank branches;

dd) Transfer of ownership to valuable papers due to collateral disposition. The transfer of ownership in this case shall be carried out in accordance with law regulations on secured transactions.

Article 2. Regulated entities

Sellers and buyers of valuable papers, including:

1. [4] Credit institutions and foreign bank branches established and operating in accordance with provisions of the Law of Credit Institutions, including: commercial banks, cooperative banks, non-bank credit institutions, and foreign bank branches (hereinafter referred to as “credit institutions, FBBs”).<0}

2. Vietnamese and foreign organizations and individuals carrying out the trading of valuable papers with credit institutions/FBBs.

Article 3. Rules for trading of valuable papers

1. [5] Credit institutions and FBBs are allowed to carry out trading of valuable papers when such trading activities are permitted by law and fall within the scope of their establishment and operation licenses (for credit institutions) or establishment licenses (for FBBs) issued by SBV (hereinafter referred to as “License”) as follows:

a) Credit institutions (except those specified in point b of this clause), FBBs are allowed to carry out trading of deposit certificates if their license covers trading of other valuable papers; are allowed to carry out trading of bonds issued by other credit institutions if their license covers trading of corporate bonds;

b) Specialized finance companies are allowed to carry out trading of deposit certificates if their license covers trading of deposit certificates domestically issued by credit institutions, FBBs.

2. Buyers and sellers shall assume legal responsibility for their compliance with regulations herein and relevant laws when carrying out trading of valuable papers.

3. VND (Vietnamese Dong) shall be the currency used in trading of valuable papers.

4. The financial instrument to be purchased or sold is under the lawful ownership of the seller and is not matured; the seller undertakes that the financial instrument is not in any disputes, is eligible for trading as prescribed by law, and is not undergoing any discounting or rediscounting.

5. [6] Credit institutions, FBBs (except specialized finance companies) shall carry out trading of bonds domestically issued by other credit institution in accordance with provisions of the Law on Credit Institutions, the Law on Securities, Government’s Decrees on issuance of corporate bonds, legislative documents providing guidance on the Law on Securities, relevant laws and this Circular.

6. Credit institutions/FBBs shall only purchase [7] deposit certificates whose remaining term to maturity is less than 12 months. The remaining term to maturity is the length of time commencing on the date of payment for the financial instrument as prescribed in Clause 3 Article 4 hereof and ending on the maturity date of that financial instrument on which its principal and interest must be fully paid.

7. FBBs shall not be allowed to purchase convertible bonds.

8. [8] Credit institutions, FBBs shall only carry out trading of valuable papers issued by general finance companies or specialized finance companies with organizations (including credit institutions, FBBs).

Article 4. Transaction information

The form of transactions in valuable papers must comply with relevant laws. An agreement on trading of financial instrument shall, inter alia, include the following contents:

1. Information about the seller and the buyer.

2. Name of the financial instrument; issuer; term, maturity date and value determined according to face value of the financial instrument.

3. Date of payment for financial instrument.

4. Payment amount for financial instrument.

5. Rights and obligations of the seller and the buyer.

Article 5. Internal regulations

1. Pursuant to regulations of the Law on Credit Institutions, this Circular and relevant laws, credit institutions/FBBs shall promulgate their internal regulations on trading of valuable papers which must be conformable with their management models, business characteristics and conditions, and ensure their safe operation.

2. Responsibilities and obligations of each department and individual involved in trading of valuable papers must be specified in the internal regulations.

3. Internal regulations shall include at least business processes and regulations on management risks associated with trading of valuable papers.

Article 6. Implementation[9]

1. This Circular comes into force from October 27, 2021.

2. This Circular provides amendments to the Circular No. 01/2021/TT-NHNN dated March 31, 2021 of the SBV's Governor on domestic issuance of promissory notes, treasury bills, deposit certificates and bonds by credit institutions and foreign bank branches. To be specific:

a) Clause 1 Article 4 is amended as follows:

 “1. Buyers of valuable papers are domestic organizations (including credit institutions and FBBs), Vietnamese people, and foreign organizations and foreigners, except those specified in Clause 2, Clause 3 and Clause 4 of this Article.”

b) Clause 4 is added to Article 4 as follows:

 “4. With regard to valuable papers which are promissory notes, treasury bills and deposit certificates, credit institutions and FBBs shall only purchase valuable papers whose term is less than 12 months.”

Article 7. Implementation organization

The Chief of Office, the Director of the Monetary Policy Department, heads of units affiliated to the State Bank of Vietnam, credit institutions and foreign bank branches shall organize the implementation of this Circular./.

[1] The phrase “kỳ phiếu, tín phiếu” (“promissory notes, treasury bills”) is abrogated according to Article 2 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[2] The Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches is promulgated pursuant to:

 “The Law on the State Bank of Vietnam dated June 16, 2010;

The Law on Credit Institutions dated January 18, 2024;

The Law on Securities dated November 26, 2019; the Law providing amendments to Law on Securities, Law on Accounting, Law on Independent Audit, Law on State Budget, Law on Management and Use of Public Property, Law on Tax Administration, Law on Personal Income Tax, Law on National Reserves, and Law on Penalties for Administrative Violations dated November 29, 2024;

The Government's Decree No. 102/2022/ND-CP dated December 12, 2022 prescribing functions, tasks, powers and organizational structure of the State Bank of Vietnam (SBV);

And at the request of the Director of the Monetary Policy Department;”

[3] The phrase “kỳ phiếu, tín phiếu” (“promissory notes, treasury bills”) is abrogated according to Article 2 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[4] This clause is amended according to clause 1 Article 1 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[5] This clause is amended according to clause 2 Article 1 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[6] This clause is amended according to clause 3 Article 1 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[7] The phrase “kỳ phiếu, tín phiếu” (“promissory notes, treasury bills”) is abrogated according to Article 2 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[8] This clause is amended according to clause 4 Article 1 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025.

[9] Articles 3 and 4 of the Circular No. 59/2024/TT-NHNN providing amendments to Circular No. 12/2021/TT-NHNN dated July 30, 2021 of the Governor of the State Bank of Vietnam prescribing credit institutions and foreign bank branches’ trading of promissory notes, treasury bills, deposit certificates and bonds domestically issued by other credit institutions and foreign bank branches, coming to force from March 15, 2025, stipulate as follows:

 “Article 3. Responsibility for implementation

The Chief of Office, the Director of the Monetary Policy Department, heads of units affiliated to the State Bank of Vietnam, credit institutions and FBBs are responsible for the implementation of this Circular.

Article 4. Effect

1. This Circular comes into force from March 15, 2025.

2. Credit institutions, FBBs shall carry out trading of promissory notes, treasury bills issued before the effective date of the 2024 the Law on Credit Institutions in the same manner as trading of deposit certificates prescribed in the Circular No. 12/2021/TT-NHNN, as amended in this Circular.”