Circular 12/2021/TT-NHNN purchase, sale of promissory notes, treasury bills, deposit certificates, bonds

CIRCULAR

Prescribing purchase and sale by credit institutions or foreign bank branches of promissory notes, treasury bills, deposit certificates and bonds issued domestically by other credit institutions or foreign bank branches^[1]

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

Pursuant to the June 16, 2010 Law on Credit Institutions; and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the November 26, 2019 Law on Securities;

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

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

The Governor of the State Bank of Vietnam promulgates the Circular prescribing purchase and sale by credit institutions or foreign bank branches of promissory notes, treasury bills, deposit certificates and bonds issued domestically by other credit institutions or foreign bank branches.

Article 1. Scope of regulation

1. This Circular prescribes purchase and sale by credit institutions or foreign bank branches of promissory notes, treasury bills, deposit certificates and bonds (below collectively referred to as valuable papers) issued domestically by other credit institutions or foreign bank branches, which are not yet mature and the ownership of which is transferred to the purchaser without requiring the purchaser to make a commitment to sell or redeem,  or reserve the right of recourse, to such valuable papers (below referred to as purchase and sale of valuable papers).

2. This Circular does not regulate the following activities:

a/ Purchase and sale of valuable papers by credit institutions or foreign bank branches in the international market;

b/ Purchase and sale of government-guaranteed bonds issued by credit institutions;

c/ Domestic issuance of valuable papers by credit institutions or foreign bank branches; redemption and swap of bonds issued by credit institutions themselves;

d/ Definite-term purchase and sale of valuable papers among credit institutions and foreign bank branches;

dd/ Transfer of ownership over valuable papers as a result of realization of collaterals. The transfer of ownership in this case must comply with the law on secured transactions.

Article 2. Subjects of application

Sellers and purchasers of valuable papers include the following subjects:

1. Credit institutions and foreign bank branches established and operating in accordance with the Law on Credit Institutions, including commercial banks, cooperative banks, foreign bank branches, and finance companies (below collectively referred to as credit institutions and foreign bank branches).

2. Vietnamese organizations and individuals and foreign organizations and individuals purchasing and selling valuable papers from/to credit institutions and foreign bank branches

Article 3. Principles of purchase and sale of valuable papers

1. Credit institutions and foreign bank branches may purchase and sell valuable papers in conformity with the contents on purchase and sale of corporate bonds and/or other valuable papers stated in their licenses granted by the State Bank of Vietnam.

2. Purchasers and sellers shall take responsibility before law for the purchase and sale of valuable papers in accordance with this Circular and relevant laws.

3. The currency used in transactions on purchase and sale of valuable papers is Vietnam dong.

4. Valuable papers to be purchased or sold are under the lawful ownership of sellers and not yet mature for full payment of principals and interests. Sellers shall make a commitment stating that their valuable papers are not in any dispute, are allowed to be traded in accordance with law, and are not in the status of being discounted or rediscounted.

5. Credit institutions and foreign bank branches shall purchase and sell bonds in accordance with the Law on Credit Institutions, the Law on Securities, the Government’s decree on issuance of corporate bonds, other documents guiding the Law on Securities, relevant laws, and this Circular.

6. Credit institutions and foreign bank branches may only purchase promissory notes, treasury bills and deposit certificates with a remaining term to maturity shorter than 12 months. The remaining term to maturity is the period counted from the date of payment for the purchase of a valuable paper specified in Clause 3, Article 4 of this Circular to the maturity date for full payment of principals and interests of such valuable paper.

7. Foreign bank branches may not purchase convertible bonds.

8. For valuable papers issued by finance companies or financial leasing companies, credit institutions and foreign bank branches may only purchase or sell them from/to organizations (including also credit institutions and foreign bank branches).

Article 4. Information on transactions

All transactions on purchase and sale of valuable papers shall be carried out in a form compliant with relevant laws. An agreement on purchase and sale of a valuable paper must have at least the following contents:

1. Information on the seller and purchaser.

2. Name of the valuable paper; credit institution or foreign bank branch issuing the valuable paper; term to maturity of the valuable paper; maturity date for full payment of principals and interests of the valuable paper; par value of the valuable paper.

3. Date of payment for the purchase of the valuable paper.

4. The amount to be paid for the purchase of the valuable paper.

5. Rights and obligations of the seller and purchaser.

Article 5. Internal regulations

1. Pursuant to the Law on Credit Institutions, this Circular and relevant laws, credit institutions and foreign bank branches shall promulgate their internal regulations on purchase and sale of valuable papers as suitable to their management models and business characteristics and conditions, ensuring the safety of their operation.

2. Internal regulations must specify responsibilities and obligations of each division and individual involved in carrying out transactions on purchase and sale of valuable papers.

3. Internal regulations must at least contain professional processes and contents on risk management for purchase and sale of valuable papers.

Article 6. Implementation provisions

1. This Circular takes effect on October 27, 2021.

2. This Circular amends and supplements a number of articles of Circular No. 01/2021/TT-NHNN of March 31, 2021, of the Governor of the State Bank of Vietnam, prescribing the domestic issuance of promissory notes, treasury bills, deposit certificates and bonds by credit institutions and foreign bank branches, as follows:

a/ To amend and supplement Clause 1, Article 4 as follows:

“1. Purchasers of valuable papers include organizations (including also credit institutions and foreign bank branches), Vietnamese individuals, and foreign organizations and individuals, except those specified in Clauses 2, 3 and 4 of this Article.”

b/ To add the following Clause 4 to Article 4:

“4. For valuable papers being promissory notes, treasury bills or deposit certificates, credit institutions and foreign bank branches may only purchase them if their term to maturity is shorter than 12 months.”

Article 7. Organization of implementation

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

State Bank Governor
NGUYEN THI HONG