Circular No. 17/2016/TT-NHNN dated June 30, 2016 of the State Bank of Vietnam on money brokerage operations of commercial banks and branches of foreign banks

CIRCULAR

Prescribing monetary brokerage operations of commercial banks and foreign bank branches[1]

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to the Government’s Decree No. 156/2013/ND-CP of November 11, 2013, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam (below referred to as the State Bank);

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

The State Bank Governor promulgates the Circular prescribing monetary brokerage operations of commercial banks and foreign bank branches.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular prescribes monetary brokerage operations of commercial banks and foreign bank branches for clients.

Article 2. Subjects of application

1. Monetary brokers (below referred to as brokers) being commercial banks or foreign bank branches which have obtained the State Bank’s approval to perform monetary brokerage operations as stated in their establishment and operation licenses, for commercial banks, or establishment licenses, for foreign bank branches, granted by the State Bank.

2. Clients provided with monetary brokerage services (below referred to as clients) being credit institutions or foreign bank branches established and operating under the Law on Credit Institutions and other financial institutions.

Article 3. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Monetary brokerage means the provision of intermediary services with collection of a brokerage charge to arrange the performance of banking operations or performance of other business activities among credit institutions, foreign bank branches and other financial institutions as prescribed in Article 5 of this Circular.

2. Other financial institutions are financial institutions defined in the Anti-Money Laundering Law.

3. Monetary brokerage charge means an amount of money that a client has to pay to a broker for the provision of monetary brokerage services.

Article 4. Monetary brokerage principles

1. Commercial banks and foreign bank branches shall issue their own internal regulations on monetary brokerage operations in accordance with this Circular and relevant laws, Such a regulation must at least contain the following contents: the process of and procedures for performing monetary brokerage operations; scope of liability and powers of persons involved in monetary brokerage operations; and management of risks over monetary brokerage operations.

Within 10 days after issuing, modifying, supplementing or replacing its internal regulation on monetary brokerage operations, a commercial bank or foreign bank branch shall send directly or by post to the State Bank (the Banking Supervision Agency) the issued, modified or supplemented regulation or the replacement regulation.

2. The performance of monetary brokerage operations must comply with this Circular and relevant laws.

3.  To have at least one client being a credit institution or foreign bank branch established and operating under the Law on Credit Institutions.

4. To ensure honesty and objectivity and serve lawful interests of clients:

a/ To fully and accurately reflect information on brokered transactions and other information which are provided by permission of clients;

b/ Not to provide false information or interfere in any form to falsify information, leading to clients’ inaccurate assessment of brokered transactions and/or affecting clients’ lawful interests.

5. Not to provide information on clients and brokered transactions to a third party, unless it is so requested by a competent state agency in accordance with law or so agreed by clients.

6. A commercial bank or foreign bank branches may not concurrently act as the broker and the performer of the brokered transaction in the relation with a client.

Chapter II

SPECIFIC PROVISIONS

Article 5. Scope of monetary brokerage

Commercial banks and foreign bank branches may provide monetary brokerage services for banking operations and other business activities as prescribed in the Law on Credit Institutions and guided by the State Bank.

Article 6. Modes of performing monetary brokerage operations

A broker may perform monetary brokerage operations via direct transactions or indirect transactions via computer and/or telephone networks with clients, or by other modes agreed upon by involved parties in conformity with the parties’ conditions and in accordance with law.

Article 7. Monetary brokerage contracts

A broker and a client shall enter into a monetary brokerage contract on the basis of mutual agreement and conformity with this Circular and relevant laws. The contract must have the following main contents:

1. Information on the broker and the client.

2. Mode of performing monetary brokerage operations.

3. Monetary brokerage charge and other related expenses (if any).

4. Payment mode and deadline.

5. Interests and obligations of the parties.

6. Liability for breach of contract.

7. Dispute settlement provisions.

8. Validity of contract.

9. Other agreements in accordance with this Circular and relevant laws.

Article 8. Monetary brokerage charge

Monetary brokerage charge and other related expenses shall be agreed upon between brokers and their clients.

Article 9. Archive of dossiers

Brokers shall make and archive dossiers of monetary brokerage operations, each comprising:

1. A monetary brokerage contract.

2. Other documents relating to the performance of the monetary brokerage transaction.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 10. Effect

1. This Circular takes effect on August 22, 2016, and replaces the State Bank Governor’s Decision No. 351/2004/QD-NHNN of April 7, 2004, promulgating the Regulation on monetary brokerage.

2. For monetary brokerage contracts concluded before the effective date of this Circular, credit institutions and foreign bank branches may continue performing jobs which are conformable with the law in effect at the time of concluding such contracts or reach agreement to amend or supplement such contracts in accordance with this Circular.

Article 11. Organization of implementation

1. The Banking Supervision Agency shall examine, inspect and supervise the implementation of this Circular and handle violations according to its competence.

2. The Chief of the Office, the Director of the Monetary Policy Department and heads of related units of the State Bank, directors of provincial-level branches of the State Bank, chairpersons of the Boards of Directors or Members’ Councils and general directors (directors) of commercials banks and foreign bank branches shall implement this Circular.-

For the Governor of the State Bank of Vietnam
Deputy Governor
NGUYEN THI HONG