Decision No. 351/2004/QD-NHNN dated April 7, 2004 of the State Bank of Vietnam promulgating the Regulation on money brokerage

DECISION

ON THE ISSUANCE OF THE REGULATION ON MONEY BROKERAGE

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam No. 01/2997/QH10 dated 12 December, 1997 and the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June, 2003;

- Pursuant to the Law on Credit Institutions No. 02/1997/QH10 dated 12 December, 1997;

- Pursuant to the Decree No. 86/2002/ND-CP dated 05 November, 2002 of the Government providing for the function, authority and organizational structure of the ministries and ministerial level agencies;

- Upon the proposal of the Director of Credit Department,

DECIDES:

Article 1. To issue in conjunction with this Decision the Regulation on the money brokerage

Article 2. This Decision shall be effective after 15 days from its publication in the Official Gazette.

Article 3. The Director of Administrative Department, the Director of Credit Department, Heads of related units of the State Bank of Vietnam, General Managers of the State Bank's branches in provinces, cities under the central Government's management, Chairperson of the Board of Directors, General Directors (Directors) of Credit Institutions shall be responsible for the implementation of this Decision.

REGULATION

ON MONEY BROKERAGE
(issued in conjunction with the Decision No. 351/2004/QD-NHNN dated 7 April, 2004 of The Governor of The State Bank)

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope

This Regulation shall govern the money brokerage of Credit Institutions

Article 2. Subjects of application

1. Money brokerage organization (referred to as the Broker) shall include Credit Institutions set up and operating in Vietnam in accordance with the Law on Credit Institutions, which are granted with the Licence for money brokerage activity by the State Bank

2. Customers provided with money brokerage service shall include Credit Institutions, which are set up and operating in Vietnam in accordance with the Law on Credit Institutions and foreign financial institutions.

Article 3. Definition of money brokerage

Money brokerage (referred to as brokerage) shall be the provision of services against some fee by credit institutions to arrange, facilitate transactions including borrowing, lending, deposit taking, depositing; purchase, sale of valuable paper; purchase, sale of foreign currencies and other transactions between credit institutions, foreign financial institutions.

Article 4. Principles of brokerage

1. Faithfulness, fair, and for customers' sake: The broker must reflect truly, fully, faithfully information of prices, transaction value and other information, which customers permit the broker to provide with; Any price level that may cause the misunderstanding of market price to customers shall not be permitted to provide; It is not permitted to provide any preferential treatment to customers with whom the broker has close relationship; It is not permitted to carry out any transaction, which may affect customers' interests; The Broker must seek all possible measures and have evidences proving that they have sought every measure to provide customers with transactions with the most optimum price;

2. It is not permitted to disclose information relating to name, business address and confidential information of customers without their consent, except for the case where it is requested by the State competent agencies.

3. Priority shall be given to the performance of customers' order over that of their credit institutions.

Article 5. Application of international treaties and rules in the event of a foreign party's participation

1. In case where international treaties on brokerage to which the Socialist Republic of Vietnam is signatory or has acceded to contain provisions other than those in this Regulation, provisions in those international treaties shall be applicable.

2. Parties may agree on the application of international regulations, customs and rules on the brokerage if they are not contrary to applicable laws of Vietnam.

Chapter II.

SPECIFIC PROVISIONS

Article 6. Brokerage licensing agencies

The State Bank (Banks Department or branches of the State Bank in provinces, cities) shall issue and revoke the License for brokerage activity (hereinafter referred to as the License).

Article 7. Condition for License issuance

The State Bank of Vietnam shall issue the License to Credit Institutions, which satisfy basic conditions as follows:

1. There is a requirement for the brokerage activity;

2. Having a department or a subsidiary in their organization, which engages in the brokerage activity;

3. The administrator, manager of the brokerage department or subsidiary (The Head, Deputy Heads of the Department, or the Director, Deputy Directors) possess the professional expertise in economics, finance, banking in line with the brokerage activity; the knowledge of and experience in risk management;

4. Availability of feasible plan on the brokerage performance;

5. Availability of the internal control system in accordance with applicable provisions of the State Bank;

6. Availability of the material foundation, system of informatics technique and means of communication (telephone, recording devices, computers and other devices), which satisfy requirements of brokerage activity.

Article 8. Files, procedures for License

1. The application file for the License by the State Bank shall include:

a. An application for the License;

b. Plan for the brokerage performance in the first 3 years, which clearly state the organization method for the brokerage, material foundation, equipment of the informatics technique system and means of communication that ensure brokerage activity, the efficiency and economic benefits to the Credit Institution;

c. List, CVs, qualification's certificates (copies certified by the State public notary agency) proving the capacity and professional level of the administrator, manager and staff of the department or the subsidiary that engages in the brokerage activity.

2. The application file for the License of credit institutions shall be made in 2 sets in Vietnamese. Credit Institutions (except for joint stock credit institutions) shall submit the application file for the License to the State Bank (Banks Department). Joint stock Credit Institutions shall submit their application file for the License to the State Bank's branches in provinces, cities (where the Head offices of joint stock credit institutions are located);

3. Within a period of 30 business days from the date of full receipt of the application file for the License from credit institutions, the State Bank (Banks Department or the State Bank's branches in provinces, cities) shall issue or refuse to issue the License. In case of refusal, the State Bank (Banks Department or the State Bank's branches in provinces, cities) shall clearly state reasons thereof in writing. In case of any amendment, supplement, the time for the amendment, supplement of the file shall not be counted to the time limit for the License processing.

4. The State Bank shall provide in details for the operations, which credit institutions are permitted to carry out as the broker. Credit Institutions shall only carry out operations stated in the License. The falsification, erasure, assignment, leasing, lending of the License are strictly forbidden.

5. In case where operations stated in the License are to be supplemented or amended, the Credit Institutions shall proceed with procedures for the issuance of a new License or a supplemented License.

6. Licensed Credit Institutions shall publish in a central, local newspaper the contents stipulated in the License in accordance with provisions of applicable laws.

Article 9. Revocation of the License

Licensed Credit Institutions may be revoked their License in the event of one of following cases:

1. Availability of evidences proving that the application file for the License has contained information, which have been intentionally falsified.

2. The credit institution applies for a voluntary termination of the brokerage activity, the dissolution or bankruptcy;

3. Having operated in contrary to their purposes;

4. Not being able to fully satisfy conditions for the License in accordance with provisions stated in this Regulation

In case of the License revocation, the State Bank shall give written notice to Credit institutions of the License revocation within a period of 14 days.

Article 10. Brokerage scope

Credit Institutions shall be entitled to provide brokerage service in respect of one or several of following operations:

1. Borrowing, lending;

2. Purchase, sale of debts;

3. Depositing, deposit taking;

4. Purchase, sale of valuable paper;

5. Spot foreign exchange transaction;

6. Forward foreign exchange transaction;

7. Swap foreign exchange, interest rate transaction;

8. Foreign exchange option transaction;

9. Other operations in accordance with applicable provisions of the State Bank

Article 11. Forms of brokerage performance

1. The Broker may perform the brokerage in a direct transaction or an indirect transaction through the computer network and/or the telephone with customers, or in other forms agreed upon by the parties.

2. Transactions made through the telephone between the parties must be recorded to use as evidence for the case where there is some difference in the information relating to transaction or a dispute occurs between the parties.

Article 12. Brokerage fee

The brokerage fee shall be agreed upon by the parties to the brokerage, but it shall not be permitted to exceed 0.02% of each transaction's value at the maximum.

Article 13. Sequential procedure for the brokerage performance

1. Prior to the provision of the brokerage service to a new customer, the broker and the customer shall enter into a contract, which clearly states the interests and obligations of the parties in the brokerage performance. Contents of the contract shall be agreed upon by the parties themselves;

2. On business days, the Broker shall gather information provided by the Customer of the interest rates, exchange rate, transaction value, duration, conditions for the performance and other information relating to operations, which are stipulated in Article 10 of this Regulation.

3. The Broker shall, on the basis of gathered information, give notice to the Customer of the possibility of the transaction performance. In case where the Customers accepts the transaction proposed for the brokerage, the Broker shall inform the names, contact addresses of customers to one another so that customers can carry out necessary procedures to complete their transaction.

4. After each brokerage is performed (or periodically after consolidation of transactions performed in the period), the Broker shall draw a written Confirmation of the performed brokerage (hereinafter referred to as the Confirmation) to send to customers per fax or telex, or through the computer network, or other means for their confirming signature and return to the Broker. The Confirmation shall consist of following main contents: Name, address of the parties; Name of the staff who has performed the transaction; the content of the operation, value, prices of transactions made through the brokerage; Brokerage fee; Mode of payment: Rights and obligations of the parties; Effective term and other related contents. The Confirmation with the customer's signature shall be used as a basis for the payment of the brokerage fee between the Broker and Customer.

5. In case where the customer does not agree to carry out the transaction with another customer after the Broker has informed of the latter's name and business address, the Broker shall give notice of that refusal to the customer, who has been refused. The Broker and the customer may agree on the continuous seeking of other partner for him. If the transaction requested for the brokerage does not bring any result, the broker and the customer may, depending on each specific case, agree on whether or not to use the right to claim for the damage compensation or brokerage fee or other related reasonable expenses.

Article 14. Rights and obligations of the Broker

1. Obligations of the Broker

a. To comply with brokerage principles as provided for in Article 4 of this Regulation;

b. To make compensation for damages caused by him to the customer;

c. To possess recording device or other devices for the preservation of transaction's evidences for case where there is some difference in information relating to transactions or a dispute occurs between participating parties;

d. To maintain transaction recording tape, documents relating to the transaction and other necessary evidences under applicable provisions. The transaction recording tape shall include the name of partners, transaction instruments, transaction time, the name of the staff who has perform the transaction, payment date and other related information;

2. Rights of the Broker

The Broker shall have the right to request the customer:

1. To pay the brokerage fee;

2. To pay reasonable expenses relating to the brokerage under the agreement;

3. To pay fine in case where the customer fails to perform transactions requested for brokerage.

Article 15. Rights and obligations of Customer

1. Obligations of Customers

a. To honestly, accurately inform of its brokerage demand

b. To correctly perform transactions provided with the brokerage

c. To pay brokerage fee and expenses relating to the brokerage;

d. To compensate for damages (if any) to the Broker.

2. Rights of the customer

a. To agree on relevant contents in the Contract and the Confirmation of the brokerage performance;

b. To refuse to perform transactions informed by the Broke, if those transactions do not satisfy customer's demand or the counter-partner does not possess full prestige;

c. To request the Broker to amend the contents stated in the Confirmation of the brokerage performance or to re-check the recording tape or other documents when those contents are not appropriate with transaction's contents;

d. To request the Broker to compensate for the damages caused by him.

Article 16. Inspection, examination

Credit Institutions shall be subject to the inspection, examination and supervision of the State Bank under current provisions.

Article 17. Dealing with violation

Disputes arising due to the incorrect and inadequate compliance with obligations by credit institutions in accordance with this Regulation shall be dealt with under current provisions.

Chapter III

IMPLEMENTING PROVISIONS

Article 18. Responsibilities of units of the State Bank

1. Banks Department

a. To appraise the application file for the License by Credit Institutions (except for joint stock credit institutions)

b. To submit to the State Bank's Governor for consideration on the issuance, revocation of License in respect of Credit Institutions (except for joint stock credit institutions)

c. To receive the report on the issuance, revocation of the License in respect of joint stock Credit Institutions from the State Bank's branches in provinces, cities;

d. To inform the Credit Department of the list of credit institutions, which are licensed or revoked of the license;

2. Credit Department

a. To coordinate with Banks Department, the State Bank's branches in provinces, cities and the State Bank's Inspector in the issuance, revocation of the License and inspection, examination for the brokerage activity of Credit Institutions

b. To provide guidance to Credit Institutions during process of brokerage performance and submit to the Governor for the amendment, supplement of the Regulation, where necessary.

c. To receive the report on the performance of brokerage by Licensed Credit Institutions.

3. The State Bank's Inspector

To inspect, examine the brokerage performance of Credit Institutions

4. The Banking Informatics Technology Department

a. To coordinate with the Banks Department, the State Bank's branches in provinces, cities in the appraisal and submission to the Governor for the approval of the plan on the equipment of the informatics technique and communicative means system for the brokerage activity of Credit Institutions;

b. To set up provisions, information collection software, data on brokerage activity through the computer networks.

5. Branches of the State Bank in provinces, cities (where joint stock credit institutions locate their head office)

a. To appraise the application file of joint stock credit institutions for the License;

b. To consider, decide on the issuance, revocation of the License in respect of joint stock credit institutions;

c. To consolidate the brokerage performance of the licensed joint stock credit institutions in the locality to send to the Credit Department

d. To report Banks Department on the issuance, revocation of the License in respect of joint stock credit institutions.

Article 19. Responsibilities of Credit Institutions licensed by the State Bank

1. To report the State Bank (Credit Department) on the brokerage performance (under the form attached to this Regulation) on monthly basis; Licensed joint stock credit institutions shall submit the reports to the State Bank's branches in provinces, cities (where their head office is located).

2. To issue documents guiding the performance of money brokerage in line with conditions, features and charters of each credit institution on the basis of this Regulation and applicable provisions of related legal documents,

Article 20. Replacement, amendment of, supplement to the Regulation

The replacement, amendment of, supplement to this Regulation shall be decided upon by the State Bank's Governor.

REPORT ON THE PERFORMANCE OF MONEY BROKERAGE
Month......... Year..............

Note: - Report receiver:

+ Credit Department of the State Bank

+ Branches of the State Bank in provinces, cities: receive reports of joint stock credit institutions

- Reporting subjects: + Credit Institutions which are granted with the License for money brokerage activity by the State Bank

+ Branches of the State Bank in provinces, cities (where licensed joint stock credit institutions locate their head office) shall consolidate data

- Reporting time limit: + Credit Institutions (CIs) (except for joint stock CIs) shall submit their report to the Credit Department of SBV prior to the 15^th of following month

+ Joint stock CIs shall submit their report to SBV's branches in provinces, cities prior to the 10^th of following month

+ Branches of SBV in provinces, cities (consolidate the data in the locality) then send it to the Credit Department prior to the 15^th of following month

- Column (4): Turnover in VND of each operation provided with the brokerage service

- Column (5): Turnover in USD of each operation provided with the brokerage service (other foreign currencies shall be converted into USD)

- Column (6): Interest rate calculated under arithmetic average method (% per annum). Interest rates applicable to the borrowing/lending, depositing/deposit taking shall be calculated under arithmetic average method of each term: overnight, 1 week, 2 weeks., 1 month, 3 months, 6 months, 6 months, 12 months, over 12 months.

* The operations of borrowing/ lending, depositing/deposit taking (row 1 and 3) classified under each specific term: overnight, 1 week, 2 weeks, 1 month, 3 months, 6 months, 12 months and over 12 months