Clearing and settlement are final steps for completing securities trading process. For the purpose of clearing and settlement of securities transactions, all data of trading results are sent to Vietnam Securities Depository (VSD) by stock exchanges at the close of trading sessions. Cash clearing is executed by VSD for each member on the basis of netting between the amount receivable and the amount payable for transactions having the same trading date on stock exchanges and having the same settlement date, segregated by domestic investor account, foreign investor account and house account of members. VSD applies the following methods of clearing and settlement for securities transactions:
- For transaction of bonds: VSD carries out settlement in accordance with the result of multilateral netting with T+1 settlement cycle.
- For transaction of shares and fund certificates: VSD carries out settlement in accordance with the result of multilateral netting with T+2 settlement cycle. Principles for settlement of securities transactions:
- VSD makes securities settlement in the form of book-entry transfer via the system of depository accounts of selling and buying members and simultaneously adjusts ownership information on depository accounts of buying and selling investors. The settlement bank (Bank for Investment and Development of Vietnam) makes cash payment via the system of cash accounts opened by depository members at the settlement bank based on the cash clearing result sent by VSD.
- Settlement for securities transactions is made in compliance with the following principle: securities delivery at VSD and cash transfer at the settlement bank shall be surely and simultaneously carried out (DVP principle - Delivery Versus Payment). Accordingly, settlement risks born by trading participants will be mitigated as buyers and sellers must have sufficient money to fulfil settlement obligations.
Processes and procedures of securities clearing and settlement are specified in the Guideline on Securities Clearing and Settlement issued with Decision No. 211/QD-VSD dated 18 December 2015 by the Chief Executive Officer of VSD. Relevant Decisions in Legal Documents section on VSD’s website:
Decision no. 211/QD-VSD Processes and procedures
- Post-trade error correction of depository member
- Handling proprietary trading errors