Phụ lục: Thông tư 26/2021/TT-NHNN

CIRCULAR

GUIDING FOREIGN CURRENCY TRADING BETWEEN THE STATE BANK OF VIETNAM AND CREDIT INSTITUTIONS PERMITTED TO ENGAGE IN FOREIGN EXCHANGE

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

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

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005 and the Ordinance on amendment to the Ordinance on Foreign Exchange dated March 18, 2013;

Pursuant to Decree No. 70/2014/ND-CP dated July 17, 2014 of the Government on elaborating on the Ordinance on Foreign Exchange and the Ordinance on amendment to the Ordinance on Foreign Exchange;

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

At request of Director of the Central Banking Department;

The Governor of the State Bank of Vietnam hereby promulgates Circular guiding foreign currency trading between the State Bank of Vietnam and credit institutions permitted to engage in foreign exchange.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and regulated entities

This Circular provides guidelines on foreign currency trading between the State Bank of Vietnam (hereinafter referred to as “SBV”) and credit institutions permitted to engage in foreign exchange.

Article 2. Operation of SBV on domestic foreign currency market

SBV shall perform foreign currency trade with credit institutions permitted to engage in foreign exchange on the domestic foreign currency market according to interventions decided by the SBV from time to time.

Article 3. Definition

In this Circular, terms below are construed as follows:

1. “credit institution permitted to engage in foreign exchange” (hereinafter referred to as “permitted credit institution”) means a credit institution or a foreign bank branch (hereinafter referred to as “FBB”) permitted to perform and/or provide foreign exchange service.

2. “sale, purchase of foreign currency for immediate delivery” (hereinafter referred to as “spot trade”) refers to a trade where 2 parties purchase or sell an amount of foreign currency from/to each other at a spot rate applicable at the time of trade and the payment is made within 2 consecutive working days following the trade date.

3. “forward foreign currency sale, purchase” (hereinafter referred to as “forward trade”) refers to a trade where 2 parties purchase or sell an amount of foreign currency from/to each other at an exchange rate determined at the time of trade and the payment is made after at least 3 consecutive working days following the trade date.

4. “foreign currency swap” refers to a trade consisting of a purchase and a sale between 2 parties for 2 currencies with equal value which is determined by exchange rate specified at the time of trade. The sale and purchase shall be settled on 2 different days. Foreign currency swap may consist of 2 spot trades, 2 forward trades, or a spot trade and a forward trade.

5. “foreign currency trade option” (hereinafter referred to as “foreign exchange option”) refers to a trade between 2 parties where the buyer pays the seller for the right but not the obligation to trade a currency for another in the period agreed upon by the 2 parties at the strike rate specified at the time of trade. Payment for the strike rate shall be made by the buyer at a later date in the future. If the buyer chooses to exercise the right to trade currency, the seller must comply with the agreement. In a foreign exchange option, the put option for one currency is also the call option for the other currency.

6. “option premium” refers to the payment made to the seller from the buyer for the call option or put option in the exchange option.

7. “expiration date of foreign exchange option” means the final date in which the buyer can choose to exercise their right. The expiration date must not precede the settlement date by more than 2 days.

8. “trade date” is the date on which SBV and a permitted credit institution are allowed to establish trade contract in accordance with this Circular.

9. “settlement date” is the date on which SBV and a permitted credit institution are allowed to transfer the traded currencies in accordance with trade contract established on the trade date.

10. “internal regulation on trading procedures with SBV” is a document issued by a permitted credit institution, elaborating on responsibilities, entitlement of individuals, relevant entities, and guiding foreign currency trading with the SBV.

11. “standard payment instructions” refer to the payment instructions registered with SBV by a permitted credit institution which identify the checking account used for foreign currency trading with SBV.

Article 4. Registration for establishment of foreign currency trading connection

1. A permitted credit institution that wishes to establish foreign currency trading connection with SBV shall submit an application under Article 5 hereof to SBV in person or via postal service.

2. SBV shall verify the establishment of foreign currency trading connection with the permitted credit institution after ensuring that the application is adequate.

3. SBV shall only establish foreign currency trading connection with a contact point which is an office or a branch of each permitted credit institution registered by the permitted credit institution to SBV.

Article 5. Application for establishment of foreign currency trading connection

Application for establishment of foreign currency trading connection consists of:

1. Written application prepared in accordance with the Appendix 1 attached hereto.

2. Internal regulations on trading procedures with SBV.

3. Standard payment instructions for foreign currency trades with SBV in accordance with Appendix 2 attached hereto.

4. Written presentation regarding foreign currency trading instruments of the permitted credit institutions that guaranteeing trading capacity with SBV via trading methods under Clause 1 Article 10 hereof.

Article 6. Receipt and processing of application for establishment of foreign currency trading connection

Within 7 working days from the date on which adequate application for establishment of foreign currency trading connection is received, the SBV shall inform the applicant in writing about whether the establishment of foreign currency trading connection is approved or disapproved (in case of disapproval, SBV shall state the reasons).

If revision is required, SBV shall inform the applicant within 4 working days from the date on which the application is received. The applicant shall revise the application and submit the revised application to SBV within 10 working days from the date on which they receive the notice.

Chapter II

SPECIFIC PROVISIONS

Article 7. Currency for trading, buying rate, selling rate, and option premium

1. SBV shall buy and sell VND for USD with permitted credit institutions which have foreign currency trading connection with the SBV. When buying and selling VND for other currency, SBV shall inform permitted credit institutions which have foreign currency trading connection with the SBV.

2. Buying rate and selling rate of each trade method, call option premium, and put option premium shall be decided and notified to permitted credit institutions which have foreign currency trading connection with the SBV by the SBV.

Article 8. Trading method

SBV shall perform foreign currency trade with permitted credit institutions which have foreign currency trading connection with the SBV via:

1. Spot trade.

2. Forward trade.

3. Foreign currency swap.

4. Foreign exchange option.

5. Other trading methods decided by SBV from time to time.

Article 9. Term of trade

Term of forward trade, forward trade in foreign currency swap, and foreign currency option shall be notified by SBV under interventions specified in Clause 1 Article 12 hereof.

Article 10. Instruments and languages of trade

1. SBV shall trade with permitted credit institutions via online trading systems such as Refinitiv, Bloomberg, telephones, or other instruments decided by SBV from time to time.

2. Verified foreign currency trades on instruments under Clause 1 of this Article means the commitment is unchanged. Revision or cancellation must be agreed upon by both parties.

3. If foreign currency trade is performed via telephones, permitted credit institutions must make sure that telephones can record audio, store audio recording, and trace the agreed trade. Once the agreement is made via telephones, on the trade date, SBV and permitted credit institutions shall verify again via physical or electronic documents which will be signed by competent authorities.

4. Language used in trade across foreign currency trading instruments is Vietnamese or English.

Article 11. Trading hours

1. The official foreign currency trading hours between SBV and permitted credit institutions shall be the office hours of SBV during weekdays.

2. Any foreign currency exchange that occurs outside of the trading hours mentioned under Clause 1 of this Article, permitted credit institutions must organize implementation of said exchange in a coherent, safe manner and ensure risk management.

Article 12. Trading procedures

1. SBV shall notify permitted credit institutions with foreign currency trading connection of foreign exchange intervention via:

a) Website of SBV; or

b) Trading instruments under Clause 1 Article 10 hereof.

2. A permitted credit institution that wishes to engage in foreign currency trading shall send a request to SBV via instruments under Clause 1 Article 10 hereof and submit a written request prepared using Form under Appendix 3 attached hereto to SBV (Central Banking Department) by 4 p.m. at the latest of trade date (unless otherwise notified by SBV). The written request sent to SBV can be a physical copy or a scanned copy attached to an email. If the permitted credit institution submits a scanned copy attached to an email, they must submit the physical copy to SBV within 5 working days following the trade date.

The written request of the permitted credit institution must be signed by the competent individual under the list submitted to SBV under Appendix 1 attached hereto for approval.

3. Considering the request of permitted credit institution and interventions of SBV, SBV shall review, negotiate, and establish transaction with the permitted credit institutions via any of the instruments under Clause 1 Article 10 hereof.

4. Once the transaction between the 2 parties has been established via any of the instrument under Clause 1 Article 10 hereof, a confirmation must be sent via the Society for Worldwide Interbank and Financial Telecommunication (SWIFT) or other means decided by SBV.

Article 13. Payment for trade

1. Payment for a foreign currency trade must be implemented in accordance with standard payment instructions registered to SBV by the permitted credit institution according to Clause 3 Article 5 hereof.

2. If the settlement date is not a working day according to Vietnamese foreign exchange market and/or payment processing solution market for the foreign currency, the settlement date shall be the next working day.

3. A payment that fails to meet the deadline set forth under agreement between SBV and a permitted credit institution shall cause the party that makes the payment to incur fines as follows:

a) If the payment is in foreign currency, the maximum fine equals the overnight rate (applied to a standard foreign currency account by the correspondent bank of the party that receives the deferred payment at the date on which the fine occurs) multiplied by 150% multiplied by the deferred amount and multiplied by the number of days past the payment deadline;

b) If the payment is in VND, the maximum fine equals the refinancing loan interest rate of SBV applicable at the date on which the deferred payment occurs multiplied by 150% multiplied by the deferred amount and multiplied by the number of days past the deadline.

Article 14. Trade suspension, cancellation of trade connection

1. SBV shall suspend trade with a permitted credit institution for 3 months when:

a) The permitted credit institution fails to submit reports in a timely fashion or fail to submit adequate reports in accordance with Clause 1 Article 15 hereof 3 times in a single quarter (except for cases under Clause 3 Article 15 hereof); or

b) The permitted credit institution fails to comply with regulations under Clause 2 Article 15 hereof.

2. SBV shall suspend foreign currency trade with a permitted credit institution when the permitted credit institution is:

a) placed under special control; or

b) suspended from engaging in foreign exchange.

3. SBV shall cancel foreign currency trading connection with a permitted credit institution if the permitted credit institution has their license revoked in accordance with the Law on Credit Institutions.

4. SBV shall notify permitted credit institutions in writing of the reasons for suspension of trade or cancellation of foreign currency trading connection.

Article 15. Communication and reporting policies

1. A permitted credit institution having foreign currency trading connection with SBV must report to SBV (via Central Banking Department) as follows:

a) If trading system of Refinitiv is not used, produce reports on foreign currency trading with other credit institutions in accordance with applicable reporting policies of SBV;

b) If trading system of Refinitiv is used, produce reports in accordance with guidelines of SBV on procedures for producing reports on trading foreign currency via trading system of Refinitiv.

From the point in which foreign currency trading is completed via Refinitiv trading system, the parties must report on trade completion via Refinitiv trading system within 15 minutes. If the parties do not trade via Refinitiv trading system, the report on trade completion must be made on Refinitiv trading system within 45 minutes.

2. Permitted credit institutions must submit written reports on changes to information registered to SBV under Appendix 1 and Appendix 2 attached hereto to SBV (via Central Banking Department).

3. A permitted credit institution is exempted from producing reports mentioned under Point b Clause 1 Article 15 hereof in case of any of the following force majeure:

a) A connection error from the server containing report data of the permitted credit institution to SBV caused by the internet service provider;

b) A technical error of Refinitiv trading system caused by the service provider of Refinitiv;

c) Power outage caused by the electricity service provider or other objective reasons;

d) A technical error of reporting server of SBV;

dd) Other cases originating from an objective cause.

4. As soon as incidents under Clause 3 of this Article are rectified, the permitted credit institution must immediate report on completed trades to SBV (via Central Banking Department). The steps for reporting on these trades shall comply with guidelines of SBV regarding procedures for producing report on trading foreign currency via Refinitiv trading system.

Chapter III

RESPONSIBILITIES OF PERMITTED CREDIT INSTITUTIONS AND ENTITIES AFFILIATED TO STATE BANK OF VIETNAM

Article 16. Permitted credit institutions

1. Permitted credit institutions are responsible for:

a) Trades made by traders of permitted credit institutions via trading instruments registered with SBV; authenticity of entitlement of relevant individuals in foreign currency trades with SBV;

b) Adequacy, accuracy, legitimacy, and punctuality of documents, dossiers, and reports submitted to SBV.

2. Permitted credit institutions are responsible for complying with applicable regulations on foreign exchange and:

a) having strict risk management, internal control procedures and systems for foreign currency trade with SBV;

b) comply with regulations on foreign currency position and other regulations on safety assurance in foreign exchange activities of SBV.

Article 17. Central Banking Department

1. Process documents, review, and verify application for establishment of foreign currency trading connection with permitted credit institutions.

2. Notify foreign currency intervention and foreign currency trading to permitted credit institutions having foreign currency trading connection with SBV; declare reference exchange rates in accordance with regulations of SBV from time to time.

3. Determine fine interest and deal with deferred payment under Clause 3 Article 13 hereof by assessing impact of each instance of deferred payment of permitted credit institutions. a

4. Suspend trade, cancel foreign currency trading connection with permitted credit institutions in accordance with Article 14 hereof.

5. Inform Banking Supervision and Inspection Agency about the lists of permitted credit institutions with established, suspended, and cancelled foreign currency trading connection with SBV.

6. Act as contact point dealing within issues that occur relating to foreign currency trading between SBV and permitted credit institutions.

Article 18. Department of Monetary Policy

1. Notify approved interventions of SBV to Central Banking Department.

2. Cooperate with Central Banking Department in dealing with issues relating to foreign currency trading between SBV and permitted credit institutions.

Article 19. Banking Supervision and Inspection Agency

1. Provide copies (exemplified copy or certified true copy) of certificate of establishment and operation of credit institutions or certificate of establishment of FBB in Vietnam and documents verifying permission to provide foreign exchange services of credit institutions in domestic market issued by SBV within 2 working days from the date on which written request of Central Banking Department is received.

2. Promptly inform Central Banking Department when permitted credit institutions which perform foreign currency trading with SBV are placed under special control or suspended from engaging in foreign exchange or violating regulations under this Circular.

Chapter IV

IMPLEMENTATION

Article 20. Entry into force

1. This Circular comes into force from February 15, 2022

2. Annul the following documents:

a) Circular No. 02/2012/TT-NHNN dated February 27, 2012 of Governor of State Bank of Vietnam;

b) Circular No. 27/2013/TT-NHNN dated December 5, 2013 of Governor of State Bank of Vietnam on amendment to Circular No. 02/2012/TT-NHNN dated February 27, 2012;

c) Circular No. 45/2014/TT-NHNN dated December 29, 2014 of Governor of State Bank of Vietnam on amendment to Circular No. 02/2012/TT-NHNN dated February 27, 2012;

Article 21. Transition clauses

Permitted credit institutions which have established foreign currency trading connection with SBV prior to the effective date hereof shall continue to trade foreign currency with SBV in accordance with this Circular without registering again with SBV.

Article 22. Organization for implementation

Chief of Office, Director of Central Banking Department, heads of entities affiliated to SBV, credit institutions, FBB licensed to conduct foreign exchange activities are responsible for implementation of this Circular./.

APPENDIX 1

APPLICATION FOR ESTABLISHMENT OF FOREIGN CURRENCY TRADING CONNECTION WITH STATE BANK OF VIETNAM (*)

To: State Bank of Vietnam (Central Banking Department)

Name of permitted credit institution:

Address:

Phone number:

Head office or trading branch:

Address:

Phone number:

Registered trading instruments:

Trading system:

Code of trade:

Trade phone number:

Certificate of establishment and operation No. dated ….………

List of entitled individuals in foreign currency trading with SBV:

*) Once the permitted credit institution has established foreign currency trading connection with SBV, they must immediately update any change to the origin Application for establishment of foreign currency trading connection with SBV (changes shall be declared using this Appendix under the title Application for revision).

(**) Countersign the trade in case the trade is made via telephone.

(Permitted credit institution) hereby applies for establishment of foreign currency trading connection with SBV and guarantees to comply with Circular No. …………/2021/TT-NHNN guiding foreign currency trading between SBV and credit institutions permitted to engage in foreign exchange.

APPENDIX 2

STANDARD PAYMENT INSTRUCTIONS FOR FOREIGN CURRENCY TRADE WITH STATE BANK OF VIETNAM

To: State Bank of Vietnam (Central Banking Department)

APPENDIX 3

REQUEST FOR TRADING FOREIGN CURRENCY WITH STATE BANK OF VIETNAM

To: State Bank of Vietnam (Central Banking Department)

1. Purpose, reason for selling/buying foreign currency:

2. Total foreign currency position of the working day preceding the date on which the credit institution requests purchase/sale of foreign currency with SBV (According to regulations on foreign currency position of SBV from time to time):

3. Quantity of foreign currency requested for sale/purchase:

4. Form of trade

5. Other information (if any)