Will Vietnam have a debt trading floor?

The State Bank is taking the lead in drafting a decree on business conditions for debt trading activities, including trading floor services.

Enterprises providing debt trading services are not allowed to borrow capital from credit institutions or bank branches to purchase debts originating from credit granting relationships with foreign credit institutions or bank branches.

In this legal framework that is being completed, debt trading services are identified as one of the conditional business lines.

Debt trading service business is the continuous implementation of one of the activities related to debt trading for profit purposes, including: debt trading activities, debt trading brokerage services, debt trading floor services and debt trading consulting services.

According to the draft, credit institutions, foreign bank branches and the Vietnam Asset Management Company (VAMC) are not subject to the scope of this decree.

Meanwhile, the Vietnam Debt Trading Company (DATC) and asset management companies (AMCs) are subject to the regulation of this decree; in which, consideration is given to allowing AMCs to operate as professional debt trading enterprises (according to current regulations, AMCs are only allowed to buy debts from other credit institutions, not from economic organizations and individuals), but their establishment and operation are still carried out in accordance with the Law on Credit Institutions and guidance of the State Bank.

Organizations (except enterprises) and individuals who need to conduct debt trading activities regularly, continuously and for profit purposes must establish an enterprise to do so.

Accordingly, organizations (except enterprises) and individuals that meet all the conditions for debt purchase and sale services as prescribed in this Decree are allowed to conduct debt purchase and sale services without having to obtain a license from a competent state agency.

Organizations and individuals are allowed to buy and sell debt, but this is not a regular and continuous activity, then it must comply with the provisions of the Civil Code.

An important content of the draft decree is the framework of conditions for debt trading floor services. Debt trading floor is a place where debt buying and selling transactions are regularly conducted; debt buying and selling consulting and brokerage are conducted.

Debt trading floor service is the provision of a debt trading floor, organization of debt trading; introduction and provision of debt information to parties wishing to trade; checking debt records and documents to ensure eligibility for trading; acting as an intermediary for parties to exchange, negotiate and sign debt trading contracts.

Regarding the business of debt trading floor services, according to the explanation of the drafting team, the purpose of the regulations is to allow an enterprise to provide debt trading floor services to gradually form a centralized debt buying and selling market. Therefore, enterprises providing debt trading services that want to perform this service must meet additional conditions on capital, human resources and experience.

Specifically, enterprises providing debt trading services must have a minimum legal capital of VND 100 billion; enterprises providing trading floor services must have a minimum legal capital of VND 1,000 billion; and enterprises providing other services must have a minimum legal capital of VND 10 billion.

During the course of operation, debt trading service enterprises must maintain a charter capital level not lower than the legal capital level.

Notably, the draft stipulates that debt trading service businesses are not allowed to borrow capital from credit institutions or bank branches to purchase debts originating from credit granting relationships with foreign credit institutions or bank branches.

Particularly for debt trading floor services, service providers must meet the condition of having operated debt trading services continuously for at least 3 years with a minimum annual operating revenue (tax declaration) of VND 1,000 billion.

In addition, the enterprise must have at least 2 employees with auditing certificates or at least 2 employees with valuation certificates as prescribed by law; have regulations on the operation of the debt trading floor; have appropriate technical facilities and information technology systems.

According to Zing.vn