What are depository members in the stock market?

Article overview

Depository membership in the stock market is an important concept in the financial system, playing an indispensable role in ensuring the safety, transparency and efficiency of stock transactions. In the following article, Long Phan will explain in detail the roles, powers and obligations of depository members, as well as their importance in maintaining the stability and development of the stock market.

What is a depository member in the stock market?
What is a depository member in the stock market?

What is a securities depository?

According to Clause 34, Article 4 of the Law on Securities 2019, securities depository is the receipt of deposit, preservation, and transfer of securities to customers, helping customers exercise rights related to deposited securities.

Conditions to become a depository member

Pursuant to Clause 1, Article 158 of Decree 155/2020/ND-CP, there are two main conditions to become a depository member, including:

  • Have a Certificate of registration of depository activities: Must be granted a Certificate of registration of securities depository activities by the State Securities Commission.
  • Ensuring infrastructure and business processes: Need to meet requirements on information technology infrastructure and business processes according to the regulations of the Vietnam Securities Depository and Clearing Corporation.
Conditions to become a depository member in the stock market
Conditions to become a depository member in the stock market

The role of depository members in the stock market

Depository members in the stock market have the following main roles:

  • Ensuring safety and efficiency: Depository members help maintain stability and security for stock transactions, protecting investors’ cash flow and assets.
  • Increase liquidity: They participate in transaction settlement, helping stock transactions take place quickly and efficiently.
  • Support for new product development: Depository members provide services for new securities products such as derivatives, ETF funds, and government bonds, helping to expand the market.
  • International connections: They help attract foreign investors and support cross-border transactions, contributing to the development of international markets.
  • Technology improvement: Depository members participate in upgrading information technology systems and applying new technologies (Blockchain, Big Data), helping to increase operational efficiency and meet international standards.
  • Ensuring liquidity: They perform transaction clearing and settlement, maintaining financial stability and minimizing market risks.

In general, depository members play an important role in maintaining the stability, efficiency and sustainable development of the stock market.

What is the role of depository members in the stock market?
What is the role of depository members in the stock market?

Obligations of securities depository members

According to the provisions of Clause 3, Article 56 of the Law on Securities 2019, depository members have the following obligations:

  • Compliance with legal regulations: Depository members must perform the obligations according to Points b, d, đ, g, h, i, l and m, Clause 2, Article 55 of this Law.
  • Ensuring physical and technical facilities: Providing adequate physical facilities and technical infrastructure to serve securities depository and payment activities.
  • Contribute to the payment support fund: Make contributions to the payment support fund according to the provisions of the law.
  • Customer asset management: Must separate customer assets from depository members’ assets, and accurately and promptly record assets and rights related to customer custody assets.
  • Maintain operating conditions: Ensure full maintenance of conditions for registration of securities depository activities.
  • Comply with reporting obligations and other obligations: Fulfill reporting obligations and other obligations according to the provisions of law and regulations of Vietnam Securities Depository and Clearing Corporation.

Consulting services on depository activities in the stock market

With a team of experienced experts, Long Phan brings solutions suitable to the needs and goals of each investor. Services at Long Phan will include:

  • Consulting on the depository member registration process and necessary requirements from management agencies.
  • Support customers with procedures and documents to register as depository members.
  • Providing consulting services related to shareholder rights, exercising stock purchase rights, dividends, and other securities-related benefits.
  • Consulting to resolve when a dispute occurs.
  • Consulting on other related issues and procedures.

Compliance with securities depository regulations not only helps financial institutions maintain the stability and safety of the financial system, but also contributes to the sustainable development of the stock market. This brings long-term benefits to both investors and market participants but also minimizes risks for trading activities. If you have any questions or need support regarding securities depository services, please contact us immediately via the hotline: 0906735386.