Circular No. 203/2015/TT-BTC guiding securities transactions on the securities market

            

CIRCULAR

Guidelines on transactions in the securities market

Pursuant to the Securities Law No. 70/2006/QH11 dated June 29, 2006;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Securities Law No. 62/2010/QH12 dated November 24, 2010;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law Amending and Supplementing Certain Provisions of the Securities Law;

Pursuant to Decree No. 60/2015/NĐ-CP dated June 26, 2015 of the Government amending and supplementing certain provisions of Decree No. 58/2012/NĐ-CP dated July 20, 2012 of the Government detailing and guiding the implementation of certain provisions of the Securities Law and the Law Amending and Supplementing Certain Provisions of the Securities Law;

At the proposal of the Chairman of the State Securities Commission;

The Minister of Finance issues this Circular guiding transactions in the securities market:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Circular guides the activities of trading listed securities and securities registered for trading on the Stock Exchange.

2. This Circular applies to investors, depositary members, trading members, securities companies, fund management companies, the Stock Exchange, the Vietnam Securities Depository, and other organizations and individuals related thereto.

Article 2. Explanation of terms

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1. Trading member means a securities company approved by the Stock Exchange to become a trading member.

2. Trading system refers to the information technology system used for securities trading activities at the Stock Exchange.

3. Order transmission system refers to the system that implements the transfer of investors' trading orders from trading members to the Stock Exchange.

4. False price fluctuation range is the limit of price fluctuation of securities within a trading day, calculated as a percentage (%) relative to the reference price.

5. The reference price is the price level determined by the Stock Exchange and serves as the basis for determining the highest price (price ceiling) and the lowest price (price floor) during the trading day.

6. Matching method refers to the trading method implemented by the trading system based on matching buy orders with sell orders for securities. The matching method includes periodic matching and continuous matching.

7. Negotiation method refers to the trading method where the parties involved in the transaction negotiate the trading conditions through a trading member on the trading system; or the parties involved in the transaction negotiate and execute the transaction independently, then record the transaction results through a trading member on the trading system.

8. Margin trading refers to the purchase of securities using borrowed funds from a securities company, wherein the purchased securities are used as collateral for the aforementioned loan.

9. Day trading is a transaction involving the simultaneous purchase and sale of the same type of security in the same quantity, executed on the same account and within the same trading day.

10. Forced buy-in, forced sell-out transaction refers to a transaction that a securities company or investor must undertake to ensure sufficient securities to settle securities lending transactions for payment support or to comply with other relevant laws.

11. Pending delivery securities refers to securities that an investor has purchased through the trading system at the Stock Exchange and is currently in the process of completing ownership transfer.

Chapter II

SPECIFIC PROVISIONS

Article 3. Securities Trading Organization

1. The Stock Exchange organizes securities trading through the matching method and negotiation method.

a) The matching method on the trading system must ensure the principle of price priority and time priority;

b) The negotiation method on the trading system of the Stock Exchange is carried out according to the rules of the Stock Exchange.

2. The Stock Exchange organizes trading of listed securities and securities registered for trading, excluding situations where ownership rights are transferred outside the trading system as stipulated by securities law regarding registration, custody, settlement, and netting. The Stock Exchange may organize mandatory buy-in, sell-out sessions.

3. The Stock Exchange promulgates Trading Rules after approval by the State Securities Commission. These Trading Rules specify details about: Trading hours; Trading methods; Reference price determination; Price fluctuation range for securities; Types of trading orders; Order modification and cancellation procedures; Transaction establishment and removal; Trading suspension; Information disclosure on trading results and related matters.

4. The Securities Depository assigns stock codes to securities registered with the Securities Depository and is the sole entity issuing International Securities Identification Numbers (ISIN) for securities in Vietnam. This code is uniformly used for listing and registration for trading.

5. The Securities Depository issues Procedures for Post-Transaction Error Correction, Transaction Error Handling, and Removal of Listed and Registered Securities Transactions on the Stock Exchange after approval by the State Securities Commission.

Article 4. Suspension of Securities Trading

1. The Securities Exchange shall suspend securities trading activities throughout the system in the following cases:

a) When there is a malfunction in the trading system or the order transmission system of the Securities Exchange;

b) In the event of force majeure events such as natural disasters or fires;

c) At the request of the State Securities Commission to stabilize the market;

d) Other situations deemed necessary by the Securities Exchange to protect investors' interests, provided that such actions have been approved by the State Securities Commission.

2. The suspension of trading for specific types of securities shall be carried out in accordance with the Trading Rules of the Securities Exchange.

3. The Securities Exchange must report to the State Securities Commission immediately upon issuing a decision to suspend trading as stipulated in points a and b of Clause 1 of this Article.

Article 5. Price Fluctuation Range

1. The Securities Exchange shall establish the price fluctuation range after obtaining approval from the State Securities Commission.

2. In cases where it is necessary to stabilize the market, the State Securities Commission may decide to adjust the price fluctuation range.

Article 6. General Provisions on Securities Trading Accounts

1. Investors must open a securities trading account at a securities company to conduct securities transactions on the Securities Exchange and are responsible for providing complete and accurate customer identification information when opening a trading account.

2. Foreign investors and economic organizations with foreign investment capital that fall under the category of foreign investors according to investment laws and related regulations must register their trading code before opening a securities trading account.

3. Each investor may only open one securities trading account at each securities company, except in the cases specified in Clause 4 of this Article, Article 9, and Article 10 of this Circular.

4. The establishment of securities trading accounts by fund management companies, securities companies, insurance enterprises, and market-making banks shall be carried out according to the following principles:

a) Fund management companies may open multiple securities trading accounts at each securities company according to the following principles:

- One (01) securities trading account to conduct their own securities business;

- Two (02) securities trading accounts to manage client portfolios, including one (01) account for domestic clients and one (01) account for foreign clients;

- Separate trading accounts for investment funds and securities investment companies they manage, with each fund or company being allowed to open one (01) trading account named after the fund or company at each securities company.

b) Securities companies established and operating under Vietnamese law may open securities trading accounts according to the following principles:

- A securities company engaged in proprietary trading and a member of the Securities Exchange may only open one (01) proprietary trading account at its own company and may not open any other trading accounts at other securities companies.

- If a securities company no longer engages in proprietary trading but remains a member of the Securities Exchange, it may continue to use the proprietary trading account to sell off all held securities. This account must be closed immediately after selling the entire portfolio. If a securities company still engages in proprietary trading but no longer engages in brokerage services or is not a member of the Securities Exchange, it may open trading accounts at other securities companies for investment purposes.

- Opening trading accounts at ETF creation members to conduct ETF certificate trading. These accounts are used for ETF basket stock swap transactions to obtain ETF certificates on the primary market and for buying and selling ETF certificates on the secondary market, and may not be used for other securities transactions.

- Other trading accounts as prescribed by relevant laws.

c) Foreign securities companies may open securities trading accounts at each domestic securities company according to the following principles:

- One (01) securities trading account for proprietary trading activities.

- One (01) securities trading account for brokerage services for other foreign investors.

d) Insurance enterprises with foreign ownership exceeding fifty-one percent (51%) of the charter capital and which are neither listed nor traded may open two (02) securities trading accounts at each securities company according to the following principles:

- One (01) securities trading account for trading from equity capital. Securities obtained through transactions on this account are subject to regulations concerning foreign investor ownership.

- One (01) securities trading account for trading from domestic insurance premium income. Securities obtained through transactions on this account are not subject to regulations concerning foreign investor ownership.

d) Market-making banks for ETFs may open two (02) securities trading accounts at each securities company according to the following principles:

- One (01) securities trading account for the bank's investment activities.

- One (01) securities trading account for market-making activities for ETF certificates.

5. Investors with securities trading accounts must fulfill the obligations of major shareholders when directly or indirectly holding five percent (5%) or more of the voting shares of an issuer or five percent (5%) or more of the units of a closed-end fund.

6. Securities companies may not reuse closed account numbers to open new accounts for customers, or may only reuse closed account numbers after ten (10) years to open new accounts for customers.

Article 7. General Provisions on Securities Transactions and Settlement of Securities Transactions

1. Investors may place sell orders for the quantity of securities already available in their custodial accounts on the trading day and securities awaiting settlement from transactions. The sale of securities awaiting settlement shall be carried out in accordance with the regulations of the State Securities Commission.

2. Except for margin trading and intraday trading as provided for in Article 9 and Article 10 of this Circular, investors may only place buy orders when they have fully deposited the required funds in their securities trading account. In cases where investors open a custodial account at a custodian bank and a trading account at a securities company, investors may place buy orders and the securities company may execute such orders upon receipt of a payment guarantee or confirmation from the custodian bank that the bank accepts the investor's request to settle the securities transaction.

3. Except in cases where investors open a custodial account at a custodian bank, the securities company is responsible for checking and monitoring the balance of funds and securities, verifying against the margin requirements for transactions, and validating the legality and compliance of investors' trading orders.

Depository members are responsible for reconciling transactions based on the results of transactions from the Securities Depository Center and securities companies.

4. Investors are not allowed to place simultaneous buy and sell orders for the same type of security in the same periodic matching session, except for orders entered into the system during the continuous trading session prior to the current session that remain unexecuted but still valid.

5. Market makers and ETF fund creators may quote prices to execute purchases and sales of ETF certificates within the same trading session, and may simultaneously quote prices to purchase and sell types of securities and ETF certificates designated as market makers within the same session. These transactions must be conducted through market maker accounts and comply with the provisions of Article 12 of this Circular.

6. All settlement activities and payments to investors must be processed through commercial banks. Securities companies are not permitted to accept internal transfers between investors' accounts.

Article 8. Trading of Treasury Shares

1. Listed and registered organizations shall carry out the repurchase and sale of treasury shares on the Stock Exchange in accordance with securities laws and related guidance documents on treasury share trading. The Stock Exchange shall issue Trading Regulations for treasury shares after obtaining approval from the State Securities Commission.

2. Except in cases stipulated in Clause 7 and Clause 8 of this Article, listed and registered organizations may only repurchase or sell treasury shares after obtaining approval from the State Securities Commission. At least seven (7) days before conducting treasury share transactions, listed and registered organizations must disclose information about the treasury share transactions, the time of execution, and the principles for determining the price during treasury share transactions. Within a maximum period of fifteen (15) days from the date of the State Securities Commission's approval of the treasury share transactions, the company must complete the treasury share transactions. The duration of treasury share transactions shall not be less than ten (10) days, except in cases of negotiated transactions, and shall not exceed thirty (30) days.

3. It is strictly prohibited for listed and registered organizations on the Stock Exchange to disclose information about repurchasing and selling treasury shares without executing the disclosed transactions, placing orders during the registered treasury share trading period, or placing orders at prices outside the fluctuation range during the registered treasury share trading period. Listed organizations and registered organizations may not disclose specific expected prices but may only disclose the principles for determining the transaction price approved by the Shareholders' Meeting (if applicable).

4. On each trading day, listed and registered organizations trading treasury shares through the matching method may only place orders at prices determined according to the principles specified in Clause 5 of this Article, with a minimum total volume of 3% and a maximum of 10% of the volume registered with the State Securities Commission. This provision applies until the listed and registered organizations complete the registered volume of treasury share transactions with the State Securities Commission.

5. The principles for determining the bid price for repurchasing shares and the offer price for selling treasury shares on the trading system through the matching or negotiated method of listed organizations are as follows:

Bid Price < Reference Price + (Reference Price * 50% of the Stock Price Fluctuation Range)

Offer Price > Reference Price - (Reference Price * 50% of the Stock Price Fluctuation Range)

6. Listed and registered organizations conducting treasury share transactions not in accordance with the provisions of Clause 4 and Clause 5 of this Article must obtain written approval from the State Securities Commission.

7. Listed and registered organizations may repurchase odd-lot shares to form treasury shares and immediately sell the treasury shares formed from the repurchased odd-lot shares. The purchase of odd-lot shares by listed and registered organizations can be conducted through the brokerage activities of securities companies or through the trading systems of the Stock Exchange and through the ownership transfer system of the Securities Depository Center.

8. Listed organizations and registered organizations purchasing shares of employees under the employee stock option program, or listed securities companies purchasing odd-lot shares of themselves at the request of customers or purchasing their own shares to correct transaction errors shall be conducted through the Securities Depository Center.

9. In cases of selling treasury shares through public offerings or private placements, such transactions shall be carried out in accordance with the laws governing public offerings or private placements of shares.

Article 9. Margin Trading

1. Only securities companies with at least two securities brokerage and proprietary trading businesses may conduct margin trading when:

a) They are not in a situation of being warned about the available capital ratio under securities laws on financial safety, suspended from operations, temporarily halted, merged, consolidated, liquidated, or declared bankrupt; they do not have accumulated losses greater than or equal to fifty percent of their charter capital as reported in the most recent audited annual financial report and reviewed semi-annual financial report (if any). The audit opinion in the most recent annual financial report must be an unqualified opinion;

b) Their equity is not less than the statutory capital, meets the requirements for the debt-to-equity ratio, fully sets aside provisions, and complies with all other relevant securities laws.

2. The State Securities Commission shall guide securities companies to report before providing margin trading services. Within seven (07) days from the date of receipt of the securities company's report, the State Securities Commission shall send a letter to the company and publish on its electronic information website confirming the company's registration to provide margin trading services. A securities company may provide margin trading services from the date confirmed on the State Securities Commission's electronic information website.

3. Investors must sign a margin trading account opening contract with the securities company where the investor opens a securities trading account before conducting margin trading. The margin trading account opening contract also serves as a credit agreement for loans on the margin trading account. The margin trading account opening contract must include at least the contents regarding collateral assets, the period for additional collateral, handling of collateral assets when the customer does not add collateral; methods for resolving disputes that arise.

4. Foreign investors are not allowed to conduct margin trading.

5. At each securities company where an investor opens a trading account, the investor may only open one (01) margin trading account. The margin trading account is either a separate account or recorded as a sub-account of the existing trading account of the investor. The securities company must record the investor's margin trading account separately from the investor's trading account, and separate from the trading accounts and margin trading accounts of other investors.

6. Securities eligible for margin trading are listed or traded stocks, fund certificates, and meet criteria regarding listing and trading time; scale of capital and business performance of the issuer; liquidity and price volatility (if applicable); transparency of information and other criteria as guided by the State Securities Commission. Based on the criteria set forth by the State Securities Commission, the Stock Exchange will publish a list of securities eligible for margin trading or securities not eligible for margin trading.

7. Securities companies are responsible for publishing on their own electronic information websites lists of securities for which the company provides margin trading services, interest rates for loans, collateral assets for loans, initial margin ratios, and maintenance margin ratios. Among these, securities not permitted for margin trading shall not be included in the calculation of collateral assets when determining the initial margin ratio and maintenance margin ratio.

8. Investors are obligated to ensure the initial margin ratio, maintenance margin ratio, and to add collateral upon request by the securities company. If this obligation is not fulfilled, the securities company has the right to sell out according to the terms stipulated in the margin trading account opening contract. Prior to executing the sale-out order, the securities company must disclose information in accordance with securities laws on information disclosure and notify the customer to fulfill the obligation to report ownership and disclose transaction information as required by law (if applicable).

9. Securities companies that fail to meet one or more of the criteria specified in Clause 1 of this Article must immediately cease signing new margin trading account opening contracts, stop lending funds for margin trading, and report to the State Securities Commission within forty-eight (48) hours from the occurrence of such events.

Securities companies may continue to sign new margin trading account opening contracts and lend funds for margin trading after receiving notification from the State Securities Commission based on providing complete documentation proving continued compliance with the criteria specified in Clause 1 of this Article.

10. The State Securities Commission is responsible for developing and promulgating regulations guiding margin trading activities after obtaining approval from the Ministry of Finance.

11. In cases deemed necessary to stabilize the market, the State Securities Commission may require a temporary halt to margin trading.

Article 10. Day Trading Transactions

1. Securities companies that have all securities business operations and comply with the provisions of Clause 1 of Article 9 of this Circular may provide intraday trading services to customers after reporting to the State Securities Commission.

2. The State Securities Commission shall guide securities companies to report before providing intraday trading services. Within seven (07) days from the date of receipt of the securities company's report, the State Securities Commission shall send a letter to the company and publish on its electronic information website confirming the company's registration to provide intraday trading services. A securities company may provide intraday trading services from the date confirmed on the State Securities Commission's electronic information website.

3. Investors may conduct day trading transactions after signing a day trading contract and a margin trading contract with a securities company. The day trading contract must include provisions allowing the securities company to execute borrowing transactions and mandatory purchase transactions to support settlement in case of shortages of securities for transfer. The day trading contract must clearly state the risks arising, losses, and costs that the customer must pay.

4. Day trading activities must ensure compliance with the following principles:

a) The account for day trading activities is a separate account or is recorded as a sub-account of the existing trading account of the customer;

b) Investors may not conduct day trading transactions for odd-lot trades, negotiated trades, and must comply with the provisions of Clause 4, Article 7 of this Circular;

c) A securities company has the right to select listed securities on the margin trading list to provide day trading services to customers. The list of securities provided by the company for day trading services must be publicly disclosed on the company's electronic information website;

d) Investors are responsible for placing trading orders, ensuring that the total number of securities on sell orders equals the total number of the same type of securities on buy orders on the same trading day, and vice versa. In cases where the total number of securities from executed sell orders exceeds the total number of securities from executed buy orders, the securities company is responsible for implementing the settlement support procedures as stipulated in Article 11 of this Circular;

đ) In cases where investors place a sell order before a buy order or the total volume of the sell trade exceeds the total volume of the previously placed buy order, the securities company must reject the execution of the trading order if it cannot ensure sufficient securities for transfer on the settlement date;

e) The securities company is responsible for processing and has the obligation to pay money and transfer securities on behalf of the investor in cases where the investor does not have sufficient funds for payment or does not have sufficient securities for transfer on the settlement date according to relevant laws;

g) Customers are responsible for compensating for losses and paying the securities company all costs incurred related to mandatory purchases, securities borrowing, and borrowing money to support settlement in cases where there is insufficient money for payment or insufficient securities for transfer on the settlement date as prescribed by law;

h) The securities company has the right to require customers to deposit cash or securities before allowing them to conduct day trading transactions;

i) On a trading day, the total value of day trading transactions (determined based on the total value of executed buys and sells) at each securities company shall not exceed a certain ratio relative to the company’s net assets; simultaneously, the maximum shall not exceed a certain ratio relative to the average daily trading value of the previous month of the same securities company. The number of securities traded on a day trading basis at each securities company shall not exceed a certain ratio relative to the number of circulating securities.

The above ratios are implemented according to the regulations of the State Securities Commission.

5. Day trading activities and securities borrowing activities to support settlement shall not be conducted during a period of five (05) days prior to the final registration date for determining shareholder rights for such securities.

6. In cases where it is necessary to stabilize the market, the State Securities Commission has the right to request a temporary suspension of day trading activities.

7. Securities companies that fail to meet one or more of the criteria specified in Clause 1 of this Article must immediately cease entering into new day trading contracts, stop allowing investors to conduct day trading transactions, and report to the State Securities Commission within forty-eight hours from the occurrence of such events.

Securities companies may continue to provide day trading services after receiving notification from the State Securities Commission based on providing complete documentation proving continued compliance with the criteria set forth in Clause 1 of this Article.

8. The State Securities Commission is responsible for developing and promulgating the Rules guiding day trading after obtaining approval from the Ministry of Finance. The Securities Depository Center issues the Rules guiding settlement activities for day trading transactions after receiving approval from the State Securities Commission.

Article 11. Provisions on payment support for intraday transactions

1. In case an investor does not have sufficient securities to transfer, the securities company shall be responsible for making the payment on behalf of the investor. The securities company may use its own securities from the proprietary account (if available) or borrow securities to transfer according to the payment support mechanism of the Securities Depository Center.

2. The securities company shall be responsible for executing mandatory purchase transactions to repay the amount of securities payment support that the securities company has implemented in accordance with Clause 1 of this Article.

3. Securities lending transactions and mandatory purchase transactions for payment support as stipulated in Clause 1 and Clause 2 of this Article must be directly executed by the securities company based on the following principles:

a) Mandatory purchase transactions carried out by the securities company through the stock exchange trading system or other methods in compliance with securities laws. In case of placing orders through the trading system, the mandatory purchase order must be placed at the maximum price. For negotiated transactions, they shall be carried out in accordance with relevant laws;

b) Mandatory purchase transactions and securities lending transactions must be conducted from the proprietary account of the securities company;

c) The securities company shall be responsible for returning the securities immediately upon receiving the securities obtained from mandatory purchase transactions and securities lending transactions.

4. In case an investor does not have sufficient funds to pay for the securities purchased but not yet sold (for intraday transactions), the securities company shall be responsible for using its own capital and assets to fully settle the transaction that the customer has executed.

5. Investors shall be responsible for replenishing margin payments and settling all costs incurred for the securities company in accordance with the contract concluded.

Article 12. Market Making Transactions

1. A securities company meeting the provisions of Clause 1 of Article 10 of this Circular shall register as a market maker member with the Stock Exchange based on the Market Making Contract signed with the issuer organization.

2. Supervisory banks, fund establishment members, and securities companies meeting the requirements of Clause 1 of this Article shall register as market maker members for ETFs based on contracts signed with fund management companies.

3. Market-making trading activities must comply with the following principles:

a) Market makers must act honestly and in good faith when performing market-making functions to ensure the market operates efficiently and stably;

b) Depending on market conditions, market makers must continuously maintain two-way quotations or single-side quotations for the types of securities registered for market-making in accordance with the rules of the Stock Exchange. Types of securities requiring liquidity, market-making periods, quotation methods, price spread limits between bid and ask prices, quotation ratios, quotation maintenance times, and situations where trading can be temporarily suspended shall be carried out in accordance with the rules of the Stock Exchange and the market-making contract;

c) Market makers may only place limit orders for market-making transactions. Market makers may simultaneously conduct market-making transactions and proprietary trading but must ensure pricing principles as stipulated in the Rules issued by the Stock Exchange.

4. The Stock Exchange shall be responsible for developing and promulgating Rules guiding market-making activities after approval by the State Securities Commission.

5. The Stock Exchange has the right to terminate contracts with members or suspend market-making activities of members for one or more securities in cases where members fail to fulfill their obligations and responsibilities and violate other terms of the contract as stipulated in the Rules of the Stock Exchange.

Article 13. Reporting and Supervision System

1. The Stock Exchange and the Securities Depository Center shall implement the reporting system on securities trading situations to the State Securities Commission in accordance with the provisions of the law.

2. The Stock Exchange and the Securities Depository Center are subject to supervision by the State Securities Commission regarding securities trading.

3. Securities companies have the obligation to report periodically and upon request about margin trading and intraday trading activities to the State Securities Commission, the Stock Exchange (if applicable), and the Securities Depository Center (if applicable) in accordance with the guidelines of the State Securities Commission.

4. The Stock Exchange and the Securities Depository Center are responsible for coordinating to monitor orders related to margin trading and intraday trading. Securities companies and depositary banks (if applicable) are responsible for coordinating, inspecting, ensuring the legality of orders related to margin trading and intraday trading, and ensuring transaction settlements.

Chapter III

IMPLEMENTATION

Article 14. Implementation Provisions

1. This Circular takes effect from July 1, 2016, and replaces Circular No. 74/2011/TT-BTC dated June 1, 2011, issued by the Minister of Finance guiding securities trading.

2. The Stock Exchange, the Vietnam Securities Depository, depositary members, and securities companies shall establish information technology systems and infrastructure, rules, and business procedures. Based on completed information technology systems and infrastructure, the Stock Exchange and the Vietnam Securities Depository shall issue business regulations guiding transactions stipulated in this Circular after obtaining approval from the State Securities Commission.

3. The State Securities Commission shall implement and report to the Ministry of Finance before issuing business regulations guiding transactions stipulated in this Circular.

Article 15. Implementation Organization

1. The State Securities Commission, Stock Exchanges, Securities Depositories, securities companies, fund management companies, and other relevant organizations and individuals are responsible for implementing this Circular.

2. Amendments and supplements to this Circular shall be decided by the Minister of Finance.