Latest regulations on securities trading system, activities of securities companies, information disclosure

Pursuant to the Law on Securities dated November 26, 2019;

Pursuant to Decree No. 155/2020/ND-CP dated December 31, 2020 of the Government detailing the implementation of a number of articles of the Law on Securities;

Pursuant to Decree No. 14/2023/ND-CP dated April 20, 2023 of the Government stipulating the functions, tasks, powers and organizational structure of the Ministry of Finance;

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

The Minister of Finance promulgates a Circular amending and supplementing a number of articles of the Circulars regulating securities transactions on the securities trading system; clearing and settlement of securities transactions; operations of securities companies and information disclosure on the securities market.

Article 1. Amending and supplementing a number of articles of Circular No. 120/2020/TT-BTC dated December 31, 2020 of the Minister of Finance regulating the trading of listed stocks, registration of trading and fund certificates, corporate bonds, and listed secured warrants on the securities trading system (hereinafter referred to as Circular No. 120/2020/TT-BTC)

1. Amend and supplement Point a, Clause 1, Article 7 as follows:

“a) Investors must have sufficient cash when placing an order to buy securities, except in the following cases:

– Investors trading on margin as prescribed in Article 9 of this Circular;

– Organizations established under foreign law participating in investment in the Vietnamese securities market (hereinafter referred to as foreign investors being organizations) purchasing shares are not required to have sufficient money when placing an order as prescribed in Article 9a of this Circular”.

“Article 9a. Stock purchase transactions do not require sufficient funds when placing orders by foreign institutional investors

1. The securities company shall assess the payment risk of the foreign institutional investor to determine the amount of money required when placing a stock purchase order (if any) according to the agreement between the securities company and the foreign institutional investor or the authorized representative of the foreign institutional investor.

2. In case the foreign institutional investor fails to pay in full for the stock purchase transaction, the obligation to pay for the transaction with insufficient funds shall be transferred to the securities company where the foreign institutional investor places the order through the self-trading account, except for the case specified in Clause 5 of this Article.

3. Securities companies are allowed to transfer ownership outside the securities trading system as prescribed in Point q1, Clause 2, Article 6 of Circular No. 119/2020/TT-BTC dated December 31, 2020 of the Minister of Finance regulating the activities of registration, depository, clearing and settlement of securities transactions or sale by agreement on the securities trading system for the number of shares transferred to their own trading accounts for foreign investors who are organizations lacking money to pay for stock purchase transactions as prescribed in Clause 2 of this Article no later than the trading day following the day the shares are accounted for in the securities company’s own trading account and ensure that they do not exceed the maximum limit on the ownership ratio of foreign investors as prescribed by law for such shares. Losses, profits and other expenses arising from the execution of transactions as prescribed in Clause 2 and Clause 3 of this Article shall be made according to the agreement between the securities company and the foreign institutional investor or the authorized representative of the foreign institutional investor.

4. Except for the transactions specified in Clause 3 of this Article, the securities company shall sell shares on the securities trading system for the number of shares transferred to the self-trading account. Losses, profits and other expenses arising from the transactions specified in Clauses 2 and 4 of this Article shall be made according to the agreement between the securities company and the foreign investor being an organization or the authorized representative of the foreign investor being an organization.

5. The depository bank where the foreign investor being an organization opens a securities depository account shall be responsible for paying for the transaction of insufficient money and expenses incurred (if any) in the event of incorrect confirmation of the deposit balance of the foreign investor being an organization with the securities company, leading to insufficient money to pay for the transaction of purchasing shares.”

Article 2. Amending and supplementing a number of articles of Circular No. 119/2020/TT-BTC dated December 31, 2020 of the Minister of Finance regulating the registration, depository, clearing and payment of securities transactions (hereinafter referred to as Circular No. 119/2020/TT-BTC)

1. Add point q1 after point q, Clause 2, Article 6 as follows:

“q1) Transferring ownership of the number of shares transferred to the securities company’s self-trading account prescribed in Clause 2, Article 35a of this Circular to the account of a foreign investor who is an organization in case the agreed sale on the securities trading system as prescribed in Clause 3, Article 9a of Circular No. 120/2020/TT-BTC cannot be carried out because the transfer price of shares is outside the price range or the volume of shares does not meet the minimum agreed trading volume of the Stock Exchange on the date of transfer of ownership.”

2. Add Article 35a after Article 35 as follows:

“Article 35a. Payment for stock purchase transactions by foreign investors who are organizations specified in Article 9a of Circular No. 120/2020/TT-BTC

1. Foreign investors who are organizations placing stock purchase orders must have sufficient cash in their accounts before the time when the depository member must transfer money to the depository member’s deposit account at the payment bank to make payment for the securities transaction. Clearing and payment for stock purchase transactions shall be carried out in accordance with the provisions of law and regulations of the Viet Nam Securities Depository and Clearing Corporation.

2. In case a foreign investor is an organization that places an order to buy shares and lacks payment funds as prescribed in Clause 2, Article 9a of Circular No. 120/2020/TT-BTC, the Viet Nam Securities Depository and Clearing Corporation shall transfer the payment obligation for the stock purchase transaction of the foreign investor being an organization to the obligation of the securities company where the investor places the order to buy shares (through the securities company’s proprietary account) on the payment date, based on the following notices:

a) In case the foreign investor is an organization that opens a depository account at a securities company, the securities company shall notify the Viet Nam Securities Depository and Clearing Corporation of the foreign investor’s lack of payment funds for the stock purchase transaction and the transaction information requesting transfer to the payment obligation of the securities company;

b) In case the foreign investor is an organization that opens a depository account at a depository bank, the depository bank shall notify the Viet Nam Securities Depository and Clearing Corporation that the foreign investor lacks money to pay for the stock purchase transaction and refuses to pay for the transaction lacking money.

3. The securities company must ensure sufficient money to pay for the transaction as prescribed in Clause 2 of this Article. The securities company shall be handled for violations according to the provisions of law and the regulations of the Viet Nam Securities Depository and Clearing Corporation in case it fails to ensure the performance of the obligations prescribed in Clause 2 of this Article.”

Article 3. Amending and supplementing a number of articles of Circular No. 121/2020/TT-BTC dated December 31, 2020 of the Minister of Finance regulating the operations of securities companies

1. Amending Clause 8, Article 16 as follows:

“8. In case a customer opens a depository account at a depository member that is not a trading member, the trading member and the depository member must sign a contract agreeing on the responsibility to ensure the principle that the trading member is responsible for executing the transaction order, the depository member is responsible for checking the customer’s cash and securities balance, and the depository member and the trading member ensure payment to the customer in accordance with the law.

In case a trading member receives an order to buy shares without sufficient funds as prescribed in Article 9a of Circular No. 120/2020/TT-BTC, at the end of the trading day, that trading member is responsible for notifying the depository member where the foreign investor is an organization of the details of the stock purchase transaction without sufficient funds when placing the order, as prescribed in Article 9a of Circular No. 120/2020/TT-BTC, to coordinate the implementation of payment for securities transactions in accordance with the provisions of the law on securities and the regulations of the Viet Nam Securities Depository and Clearing Corporation.

2. Add Clause 9 and Clause 10 after Clause 8, Article 16 as follows:

“9. When receiving orders to buy shares without requiring sufficient funds from foreign investors who are organizations as prescribed in Article 9a of Circular No. 120/2020/TT-BTC, securities companies must comply with:

a) The limit for receiving orders to buy shares is determined according to the provisions of Clause 10 of this Article;

b) Not receiving orders to buy shares of that securities company itself;

c) Not receiving orders to buy shares of the parent company of the securities company itself. In case subsidiaries of the same parent company of the securities company own shares of that securities company, the securities company is not allowed to receive orders to buy shares of those subsidiaries.

10. Securities companies must determine the limit for receiving orders to buy shares without requiring sufficient funds from foreign institutional investors at the beginning of the trading day and keep documents and information determining this limit. The limit for receiving orders to buy shares is determined as follows:

– The limit for receiving orders to buy shares is equal to the total amount that can be converted into cash but does not exceed the difference between 2 times the equity of the securities company and the outstanding loan balance for margin trading of securities;

– Amounts that can be converted into cash include cash at the fund; bank deposits, government debt instruments, unused deposit certificates to secure financial obligations; available overdraft limit; payment guarantee limit (if any) issued by domestic and foreign credit institutions; pending proceeds from selling self-trading securities; must collect in advance the proceeds from selling listed securities, registered for trading; money of foreign investors who are organizations specified in Clause 1, Article 9a of Circular No. 120/2020/TT-BTC to ensure the ability to pay for their stock purchase transactions;

– The equity of the securities company is determined based on the quarterly financial statements prepared in the most recent period before the calculation time. In case the securities company is a parent company, the equity is determined based on the consolidated quarterly financial statements after excluding the interests of non-controlling shareholders.”

3. Add Clause 7 after Clause 6, Article 28 as follows:

“7. In case a securities company complies with the provisions of Clause 2, Article 9a of Circular No. 120/2020/TT-BTC, leading to exceeding the investment limit prescribed in Clause 4 of this Article, the securities company shall not continue to receive orders to purchase shares without requiring sufficient funds from foreign institutional investors until the investment limit is met and must apply necessary measures within a maximum period of 01 year to comply with the investment limit.”

Article 4. Amending and supplementing a number of articles of Circular No. 96/2020/TT-BTC dated November 16, 2020 of the Minister of Finance guiding the disclosure of information on the stock market

1. Amending and supplementing Article 5 as follows:

“Article 5. Language of information disclosure on the stock market

1. The language for information disclosure on the stock market is Vietnamese. Listed organizations, public companies, Stock Exchanges, and Viet Nam Securities Depository and Clearing Corporation shall simultaneously disclose information in English according to the provisions of Clauses 2 and 3 of this Article. Information disclosed in English must be consistent with the content of information disclosed in Vietnamese. In case there is a difference or a different understanding between information in Vietnamese and English, the information in Vietnamese shall prevail.

2. Listed organizations and public companies shall simultaneously disclose information in English according to the following roadmap:

a) Listed organizations and large-scale public companies shall periodically disclose information in English from January 1, 2025;

b) Listed organizations and large-scale public companies shall disclose extraordinary information, disclose information upon request and disclose information on other activities of public companies simultaneously in English from January 1, 2026;

c) Public companies not subject to the provisions of Points a and b of this Clause shall disclose periodic information simultaneously in English from January 1, 2027;

d) Public companies not subject to the provisions of Points a and b of this Clause shall disclose extraordinary information, disclose information upon request and disclose information on other activities of public companies simultaneously in English from January 1, 2028.

3. Stock exchanges and the Viet Nam Securities Depository and Clearing Corporation shall disclose information in Vietnamese and English.”

2. Add Clause 8 after Clause 7, Article 25 as follows:

“8. In case a foreign investor is an organization that does not repurchase shares as prescribed in Clause 3, Article 9a of Circular No. 120/2020/TT-BTC, the securities company where the foreign investor is an organization that places a transaction order must disclose information on the information disclosure media of the State Securities Commission, the Stock Exchange, the Viet Nam Securities Depository and Clearing Corporation and at the same time disclose information on the securities company’s website about the transaction of the foreign investor being an organization according to the form prescribed in Appendix XVII issued with this Circular within 24 hours from the time the foreign investor being an organization does not repurchase shares as prescribed.”

3. Amend and supplement Point a, Clause 1, Article 33 as follows:

“a) At least 03 working days before the expected transaction date, insiders and related persons must disclose information about the expected transaction according to the form prescribed in Appendix XIII or Appendix XIV issued with this Circular, except for the case where the securities company is a related person of an insider of a listed organization or a registered trading organization when conducting transactions according to the provisions of Clause 2 and Clause 3, Article 9a of Circular No. 120/2020/TT-BTC.

In case of conducting transactions according to the provisions of Clause 4, Article 9a of Circular No. 120/2020/TT-BTC, the exemption from information disclosure shall apply to transactions conducted within 4 working days from the date the shares are transferred to the securities company’s self-trading account.”

4. Add Clause 8 after Clause 7, Article 33 as follows:

“8. In case a securities company is a related person of an insider of a listed organization or a registered trading organization, the securities company must disclose information and report to the State Securities Commission, the Stock Exchange and notify the listed organization or registered trading organization when the daily transaction value is VND 50 million or more or the monthly transaction value is VND 200 million or more calculated at par value, including cases of transferring ownership outside the securities trading system according to the form prescribed in Appendix XVIII issued with this Circular within 24 hours from the following times:

a) Complete the transaction payment as prescribed in Clause 2, Article 35a of Circular No. 119/2020/TT-BTC;

b) Complete the sale of shares as prescribed in Clause 3 and Clause 4, Article 9a of Circular No. 120/2020/TT-BTC.”

5. Add Appendix XVII and Appendix XVIII after Appendix XVI.

Article 5. Implementation provisions

1. This Circular takes effect from November 2, 2024.

2. The Vietnam Securities Depository and Clearing Corporation shall perform clearing and settlement of securities transactions and manage and use the payment support fund as prescribed in Article 35a and Clause 3, Article 45 of Circular No. 119/2020/TT-BTC until the clearing and settlement of securities transactions under the central clearing counterparty mechanism is officially implemented.

3. The State Securities Commission, Viet Nam Stock Exchange, Ha Noi Stock Exchange, Ho Chi Minh City Stock Exchange, Viet Nam Securities Depository and Clearing Corporation, securities companies, depository members and other relevant organizations and individuals are responsible for implementing this Circular./.

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