On September 18, 2024, the Ministry of Finance of Vietnam issued Circular No. 68/2024/TT-BTC, amending and supplementing certain provisions related to securities trading on the securities trading system, the clearing and settlement of securities transactions, the operations of securities companies, and the disclosure of information on the securities market.
Circular No. 68 modifies and supplements certain provisions of Circular No. 120/2020/TT-BTC, which governs trading in listed stocks, securities registration, certificates of fund units, corporate bonds, and covered warrants on the securities trading system.
Specifically, Circular No. 68 adds Article 9a under Article 9 of Circular No. 120, stating that foreign investment organizations are not required to have sufficient funds in advance when placing stock purchase orders.
The circular mandates that securities companies must assess the clearing risk of foreign institutional investors and, based on the agreements between the securities company and the foreign investment organization, determine the required amount of funds when placing stock purchase orders.
If the foreign investment organization fails to fully pay for the subscribed stock transaction, the obligation to make up the shortfall will fall on the securities company that placed the stock purchase order through the proprietary account of the foreign investor, except in cases provided for under Clause 5 of this article.
Additionally, Circular No. 68 also modifies and supplements certain provisions of Circular No. 119/2020/TT-BTC, which governs the registration, custody, and settlement of securities transactions.
The new circular stipulates that when a foreign investment organization places a stock purchase order, its depository member must ensure that sufficient funds are available in the account before transferring the amount to the depository member’s bank account for securities transaction payment. The clearing and settlement of stock purchase transactions must comply with current laws and the regulations of the Vietnam Securities Depository and Clearing Corporation (VSDC).
Circular No. 68 explicitly states that securities companies must ensure that sufficient funds are available to cover the payment obligations outlined in Clause 2 of this article. Any securities company failing to meet its obligations under Clause 2 will be subject to legal penalties.
Key Points:
Amendments to Circular No. 120/2020/TT-BTC:
- Addition of Article 9a, stipulating that foreign investment organizations are not required to provide sufficient funds in advance when placing stock purchase orders.
- Securities companies must assess the clearing risks of foreign investment organizations and determine the required amount of funds based on the agreements between the securities company and the foreign investment organization.
- If a foreign investment organization does not fully pay for stock transactions, the securities company will bear the obligation to cover the shortfall unless an exception applies under Clause 5 of this article.
Amendments to Circular No. 119/2020/TT-BTC:
- Foreign investment organizations must have sufficient funds in their accounts when placing stock purchase orders, which must be transferred to the depository member’s bank account for transaction payment.
- Stock transaction clearing and settlement must comply with current laws and the regulations of the Vietnam Securities Depository and Clearing Corporation (VSDC).
- Securities companies must ensure sufficient funds for transaction payments, and failure to comply will result in legal penalties.
