On September 18th, the Ministry of Finance issued Circular 68/2024/TT-BTC, amending and supplementing several 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 in the securities market, effective from November 2nd.
Buying stocks doesn't require sufficient funds.
The Circular clearly states that foreign institutional investors can place buy orders for shares without being required to have sufficient funds. Based on this, securities companies will assess the payment risk of the foreign institutional investor to determine the required amount of funds for placing a buy order (if any), as agreed upon by both parties.
Accordingly, if a foreign institutional investor fails to pay the full amount for a share purchase transaction, the obligation to pay the outstanding amount is transferred to the securities company (where the foreign institutional investor placed the order) through its proprietary trading account. The circular also clearly stipulates that the securities company may transfer ownership outside the trading system or sell the shares transferred to its proprietary trading account to the foreign institutional investor who is short of payment, no later than the next trading day. If ownership of the aforementioned securities is not transferred to the foreign institutional investor (due to the limit being reached or the foreign institutional investor failing to repurchase them, etc.), the securities company will sell those shares on the stock market. Any losses, profits, and other expenses arising from the transaction will be handled according to the agreement between the two parties.
Circular 68/2024/TT-BTC also stipulates that the custodian bank (where the foreign institutional investor opens a securities custody account) is responsible for paying for shortfalls in transactions and any resulting costs (if any) in cases where the securities company incorrectly confirms the deposit balance of the foreign institutional investor, leading to a shortfall in the payment for the share purchase transaction.
Ensure payment for the transaction
In addition, the new Circular also stipulates that foreign institutional investors placing buy orders for shares must have sufficient funds in their account before the depository member transfers the money to the depository member's deposit account at the settlement bank to complete the securities transaction. The clearing and settlement of share purchase transactions are carried out in accordance with the law and regulations of the Vietnam Securities Depository and Clearing Corporation (VSDC).
If a foreign institutional investor places a buy order for shares but lacks sufficient funds for payment, VSDC will transfer the payment obligation to the securities company where the foreign institutional investor placed the buy order (via the securities company's proprietary trading account) on the payment date.
In this arrangement, the securities company guarantees the security of payments for foreign institutional investors.
Specifically, the limit for accepting buy orders for shares is equal to the total amount of convertible assets, but not exceeding the difference between the securities company's equity and the outstanding balance of margin trading loans. Convertible assets include cash on hand, bank deposits, government debt instruments, certificates of deposit, etc.
Furthermore, the equity of a securities company is determined based on the quarterly financial statements prepared in the most recent period prior to the calculation. If 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.
To comply with the regulations on cross-ownership in the Enterprise Law, the Circular also stipulates that securities companies are not allowed to accept orders to buy shares of themselves and their parent company, or the subsidiaries of the same parent company.
Furthermore, the regulations clearly state that if a securities company, while complying with the regulations, exceeds the investment limit, it will not be allowed to continue accepting buy orders for shares from foreign institutional investors that do not require sufficient funds until the investment limit is met. The company must then take necessary measures within a maximum of one year to comply with the investment limit.
Notably, the new Circular also requires securities companies to disclose information about foreign institutional investors failing to repurchase shares through information disclosure channels within 24 hours. Furthermore, Circular 68 stipulates that the language of information disclosure on the securities market must be Vietnamese and English.
TH (according to VNA)Source: https://baohaiduong.vn/nhung-quy-dinh-dang-chu-y-ve-giao-dich-chung-khoan-moi-duoc-ban-hanh-393437.html
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