Circular No. 115/2017/TT-BTC dated October 25, 2017 of the Ministry of Finance on guiding the surveillance of securities trading on the securities market

CIRCULAR

Guiding the surveillance of securities trading on the securities market[1]

Pursuant to the June 29, 2006 Law on Securities;

Pursuant to the November 24, 2010 Law Amending and Supplementing a Number of Articles of the Law on Securities;

Pursuant to the Government’s Decree No. 58/2012/ND-CP of July 20, 2012, detailing and guiding a number of articles of the Law on Securities and the Law Amending and Supplementing a Number of Articles of the Law on Securities;

Pursuant to the Government’s Decree No. 60/2015/ND-CP of June 26, 2015, amending and supplementing a number of articles of Decree No. 58/2012/ND-CP of July 20, 2012, detailing and guiding a number of articles of the Law on Securities and the Law Amending and Supplementing a Number of Articles of the Law on Securities;

Pursuant to the Government’s Decree No. 42/2015/ND-CP of May 5, 2015, prescribing derivatives and the derivatives market;

Pursuant to the Government’s Decree No. 87/2017/ND-CP of June 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

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

The Minister of Finance promulgates the Circular guiding the surveillance of securities trading on the securities market.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Circular guides the surveillance of securities trading on the organized securities market.

Article 2.Subjects of application

This Circular applies to the following watchdogs and entities subject to surveillance:

1. Watchdogs:

a/ The State Securities Commission (SSC);

b/ The Stock Exchanges (SEs);

c/ The Vietnam Securities Depository (VSD).

2. Subject to surveillance are institutions and individuals involved in securities trading and providing securities trading-related services, including:

a/ Listed institutions, institutions registered for trading;

b/ Trading members and derivative trading members (below collectively referred to as trading members);

c/ Depository members of the Vietnam Securities Depository (below referred to as depository members);

d/ Securities investment fund management companies, securities investment funds and securities investment companies;

dd/ SEs and VSD, when providing securities trading-related services;

e/ Securities companies, commercial banks and foreign bank branches permitted to carry out derivatives clearing and trading payment (below referred to as clearing members);

g/ Individual investors and institutional investors (below collectively referred to as investors);

h/ Supervisory banks and commercial banks providing the service of opening securities investment deposit accounts;

i/ Other related entities.

Article 3.Interpretation of terms

In this Circular, the terms below are construed as follows:

1.Organized securities marketmeans a location or form of information exchange for gathering orders to purchase, sell and trade in listed securities, and register trading on the SEs, including also the derivatives trading market (below referred to as the securities market).

2.Listed institution or institution registered for tradingmeans an institution that has its securities listed or registered for trading on an SE.

3.Securities tradingmeans the purchase and sale of securities listed or registered for trading on the SEs carried out by the VSD in accordance with the securities law via the trading system of the SEs and other cases of securities ownership transfer.

4.Insider tradingmeans acts defined in Clause 1, Article 70 of the Government’s Decree No. 58/2012/ND-CP of July 20, 2012, detailing and guiding the implementation of a number of articles of the Securities Law and the Law Amending and Supplementing a Number of Articles of the Securities Law (below referred to as Decree No. 58/2012/ND-CP).

5.Securities market manipulation tradingmeans acts defined in Clause 2, Article 70 of Decree No. 58/2012/ND-CP.

6.Abnormal tradingmeans transactions subject to abnormality warning according to the surveillance criteria set out and applied by the SEs to identify abnormally traded securities after obtaining approval of the SSC.

7.Rumormeans information spread by a group of persons or an individual or institution on a matter related to securities or securities trading on the securities market, which may be true or untrue but cannot be verified at the time of spreading.

Chapter II

ORGANIZATION OF SECURITIES TRADING SURVEILLANCE

Section 1

SECURITIES TRADING SURVEILLANCE BY THE STATE SECURITIES COMMISSION

Article 4.Responsibilities and powers of the SSC

1. To assume the prime responsibility for, and coordinate with related agencies and units in, drafting and submitting to competent authorities for promulgation legal documents on securities trading surveillance.

2. To promulgate the procedures for securities trading surveillance by the SSC; and a regulation on coordination among the SSC, SEs and VSD in securities trading surveillance.

3. To approve the system of securities trading surveillance criteria developed by the SEs and thresholds of surveillance of deposit asset use ratio and position limit on each account of investors or clearing members set by the VSD.

4. To work out and implement annual securities trading surveillance plans.

5. To perform surveillance of securities trading activities on the securities market in order to detect, prevent and handle insider trading and securities market manipulation trading acts and acts violating the regulations on securities trading.

6. To supervise investors in their observance of regulations on securities trading.

7. To request entities subject to surveillance to report, explain and provide information and documents on securities trading.

8. To promptly issue appropriate warnings about transactions and acts showing signs of law violation in order to prevent illegal acts of entities subject to surveillance in securities trading.

9. To summarize surveillance reports and other reports to serve securities trading surveillance of the SEs, VSD and trading members; to request the SEs, VSD, trading members and clearing members to coordinate in promptly detecting, analyzing, assessing, inspecting and handling, when necessary, entities involved in abnormal securities transactions in accordance with law.

10. To assume the prime responsibility for, and coordinate with related units in, inspecting entities subject to surveillance defined in Clause 2, Article 2 of this Circular.

11. To report on securities trading surveillance results on an annual basis or upon request to the Ministry of Finance.

Article 5.Contents of surveillance by the SSC

Contents of surveillance by the SSC include:

1. Making in-depth analyses based on surveillance reports and other reports to serve surveillance of the SEs, VSD and trading members and other information sources in order to detect securities market manipulation transactions, insider transactions, other prohibited transactions and securities trading-related acts in violation of the law on securities and securities market in order to take measures to promptly prevent and handle them.

2. Performing surveillance of operations of the SEs in the organization and surveillance of securities transactions on the organized securities market within the scope of supervision by the SEs as prescribed in Section 2, Chapter II of this Circular.

3. Performing surveillance of operations of the VSD in the management and supervision of the deposit asset use ratio on each account of investors and clearing members; and of position limits of investors when trading in derivatives under Section 3, Chapter II of this Circular.

4. Performing surveillance of securities transactions of domestic institutional investors and foreign investors in order to promptly detect abnormal practices which may have psychological effects on small investors.

5. Performing surveillance of the provision of securities trading-related services by the entities specified at Points b, c, d, dd, e, h and i, Clause 2, Article 2 of this Circular.

Article 6.Methods of securities trading surveillance by the SSC

1. Based on trading data provided by the SEs, analyzing, assessing and handling under regulations securities transactions showing abnormal signs.

2. Performing surveillance of securities transactions based on information from the following sources:

a/ Surveillance reports and reports to serve surveillance of the SEs, VSD and trading members;

b/ Reports of listed institutions and institutions registered for trading;

c/ Reports of institutions and individuals involved in trading on the securities market;

d/ Information reported in the mass media, rumors;

dd/ Other sources of information.

3. Irregularly inspecting entities subject to surveillance upon detecting signs of abnormal transactions or based on reports of the SEs, VSD, trading members and institutions and individuals involved in securities trading and provision of securities trading-related services on the securities market.

Section 2

SECURITIES TRADING SURVEILLANCE BY THE STOCK EXCHANGES

Article 7.Responsibilities and powers of the SEs

1. To promulgate the surveillance procedures to ensure effective surveillance; to issue a system of criteria for surveillance of securities trading on the SEs under Article 9 of this Circular after obtaining approval of the SSC.

2. To build databases to serve surveillance as prescribed in Article 11 of this Circular.

3. To perform surveillance of securities trading and provision of securities trading-related services within the securities trading markets they organize in accordance with law.

4. To perform surveillance of transactions during a day, many days or periodically; to make analyses and assessments and clearly identify signs of securities market manipulation or insider transactions and trading acts specified in Clause 3, Article 70 of Decree No. 58/2012/ND-CP.

5. To perform surveillance of information disclosure and reporting under the current regulations concerning securities trading of trading members, listed institutions, institutions registered for trading, securities investment fund management companies, public securities investment funds, securities investment companies and investors.

6. To review information in the mass media and rumors relating to abnormal transactions.

7. To request trading members and related institutions and individuals to report and provide information and documents related to their securities transactions for surveillance.

8. To inspect trading members under Article 12 of this Circular; to coordinate with the SSC in regularly or irregularly inspecting entities subject to their surveillance.

9. To handle under their regulations trading members that violate securities trading regulations, and request the SSC to handle acts violating the securities trading regulations in accordance with law.

10. To make and send to the SSC regular reports, irregular reports and reports upon request on surveillance of securities trading of entities subject to surveillance.

11. To coordinate with the VSD in ensuring that trading on the market and derivatives clearing and trading payment activities are safely and efficiently carried out under Clause 3, Article 11 of the Government’s Decree No. 42/2015/ND-CP of May 5, 2015, on derivatives and derivatives market, and other relevant legal documents.

Article 8.Contents of securities trading surveillance by the SEs

1. The SEs shall perform surveillance in order to prevent and detect transactions and acts in violation of the securities trading regulations, including:

a/ Insider trading acts;

b/ Securities market manipulation trading acts;

c/ Trading acts specified in Clause 3, Article 70 of Decree No. 58/2012/ND-CP;

d/ Other acts in violation of the securities trading regulations as specified by the law securities and securities market.

2. The surveillance of trading and disclosure of information and reports relating to the trading of listed securities or securities registered for trading on the SEs of institutions listing securities or registered for securities trading, securities investment fund management companies, public securities investment funds, securities investment companies, major shareholders and investors holding 5% or more of fund certificates of closed public funds, insiders of institutions listing securities or registered for securities trading, insiders of closed public funds and their related persons, persons authorized to disclose information and investors, shall be performed under the current regulations.

Article 9.Securities trading surveillance criteria

1. The SEs shall develop and issue a system of securities trading surveillance criteria for listed securities or securities registered for trading to serve as a basis for surveillance of transactions within a day or in many days after obtaining approval of the SSC.

2. Contents and specific parameters of the system of securities trading surveillance criteria shall be developed and adjusted in each period to suit the trading reality of the securities market and ensure effective securities trading surveillance.

Article 10.Methods of securities trading surveillance by the SEs

1. Performing online surveillance on their surveillance systems of transactions within a day for listed securities or securities registered for trading, for detecting abnormal transactions.

2. Performing surveillance of securities transactions in many days based on one or several of the following sources:

a/ Their securities trading databases;

b/ Reports of trading members, listed institutions or institutions registered for trading, institutions and individuals participating in the securities market; information disclosed by investors in accordance with the law on securities and securities market;

c/ Information relating to the derivatives clearing and payment received from the VSD;

d/ Information reported in the mass media, rumors;

dd/ Other sources of information.

3. Requesting related institutions and individuals to provide information and explanations to further clarify signs of abnormal transactions.

4. Inspecting trading members under Article 12 of this Circular.

5. Coordinating with the SSC in regularly or irregularly inspecting entities subject to surveillance under their management.

Article 11.Databases for securities trading surveillance

The SEs shall build databases to serve securities trading surveillance. Such a database must at least contain:

1. Data on securities trading results.

2. A list of, and information about, entities subject to surveillance under their management that violate the law on securities and securities market and their regulations.

3. Reports and information on securities transactions already disclosed through their information disclosure systems; reports and information already reported to the SSC.

4. Data related to securities trading accounts of investors.

Article 12.Inspection of trading members of the SEs

1. Inspecting the observance of the regulations and processes related to securities trading and member regulations issued by the SEs.

2. Inspecting the observance of the regulations on listing and information disclosure by trading members being listed institutions and institutions registered for securities trading on the SEs.

3. Based on results of inspections performed under Clauses 1 and 2 of this Article, the SEs shall:

a/ Handle violations of the securities trading regulations committed by their trading members under their regulations;

b/ Report to the SSC on inspection and handling results;

c/ Propose the SSC to handle violations of trading members which fall beyond their competence.

Article 13.Regular trading surveillance reports

1. Within the first 2 working days of every week, an SE shall send to the SSC its weekly trading surveillance report for the previous week, including:

a/ Book of trading orders, results of securities trading within a day; and regular information within a trading day as specified in Clause 2, Article 33 of the Ministry of Finance’s Circular No. 155/2015/TT-BTC of October 6, 2015, guiding the information disclosure on the securities market (below referred to as Circular No. 155/2015/TT-BTC), which must be made according to Form No. 01 provided in Appendix I to this Circular;

b/ Results of securities trading surveillance in the previous week, made according to Form No. 02 in Appendix I to this Circular.

2. Within the first 10 working days of every month, an SE shall send to the SSC its monthly trading surveillance report for the previous month, made according to Form No. 03 in Appendix I to this Circular.

3. Within the first 20 working days of every year, an SE shall send to the SSC its annual trading surveillance report for the previous year, made according to Form  No. 04 in Appendix I to this Circular.

4. Reports specified in Clauses 1, 2 and 3 of this Article shall be made in written and electronic forms. Reports specified at Point a, Clause 1 of this Article may be sent only in electronic form. The above reports may be sent in electronic form only in case the SSC and SEs all apply the e-signature program. The SEs shall store reported information in accordance with law.

Article 14.Irregular trading surveillance reports

1. An SE shall send to the SSC an irregular report when detecting a sign of a violation specified in Clause 1, Article 8 of this Circular within twenty four (24) hours after detecting it or receiving a report requesting irregular disclosure of information relating to securities trading.

2. In case of irregular reports specified in Clause 1 of this Article, the SEs shall make separate analysis reports on each specific case, stating their assessment opinions and proposing handling solutions according to their competence or requesting handling by other agencies of cases falling beyond their competence.

Article 15.Trading surveillance reports upon request

1. The SEs shall send reports upon written request of the SSC.

2. Reports to be sent to the SSC mentioned in Clause 1 of this Article must be in written and electronic forms, have contents and be sent within the time limit requested by the SSC.

Section 3

SURVEILLANCE BY THE VIETNAM SECURITIES DEPOSITORY

Article 16.Responsibilities and powers of the VSD

1. To elaborate regulations on, and professional procedures for, derivatives clearing and trading payment to ensure effective surveillance of these activities.

2. To manage and supervise the maintenance of deposit levels; to determine and adjust position limits of clearing members and investors under regulations.

3. To request institutions and individuals subject to surveillance and involved in the securities clearing and payment to report, explain and provide information and documents to serve the surveillance.

4. Upon detecting abnormal signs in trading payment or signs of insolvency of investors or clearing members, to warn or request such clearing members to explain and provide relevant documents and information and promptly report to the SSC and concurrently notify such to the SEs.

5. To promptly report to the SEs cases of violation of the deposit asset use ratio or position limits.

6. To store sufficient relevant information specified in Article 20 of this Circular and share information related to securities trading for the SEs to perform the trading surveillance.

7. To comply with the provisions of Article 29 of the Government’s Decree No. 42/2015/ND-CP of May 5, 2015, on derivatives and derivatives market, regarding the coordination between it and the SEs.

8. To coordinate with the SSC in carrying out regular or irregular inspections of entities subject to surveillance.

9. To handle violations according to its competence or report violations which fall beyond its competence to the SSC for handling in accordance with law.

10. To make and send to the SSC regular reports, irregular surveillance reports, reports at the latter’s request and reports to serve the surveillance as specified in Article 25 of this Circular.

Article 17.Contents of surveillance by the VSD

1. Performing surveillance of observance of the law on securities and securities market by depository members and clearing members in their professional activities related to the securities registration, depository, clearing and payment.

2. Performing surveillance of the deposit asset use ratio on accounts of investors and clearing members.

3. Performing surveillance of position limits of investors when trading in derivatives.

Article 18.Surveillance criteria of the VSD

1. The VSD shall develop and issue thresholds of surveillance of the deposit asset use ratio and position limits on accounts of investors or clearing members in their professional operation regulations after they are approved by the VSD.

2. Contents and thresholds of surveillance shall be developed and adjusted in each period to suit the trading reality of the securities market and ensure effective surveillance on the securities market.

Article 19.Methods of surveillance by the VSD

1. Performing surveillance of cases where the deposit asset use ratio of investors or position limit is violated based on one or several of the following data or information sources:

a/ Data on positions or deposits of clearing members or investors;

b/ Regular reports or information reported by clearing members and other entities participating in the derivatives market;

c/ Information reported in the mass media;

d/ Other sources of information.

2. Requesting institutions and individuals subject to surveillance to provide information and explanations to further clarify signs of abnormal transactions.

3. Coordinating with the SSC in regularly or irregularly inspecting entities subject to surveillance.

Article 20.Storage of data to serve surveillance

The VSD shall store sufficient information about:

1. The end-of-day number of positions on accounts of investors and clearing members; value of losses, profits and daily positions of clearing members, initial deposit value, required deposit value, value and list of deposit assets on accounts of investors and clearing members.

2. Information relating to position limits of investors.

3. List of and information about entities subject to surveillance by the VSD that violate the regulations on derivatives and derivatives market and regulations of the VSD on derivatives clearing and payment.

4. Data on handling of clearing members at the VSD for violating the deposit asset use ratio or position limits.

5. Data on derivatives clearing and trading payment activities of clearing members and investors.

Article 21.Regular surveillance reports

1. Within the first 10 working days of every month, the VSD shall send to the SSC its monthly surveillance reports for the previous month, including:

- Report on handling of violations of clearing members (made according to Form No. 06 in Appendix II);

- Report on assistance for insolvent clearing members (made according to Form No. 07 in Appendix II).

2. Reports specified in Clause 1 of this Article shall be made in written form and electronic form (under the e-signature program).

Article 22.Irregular trading surveillance reports

1. The VSD shall send to the SSC irregular reports when detecting signs of violations of the regulations on deposits, position limits, derivatives clearing and trading payment.

2. An irregular report shall be sent to the SSC in written and electronic forms within twenty four (24) hours after the VSD detects the violation or receives a report requesting irregular disclosure of information about securities showing abnormal signs.

3. In case of irregular reports, the VSD shall make reports on each specific case, stating its assessment opinion and proposing handling solutions according to its competence or requesting handling by other agencies of cases that fall beyond its competence.

Article 23.Surveillance reporting upon request

1. The VSD shall send reports upon written request of the SSC.

2. Reports to be sent to the SSC mentioned in Clause 1 of this Article must be in written and electronic forms, have contents and be sent within the time limit requested by the SSC.

Chapter III

OBLIGATIONS OF ENTITIES SUBJECT TO SURVEILLANCE

Article 24.Obligation of institutions and individuals involved in securities trading or providing securities trading services to provide information and explanations upon request

1. Institutions and individuals involved in securities trading or providing securities trading services are obliged to promptly, adequately and accurately provide information, documents and electronic data relating to securities trading surveillance contents at the request of the SSC, SEs and VSD; give explanations at the request of the SSC and SEs about events related to securities trading in accordance with law and disclose information in accordance with the law on securities and securities market in the following cases:

a/ Securities transactions of institutions or individuals that are their major shareholders specified in Article 29 of the Law on Securities and Circular No. 155/2015/TT-BTC;

b/ Securities transactions of institutions or individuals or related persons that intend to hold up to twenty-five percent (25%) of voting stocks or fund certificates of a listed institution or an institution registered for trading or a closed fund, or are holding twenty-five percent (25%) or more of voting stocks or fund certificates of a listed institution or an institution registered for trading or a closed fund under Clause 1,  Article 32 of the Law on Securities as amended by Clause 11, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Securities and its guiding documents;

c/ Securities transactions of members of the Board of Directors, Control Board, General Director (Director), Deputy General Directors (Deputy Directors), Financial Director, Chief Accountant, Head of the Finance and Accounting Section and insiders of a listed institution or an institution registered for trading, insiders of a listed public fund, persons authorized to disclose information and related persons defined in Circular No. 155/2015/TT-BTC;

d/ Commercial banks providing the service of opening securities investment accounts for investors shall provide information on the balances of these accounts at the request of the SSC and competent agencies in accordance with law;

dd/ Supervisory banks shall provide data on the securities investment and trading of investment funds they supervise at the request of the SSC and competent agencies in accordance with law.

2. When conducting securities transactions on the securities market, institutions and individuals shall cooperate with the SSC, SEs, VSD and competent agencies at the latter’s request in accordance with law.

3. An institution or individual that conducts securities transactions or provides securities trading services but fails to coordinate or cooperate with the agencies specified in Clause 2 of this Article shall be handled in accordance with law.

Article 25.Obligations of the Vietnam Securities Depository

The VSD shall store sufficient information relating to its professional operations and send to the SSD regular reports, irregular reports and reports upon request to serve the securities market surveillance.

1. Within the first 10 working days of a month, the VSD shall send to the SSC its monthly regular reports for the previous month, including:

a/ Report on grant of securities codes (made according to Form No. 01 in Appendix II);

b/ Report on correction of trading payment errors, extension of payment deadline, cancellation of payments (made according to Form No. 02 in Appendix II);

c/ Statistics on securities transactions with ownership transfer not via the trading systems of the SEs (donation, inheritance, etc.) (made according to Form No. 03 in Appendix II);

d/ Report on information and names of securities trading accounts of investors opened at securities companies (made according to Form No. 04 in Appendix II);

dd/ List of major shareholders of companies that have registered securities at the VSD (made according to Form No. 05 in Appendix II).

Monthly reports specified at Points a and b, Clause 1 of this Article shall be made in written form and electronic form (under the e-signature program). Reports specified at Points c, d and dd, Clause 1 of this Article shall be only made in electronic form. The VSD shall store reported information in accordance with law.

2. Irregular reports: The VSD shall send to the SSC irregular reports when detecting signs of violation of the regulations on correction of errors, extension of payment deadline, cancellation of transactions for payment, ownership transfer not via the trading system, securities holding rate of investors, collaterals, change in securities ownership, exercise of rights; or violations committed by securities depository members, clearing members or users of services provided by the VSD in accordance with law.

An irregular report shall be sent to the SSC in written and electronic forms within twenty four (24) hours after the VSD detects the violation or receives a report requesting the irregular disclosure of information relating to securities with abnormal signs.

3. Reports upon request: The VSD shall send reports when receiving written requests of the SSC to serve the surveillance. Such a report must be made in written and electronic forms, have contents and be sent within the time limit requested by the SSC.

4. The VSD shall store reported information in accordance with law.

5. When necessary, the VSD shall make regular or irregular reports at the request of the Ministry of Finance.

Article 26.Obligations of trading members and depository members

1. The obligation of trading members and clearing members to coordinate with authorities in performing surveillance

a/ To coordinate with the SSC, SEs and VSD in performing securities trading surveillance when so requested;

b/ To coordinate with the SSC in inviting investors to work with inspection teams of the SSC on transactions showing abnormal signs;

c/ To send reports to the SSC upon detecting transactions violating the regulations on securities and securities market.

2. The reporting obligation of trading members

a/ Trading members shall send to the SSC and SEs reports to serve the securities trading surveillance within the ambit of their functions, including:

- Monthly reports: Within the first 5 working days of a month, trading members shall send to the SEs monthly reports for the previous month, made according to the form in Appendix III to this Circular.

- Irregular reports: Trading members shall report to the SSC and SEs within twenty four (24) hours after detecting a transaction showing signs of a prohibited transaction as specified in Article 9 of the Securities Law.

- Reports upon request: Trading members shall send to the SSC and SEs reports when receiving written requests of the SSC and SEs. They shall report in an adequate, accurate and timely manner and on contents and within the time limit requested by the SSE and SEs.

b/ All reports specified at Point a of this Clause must be in written form and electronic form (when necessary).

Chapter IV

IMPLEMENTATION PROVISIONS

Article 27.Effect

This Circular takes effect on December 8, 2017, and replaces the Ministry of Finance’s Circular No. 13/2013/TT-BTC of January 25, 2013, on surveillance of securities trading on the securities market.

Article 28.Organization of implementation

1. The State Securities Commission, Stock Exchanges, Vietnam Securities Depository, trading members, clearing members, listed institutions, institutions registered for trading, securities investment fund management companies, securities investment companies and  related institutions and individuals shall implement this Circular.

2. Any amendments and supplementations to or replacement of this Circular shall be decided by the Minister of Finance.-

For the Minister of Finance
Deputy Minister
TRAN XUAN HA

* All appendices to this Circular are not translated.