Circular No. 74/2011/TT-BTC dated June 01, 2011 guiding on securities transaction

THE MINISTRY OF FINANCE

Circular No. 74/2011/TT-BTC of June 1, 2011, guiding the securities trading

Pursuant to Securities Law No. 70/2006/QH11, passed by the National Assembly on June 29, 2006;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance guides trading activities on the securities market as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides securities trading activities of companies listing or registering for trading and public securities investment funds on the Stock Exchanges (SEs).

Article 2. Interpretation of terms

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

1. Trading member means a securities company approved by an SE to become a trading member.

2. Trading system means a computer system used for securities trading activities on an SE.

3. Order transmission system means a system transmitting trading orders of investors from trading members to an SE.

4. Price range means limits of fluctuation of securities prices set for a trading day and calculated in percentage (%) of reference prices.

5. Reference price means a price serving as a basis for an SE to calculate securities price fluctuation limits on a trading day.

6. Auction method means a trading method applied by a trading system on the basis of comparing or matching securities purchase orders and sale orders. Auctions include call auction and continuous auction.

7. Agreement method means a trading method whereby trading members reach agreement with one another on trading conditions and enter information into the system for recording trading results.

8. Margin trading means a customer’s transaction to purchase securities on loans of a securities company and use as collateral of other securities on this customer’s accounts and securities to be purchased with these loans.

9. Inside information means undisclosed information about a public company or public fund which might, once disclosed, greatly affect prices of securities of this company or fund.

10. Insider transaction means a transaction to purchase or sell securities based on reference to inside information in order to bring about benefits (earning of profits or avoidance or reduction of losses) for parties to the transaction, parties having access to inside information or a third party.

11. Securities market manipulation transaction means that one or more than one individual or organization conducts or colludes with one another in conducting, directly or indirectly, the placement of orders, trading, disclosure or spreading of information in order to create sham supply and demand, false liquidity or changes in prices of one or several types of securities.

Chapter II

SPECIFIC PROVISIONS

Article 3. Organization of securities trading

1. The SEs shall organize securities trading by the auction and agreement methods. Auction on a trading system shall be conducted on the principle of price and time priority.

2. The SEs shall organize trading of securities listed or registered for trading via their trading systems, except the following cases:

a/ The case specified at Point b, Clause 1, Article 4 of the Ministry of Finance’s Circular No. 43/2010/TT-BTC of March 25, 2010, amending and supplementing the Regulation on securities registration, deposit, clearing and settlement, promulgated together with the Minister of Finance’s Decision No. 87/2007/QD-BTC of October 22, 2007;

b/ Auction for sale of state capital portions in listed institutions and public companies;

c/ Other cases of transfer via the Securities Depository Center (SDC) after obtaining approval of the State Securities Commission (SSC).

3. The SEs shall promulgate regulations guiding securities trading after obtaining the SSC’s approval. A regulation guiding securities trading must specify the trading time; trading method; method of determining reference prices; trading price range; types of trading orders; modification of trading orders; cancellation of trading orders and other relevant contents.

4. The Hanoi SE may organize the trading of listed securities and securities of unlisted public companies, except the cases specified at Points a, b and c, Clause 2 of this Article.

5. The SDC shall assign symbols to securities to be traded on the SEs.

Article 4. Suspension of securities trading

1. An SE shall suspend securities trading activities on its entire system in the following cases:

a/ Its trading system or order transmission system encounters an incident;

b/ A force majeure circumstance, i.e. natural disaster or fire, occurs, affecting the market’s trading activities;

c/ The SSC requests the trading suspension for stabilizing the market;

d/ Other cases which it finds necessary to protect investors’ interests after obtaining the SSC’s approval.

2. The suspension of trading of each specific type of securities complies with regulations of the SEs.

3. The SEs shall report to the SSC on trading suspension immediately after deciding on it under Points a and b, Clause 1, and Clause 2 of this Article.

Article 5. Price range

1. Each SE shall set its price range after obtaining the SSC’s approval.

2. In case of necessity to assure the stability of the market, the SSC shall decide to adjust price ranges.

Article 6. Post-trading error correction, establishment and cancellation of transactions

1. The SDC shall promulgate the process of post-trading error correction for securities listed and registered for trading on the SEs after obtaining the SSC’s approval.

2. The SEs shall promulgate regulations on establishment and cancellation of securities transactions after obtaining the SSC’s approval.

Article 7. Securities transactions of investors

1. Investors shall open securities trading accounts at securities companies for conducting securities transactions on the SEs and provide sufficient and accurate relevant information when opening these accounts.

2. An investor may open only one trading account at a securities company, except accounts in the following cases:

a/ It/he/she opens margin trading accounts;

b/ A fund management company is required to open separate trading accounts for itself and each securities investment fund which it manages at each of securities companies where it intends to open accounts, and clearly state such in account-opening contracts. In case of management of portfolios, a fund management company shall open two (2) trading accounts bearing its name at a securities company representing its trusting investors, including one (1) account for domestic trusting investors and one (1) account for foreign trusting investors;

c/ A foreign investor being a foreign securities company established under foreign laws is allowed to open separate securities trading accounts at a securities company for managing securities under its ownership (for the dealing operation) and accounts for its customers (for the brokerage operation);

d/ A wholly foreign-owned insurance business operating in Vietnam, when engaged in securities trading activities, is required to open two (2) trading accounts at a securities company: one (1) account on investment from its equity capital which is subject to the foreign ownership percentage regulation and one (1) account on investment from collected insurance premiums which is not subject to the foreign ownership percentage regulation.

3. The opening of securities trading accounts of securities practitioners complies with Clause 2, Article 81 of the Securities Law.

4. In case an investor wishes to open securities trading accounts at different securities companies, its/his/her dossiers for opening of new accounts at subsequent securities companies must clearly state the number of accounts already opened at other securities companies and identification numbers of these accounts.

5. Foreign investors may only open trading accounts after making registration with and receiving securities trading identification numbers from the SDC.

6. The SSC shall guide the principle for granting identification numbers of securities trading accounts to investors. Securities companies at which investors open their accounts shall store information on account holders and securities transactions and relevant documents for at least 10 years after these transactions are conducted.

7. Investors shall assure the margin ratio in cash or in securities in transactions. The SSC shall guide the margin ratio in cash or in securities after obtaining the Ministry of Finance’s approval.

8. Securities listed or registered for trading shall be transferred via the SEs. Transfers specified in Clause 2, Article 3 of this Circular shall be conducted via the SDC with information thereon disclosed on the SEs.

9. Securities companies may purchase odd-lot stocks and fund certificates of investors at agreed prices or organize odd-lot transactions for their customers under the SSC’s regulations.

Article 8. Securities transactions on trading days

1. An investor may conduct reverse transactions (purchase and sale) in the same securities on a trading day when satisfying the following conditions:

a/ It/he/she uses an account opened at a securities company for executing both purchase orders and sale orders;

b/ It/he/she may purchase (or sell) only a type of securities if its previous sale orders (or purchase orders) for the same type of securities have been executed and these trading orders satisfy the requirement of the margin ratio as specified in Clause 7, Article 7 of this Circular;

c/ The securities company and custodian bank are responsible for examining the validity of the investor’s purchase/sale orders.

2. An investor may not:

a/ Conduct transactions which do not lead to a securities ownership change;

b/ Place purchase orders and sale orders for the same type of securities simultaneously at a time of auction on the same account or on different accounts all held by it/him/her.

Article 9. Accounts for authorized trading

1. When opening securities trading accounts, investors may make trading authorization in the following cases:

a/ They authorize in writing securities companies or custodian banks to conduct transactions on their behalf. When authorized to conduct transactions, securities companies/custodian banks shall conduct transactions on behalf of investors and comply with regulations on securities trading and settlement and the obligation to disclose information and take responsibility before investors for authorized jobs;

b/ They authorize in writing other individuals to conduct transactions on their behalf, assuring that:

- The authorization is certified by the local administration or notarized under law;

- The authorization contract clearly states the scope of authorization;

- The authorized person may not conduct transactions with himself/herself or with authorizing third parties.

2. Staffs of securities companies may not receive authorization by investors.

3. An investor that opens many securities trading accounts shall report on the obligation of a major shareholder on total volume of securities on these accounts and disclose information under law.

Article 10. Trading of treasury stocks

1. Institutions listing or registering for trading, when redeeming or selling treasury stocks on the SEs, shall comply with law. The SEs shall promulgate regulations to specifically guide the trading of treasury stocks after obtaining the SSC’s approval.

2. In case of selling treasury stocks, public companies shall report such to the SSC at least seven (7) days before conducting transactions.

3. Institutions listing or registering for trading may redeem odd-lot stocks of investors for use as treasury stocks. Institutions listing or registering for trading that redeem odd-lot stocks shall ensure capital sources for redemption of treasury stocks under law and are not subject to any time limit for sale of odd-lot stocks already purchased for use as treasury stocks.

Article 11. Securities margin trading

1. Securities companies may conduct margin transactions after reporting to the SSC.

2. Investors wishing to conduct margin transactions shall open margin accounts at securities companies at which they have opened securities trading accounts. At each securities company at which an investor has opened a trading account, this investor may open one (1) margin account. Securities companies shall manage margin accounts of investors separately from other trading accounts.

3. Securities eligible for margin trading are stocks and investment fund certificates currently listed on the SEs and satisfying the requirements on securities eligible for margin trading set out by the SSC. Securities companies shall publicly disclose portfolios of securities in which they conduct margin transactions.

4. Securities companies shall report, on a periodical basis or upon request, on margin trading activities to the SSC, SEs and SDC.

5. In case of necessity, to assure safety for activities of the securities market, the SSC may request securities companies to suspend their margin trading.

6. The SSC shall specify margin trading operations which securities companies may conduct.

Article 12. Cases of securities management

The SEs shall specify measures, conditions for and duration of application of measures in cases in which securities traded on the SEs are subject to warning, control, trading suspension or trading termination after obtaining the SSC’s approval.

Article 13. Prohibited transactions

1. Prohibited transactions include: insider transactions, market manipulation transactions and other transactions prohibited under law.

2. Violations of securities trading regulations shall be handled under law.

Article 14. Reporting and surveillance regime

1. The SEs and SDC shall observe the regime of reporting on securities trading activities to the SSC.

2. The SEs and SDC shall submit to surveillance by the SSC of securities trading.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 15. Implementation provisions

1. The SSC shall promulgate specific guiding regulations. The SEs and SDC shall promulgate guiding regulations and professional processes and supervise compliance in trading activities of their members after obtaining the SSC’s approval.

2. This Circular takes effect on August 1, 2011.

3. Amendments and supplementations to this Circular shall be decided by the Minister of Finance.-

For the Minister of Finance
Deputy Minister
TRAN XUAN HA