Decision 32/QD-TTg 2019 establishment of Vietnam Stock Exchange

DECISION

Approving the scheme on establishment of the Vietnam Stock Exchange^[1]

THE PRIME MINISTER

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the June 29, 2006 Law on Securities, and the November 24, 2010 Law Amending and Supplementing a Number of Articles of the Law on Securities;

Pursuant to the November 26, 2014 Law on Enterprises;

Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

At the proposal of the Minister of Finance,

DECIDES:

Article 1.To approve the scheme on establishment of the Vietnam Stock Exchange with the following principal contents:

1. Objectives

a/ General objectives

To establish the Vietnam Stock Exchange (VSE) operating after the parent company-subsidiary model on the basis of reorganization of the Hanoi Stock Exchange (HNX) and the Ho Chi Minh City Stock Exchange (HOSE) in order to unify the securities trading market and ensure the market operates in an efficient, fair, open and transparent manner; to enhance the management, supervision and protection of the lawful rights and interests of market participants; to contribute to upgrading the Vietnam’s securities market; to increase the competitiveness and step by step approach international standards and practices.

b/ Specific targets

- To complete the model of apparatus organization on the basis of establishing a focal point of operational administration and risk management in order to raise the effectiveness of organizational apparatus and operation of VSE; to enhance the autonomy and accountability in organizing market operations under regulations.

- To effectively reorganize the securities trading market in Vietnam on the basis of clearly defining three main markets, including: stock trading market, bond trading market and derivatives market; to focus on specialization and professionalization, bringing into play the role of the securities market in economic development.

- To synchronously develop modern infrastructure and information technology for the market, including transmission line systems, databases and backup systems in order to facilitate the securities market participants and connectivity with regional and international securities markets.

- To unify the finance and technology investment management; to increase the capital use efficiency and at the same time complete financial mechanisms suitable to the stock exchange’s operational characteristics.

- To expand the organized securities market, diversify trading commodities and investors and narrow the over-the-counter market, ensuring the market operates in an efficient, fair, open and transparent manner and protecting investors’ lawful rights and interests.

2. Guidelines and principles

The establishment of VSE on the basis of reorganization of HNX and HOSE must adhere to the following guidelines and principles:

a/ To comply with relevant regulations, including the Law on Securities, Law on Enterprises, and Law on Management and Use of State Capital Invested in Production and Business at Enterprises, with the Law on Securities being the top choice for application as a specialized law.

b/ The establishment shall be carried out according to appropriate roadmaps and steps, causing no impacts on trading operations in the securities market, no increase in the number of employees, no unwanted change in apparatus organization, human resources, professional operations and financial management of the stock exchanges.

c/ To enhance the role in the management and supervision of the State and representatives of state owners at enterprises, ensuring the securities market operates in an efficient, fair, open and transparent manner and increasing the operational efficiency of the stock exchanges.

3. Principal contents

a/ Operational model

- VSE, headquartered in Hanoi, operates as a single-member limited liability company with 100% state capital after the model of parent company-subsidiary with the representative of state capital owner being the Ministry of Finance.

- HNX and HOSE are subsidies of VSE with 100% capital invested by the VSE, operate independently and have the legal person status.

b/ Charter capital

- VSE’s charter capital is VND 3 trillion allocated from the charter capital of HNX and HOSE.

- In the course of operation, VSE may increase or decrease its charter capital according to the Prime Minister’s decisions.

c/ Functions and tasks

- VSE has the following main functions and tasks:

+ To formulate strategies, development investment plans, 5-year production and business plans and annual production and business plans to be submitted to competent authorities for approval under regulations.

+ To issue regulations on securities listing, securities trading, information disclosure, trading members and other professional regulations related to organization and operation of securities trading markets after receiving the State Securities Commission’s approval.

+ To supervise HNX and HOSE in the implementation of regulations on professional operations; to exert the overall supervision of the securities market in accordance with law.

+ To direct the development of the information technology system, new technologies and products in order to direct the uniform implementation.

+ To support the market development through providing infrastructure services, training, propagation, knowledge dissemination, and other services in accordance with law.

+ To act as a conciliation mediator at the request of trading members when disputes related to securities trading occur.

+ To undertake international cooperation on securities and securities market, acting as a focal point in joining in international securities market organizations.

+ To manage its subsidiary companies under regulations and its operation charter.

+ To perform other tasks in accordance with law and competent authorities’ regulations.

- HNX and HSX have the following main functions and tasks:

+ To organize listing, trading registration, securities trading, securities auction and bond bidding activities in accordance with law.

+ To supervise the observance of the law on securities and securities market by trading members, listing organizations and investors participating in securities trading at the stock exchanges under regulations.

+ To develop new products for the markets which they manage.

+ To support the market development through infrastructure service provision, training, communication and knowledge popularization.

+ To perform other tasks in accordance with law and competent authorities’ regulations.

d/ Apparatus organization

The Ministry of Finance shall decide on VSE’s apparatus organization; VSE shall decide on HNX’s and HOSE’s apparatus organization after obtaining the Ministry of Finance’s approval.

dd/ Financial and salary mechanisms

- Financial mechanism:

+ VSE shall apply the financial mechanism applicable to single-member limited liability companies with 100% state capital under the Law on Management of State Capital Invested in Production and Business at Enterprises; the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in enterprises and management and use of capital and assets at enterprises; the Government’s Decree No. 87/2015/ND-CP of October 6, 2015, on supervision of state capital investment in enterprises; financial supervision, assessment of operation efficiency and disclosure of financial information of state-owned and state-invested enterprises; the Government’s Decree No. 122/2017/ND-CP of November 13, 2017, on special regulations on financial management mechanism and operational effectiveness assessment applicable to lottery businesses, stock exchanges and Vietnam Securities Depository, and guiding, amending, supplementing and replacing documents (if any), and relevant regulations.

+ HNX and HOSE shall apply the regulation on financial management issued by VSE under regulations on financial mechanism applicable to state enterprises and in accordance with the Law on Enterprises; Law on Management of State Capital Invested in Production and Business at Enterprises; the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in enterprises and management and use of capital and assets at enterprises; the Government’s Decree No. 87/2015/ND-CP of October 6, 2015, on supervision of state capital investment in enterprises; financial supervision, assessment of operation efficiency and disclosure of financial information of state-owned and state-invested enterprises; the Government’s Decree No. 122/2017/ND-CP of November 13, 2017, on special regulations on the financial management mechanism and operational effectiveness assessment applicable to lottery businesses, stock exchanges and Vietnam Securities Depository; and guiding, amending, supplementing and replacing documents (if any), and relevant regulations.

- Salary mechanism:

+ VSE shall apply the salary mechanism applicable to state enterprises and pay salaries to its managers under current regulations.

+ VSE shall, based on the salary mechanism applicable to single-member limited liability companies with 100% state capital established and operating in accordance with the Law on Securities,  organize the management of employees, salaries and bonuses for the HNX’s and HOSE’s employees and managers.

4. Implementation roadmap

The establishment of VSE shall be carried out according to a suitable roadmap to ensure the market’s stable and uninterrupted operation, including the following two phases:

a/ Phase 1 (2019-2020):

- To establish VSE, and continue maintaining operations of the existing securities trading markets at HNX and HOSE.

- To unify the organization of operational apparatus of VSE, and reorganize the organizational apparatus of HNX and HOSE;

- To finalize a project to build a market information technology system in which HOSE acts as the owner in order to upgrade and modernize information technology for the whole market.

b/ Phase 2 (2020-2023):

- To put the market information technology system into operation for HNX and HOSE, then proceed to implement the segmentation of the sub-markets.

- To work out a plan to equitize the stock exchanges for implementation after 2023.

Article 2.Implementation organization

1. The Ministry of Finance shall:

a/ Submit to the Prime Minister for issuance a decision on the establishment of VSE on the basis of the approved scheme.

b/ Draft and issue the organization and operation charter of VSE.

c/ Decide on the apparatus organization and managers of VSE, HNX and HOSE in accordance with the Law on Securities, Law on Enterprises and Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

d/ Direct the State Securities Commission in appraising and permitting VSE to issue regulations on professional operations, and managing and supervising the operation of the stock exchanges in accordance with the Law on Securities.

dd/ Direct VSE in issuing the organization and operation charters of HNX and HOSE.

e/ Direct VSE in formulating the plan on equalization of the stock exchanges for reporting to the Prime Minister for organization of implementation after 2023.

2. The Ministry of Labor, Invalids and Social Affairs shall coordinate with the Ministry of Finance in guiding the salary, bonus and allowance mechanism applicable to VSE’s managers and employees as well as its subsidiaries under the mechanism applicable to state enterprises and in conformity with stock exchanges’ operational characteristics.

3. The People’s Committees of Hanoi and Ho Chi Minh City shall coordinate with the Ministry of Finance in performing the state management in their localities of VSE, HNX and HOSE in accordance with law.

Article 3.This Decision takes effect on the date of its signing.

Article 4.Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and heads of related agencies shall implement this Decision.-

Prime Minister
NGUYEN XUAN PHUC