Quyết định 46/2008/QD-BTC

DECISION

PROMULGATING THE REGULATION ON MANAGEMENT OF GOVERNMENT BOND TRANSACTIONS AT THE HANOI SECURITIES TRADING CENTER

THE MINISTER OF FINANCE

Pursuant to June 29, 2006 Securities Law No. 70/2006/QH11;
Pursuant to the Government’s Decree No. 77/2003/ND-CP dated July l, 2003, defining the functions, tasks, powers and organizational structure of the Finance Ministry;
At the proposal of the Chairman of the State Securities Commission,

DECIDES:

Article l.

- To promulgate together with this Decision the Regulation on management of government bond transactions at the Hanoi Securities Trading Center.

Article 2.

- This Decision takes effect 15 days after its publication in "CONG BAO".

Article 3.

- The Chairman of the State Securities Commission, the director of the Finance Ministry’s Office, heads of concerned units of the Finance Ministry, the director of the Hanoi Securities Trading Center, and concerned organizations and individuals shall implement this Decision.

REGULATION

ON MANAGEMENT OF GOVERNMENT BOND TRANSACTIONS AT THE HANOI SECURITIES TRADING CENTER
(Issued together with the Finance Minister’s Decision No. 46/2008/QD-BTC dated July 1, 2008)

Chapter I

GENERAL PROVISIONS

Article 1. - Scope of application

This Regulation provides for activities of registration for listing and disclosure of information, government bond trading members, transactions and management of transactions in government bonds listed at the Hanoi Securities Trading Center (HASTC).

Article 2. - Interpretation of terms

1. Government bond trading member at the HASTC (below referred to as member for short) means a securities company or commercial bank approved by the HASTC to become a government bond trading member.

2.The government bond trading system (below referred to as the system for short) means a system of physical bases in service of government bond trading activities at the HASTC. The system allows the receipt, transfer, modification, recording, monitoring and supply of data in service of government bond trading on it.

3. Quotation means a government bond price quoted by members on the system. A quotation is understood as a price exclusive of coupon accrued interest (if any).

4. Exercise price means a price used for determining sums of money payable in government bond transactions.

5. Ordinary member means a securities company approved by the HASTC to become a government bond trading member. Ordinary members may perform government bond brokerage and dealing operations on the HASTC’s system.

6. Special member means a commercial bank approved by the HASTC to become a government bond trading member. Special member may only perform the government bond dealing operation on the HASTC’s system.

7. Ordinary transaction means a transaction in government bonds in which a party sells and transfers the ownership of government bonds to another party without making a commitment to buy back these government bonds.

8. Sale and buyback transaction means a transaction in which a party sell and transfer the ownership of government bonds to another party and concurrently commits to buy back these government bonds and receive back the ownership thereof after a specified duration at a specified price. A sale and buy back transaction consists of a sale transaction (fist transaction) and buyback transaction (second transaction). In a sale and buyback transaction, the seller is under stood as the seller in the first transaction and the buyer is understood as the buyer in the first transaction.

Chapter II

TRADING MEMBERS

Article 3. - Trading members .

The HASTC's trading system has two types of trading members, i.e., ordinary members and special members.

Article 4. - Criteria for an entity to become a government bond trading member

1. For an ordinary member:

a/ Being a securities company established and engaged in securities trading activities under a license granted by the State Securities Commission (SSC), permitting it to perform all securities business operations, including securities brokerage, securities dealing, securities investment consultancy and securities issuance underwriting;

b/ Being a member of the Securities Depositary Center;

c/ Satisfying the criteria specified in Chapter VI of June 9, 2006 Securities Law No.70/2006/QH11 for establishment and operation of securities companies;

d/ Having sufficient material and technical conditions for government bond trading activities at the HASTC;

e/ Satisfying other conditions specified by the HASTC.

2. For a special member:

a/ Having a valid business registration certificate granted by the State Bank of Vietnam;

b/ Having a paid-in or allocated charter capital at equal to the legal capital under the Government's current regulations on the list of legal capital levels of credit institutions and relevant current regulations;

c/ Being a member of the Securities Depositary Center;

d/ Having sufficient material and technical conditions for government bond trading activities at the HASTC;

e/ Satisfying other conditions specified by the HASTC.

Article 5. - Registration for member ship

The HASTC shall specify the conditions, dossiers and procedures for entities to register themselves to become government bond trading members.

Article 6. -Termination of membership

l. Government bond trading members may voluntarily ask for the HASTC'S approval of the termination of their membership.

2. Compulsory termination of membership of a government bond trading member:

a/ It no longer satisfies the conditions specified by the HASTC on its government bond trading members;

b/ It seriously violates regulations on the HASTC's members;

c/ It violates regulations on members with less serious faults but in a systematic manner.

3. The order of effecting the termination of the membership is specified by the HASTC in professional processes.

Article 7. - Government bond transactions of members

1. All transactions in listed government bonds must be conducted by members through the HASTC's government bond trading system.

2. All bills certifying transaction results printed from the trading system must be kept by members for use as legal bases for transaction reporting, inspection or comparison upon the occurrence of a dispute.

3. For brokerage transactions:

a/ Members shall sign written contracts upon opening trading accounts for their customers;

b/ Members shall reach agreement on and publicize the mode of receiving and handling government bond transactions of their customers at their head offices, branches, transaction offices or order-taking agents. Documents related to transactions must be kept at places where requests are received. Transaction results must be notified to customers immediately on the trading date by modes already agreed upon with customers. Members shall send monthly statements of cash and securities accounts when so requested by their customers;

c/ Members shall execute brokerage orders for their customers before their dealing orders at the best exercise price possible on the HASTC's

government bond trading system. The best exercise price possible may be either a price designated by customers or a better price;

d/ Members shall preserve and keep confidential government bond trading accounts and dossiers of their customers under law;

e/ Members shall supply information relating to their customers' accounts for the purpose of management, supervision and inspection when so requested by the HASTC, the SSC and competent Vietnamese state agencies

4. For dealing transactions: Members shall ensure sufficient money and bond quantity for fulfill their obligations in related transaction on the system. .'.

Article 8. - Regulations on reporting by members

l. Members shall send to the HASTC periodical reports on their business operation, including:

a/ Monthly reports on government bond trading activities, made according to a set form (not printed herein). Such a report must be submitted within five working days after the end of a month;

b/ Annual consolidated reports on government bond trading activities, made according to a set form (not printed herein). Such a report must be submitted before March 31 every year.

2. Reporting form: Members shall send their written reports to the HASTC or send their electronic reports through their e-mail addresses already registered with the HASTC.

Article 9. - Forms of disciplining members

Members that violate relevant regulations in their government bond trading activities the HASTC shall be subjected to one or more of the following disciplines: .

a/ Reprimand;

b/ Caution;

c/ Suspension of government bond trading activities on the HASTC for a definite time;

d/ Compulsory termination of membership.

Chapter III

ORGANIZATION AND MANAGEMENT OF TRANSACTIONS

Article 10. - General provisions

1. The HASTC shall organize transactions in government bonds already put in the concentrated depositary and registered for listing.

2. Government bond transactions on the system must be conducted through members.

3. Government bond buyback transactions by issuing organizations under the issuance clause shall be specified by the HASTC on a case-by-case basis.

Article 1l. - Bonds listed at the HASTC

1. Bonds listed at the HASTC are those with a nominal term of over one year (except for foreign-currency bonds).

2. Other bonds eligible for listing, including municipal bonds and government-underwritten bonds, may be considered for listing upon request.

3. Bonds are listed at the HASTC upon written requests made by issuing organizations according to a set form (not printed herein).

Article 12. - Trading time

1. The HASTC shall organize bond trading on Monday thru Friday every week. It does not organize trading on weekends and public holidays provided in the Labor Code.

2. The specific trading time is decided by the director of the HASTC after obtaining the SSC's approval.

Article 13. - Trading mode

1. The HASTC shall apply the trading mode of agreement to government bond transactions on the system.

2. When necessary, the HASTC may decide to change the trading mode after obtaining the SSC’s approval.

Article 14. - Types of transaction

The HASTC shall organize two types of government bond transaction, including ordinary transactions and sale and buyback transactions.

Article 15. - Establishment and cancellation of transactions

1. A transaction is established as soon as the system records it, unless otherwise provided for by the SSC.

2. Members shall assure their customers' solvency (for ordinary members) and their own solvency upon entering into transactions within the prescribed time limit.

3. In case an established transaction severely affects investors' benefits or all transactions on the market, the HASTC may decide to modify or cancel transactions and report such to the Chairman of the SSC.

Article 16. - Handling of breaches of the obligation to pay for transactions

The HASTC shall specify the handling of breaches of the obligation of its trading members to pay for transactions.

Chapter IV

ORDINARY TRANSACTIONS

Article 17. - Forms of transaction

1. Ordinary transactions are conducted in two forms: electronic agreement and ordinary agreement.

2. The HASTC shall decide to change or add forms of transaction after obtaining the SSC's approval.

Article 18. - Electronic agreement

1. Electronic agreement means a form of transaction whereby trading orders are offered with firm commitments and exercised as soon as there is an exercise partner, and for which no re-confirmation is required.

2. Transactions in the form of electronic agreement are conducted on the principle that members' trading representatives enter offering or bid orders with firm commitments in the system and select appropriate matching orders for conducting transactions.

3. Offering or bid orders with firm commitments are publicly offered on the system. Contents of an offering or bid order with firm commitments are specified in the procedures for bond trading at the HASTC promulgated by the HASTC.

Article 19. - Ordinary agreement

l. Ordinary agreement means a form of transaction whereby transaction parties advertise their offerings and bids and may additionally agree upon transaction conditions.

2. After an agreement is reached, a transaction in the form of ordinary agreement is conducted on the principle that the seller enters trading orders in the system and the buyer confirms agreement transaction orders.

3. Advertised offering and bid orders shall sent to one or several partners or notified to the entire market. Contents of an advertised order are specified in the procedures for bond trading at the HASTC promulgated by the HASTC.

4. This form also applies to transactions agreed outside the system and established after their results are reported on the system. Contents of a report on transaction results are specified in the Procedures for Bond Trading at the HASCT promulgated by the HASTC.

Chapter V

SALE AND BUYBACK TRANSACTIONS

Article 20. - Forms of transaction

1. Sale and buyback transactions are conducted in two forms: electronic agreement and ordinary agreement.

2. The HASTC shall decide to change or add forms of transaction after obtaining the SSC’s approval.

Article 21. - Electronic agreement

1. Electronic agreement means a form of transaction whereby offering and bid orders with firm commitments shall, based on requests for offerings and bids on the system, be correspondingly offered and exercised as soon as they are picked, and for which no re-confirmation is required.

2. Transactions in the form of electronic agreement are conducted on the principle that members' trading representatives shall, based on requests for offerings and bids on the system, address offering or bid orders with firm commitments to partners that have sent relevant requests, and these partners shall pick appropriate offerings or bids for conducting transactions.

3. Offering or bid requests may be sent to one or several partners or notified to the entire market as requested by customers. In case customers do not specify their requirements, their requests shall be notified to the entire market. Contents of such a request are specified in the Procedures for Bond Trading at the HASTC promulgated by the

HASTC.

4. Offering or bid orders with firm commitments shall be addressed to partners that have made requests. Contents of an offering or bid order with firm commitments are specified in the Procedures for Bond Trading at the HASTC promulgated by the HASTC.

Article 22. - Ordinary agreement

1. Ordinary agreement means a form of transaction whereby transaction parties reach agreement through sending messages on the system or via communication media outside the system transaction conditions, and report transaction results on the system for establishing transactions.

2. After an agreement is reached, a transaction in the form of ordinary agreement is conducted on the principle that the seller enters trading orders in the system and the buyer confirms agreement transaction orders. Contents of a transaction report are specified in the procedures for Bond Trading at the HASTC promulgated by the HASTC.

Article 23. - Term of sale and buyback transactions

1. The term of a sale and buyback transaction is the number of real days counted from the date of payment for the first transaction to the date of payment for the second transaction.

2. The term of a sale and buyback transaction must be between two (2) days and one hundred and eighty (180) days.

3. When necessary, the HASTC may decide to change the term of a sale and buyback transaction after obtaining the SSC's approval.

Article 24. - Interest rates of sale and buyback transactions

Interest rates of sale and buyback transactions are determined on the real day/real day basis. The methods of determining sale and buyback interest rates and calculating interests are specified in the professional process of the HASTC.

Article 25. - Exercise prices

l. Exercise price in a sale and buyback transaction is calculated on the basis of the quotation, coupon accrued interest and hedger ratio (if any).

2. The formula for calculating exercise prices complies with the professional process of the HASTC.

Article 26. - Hedge ratio

1. Hedge ratio means a percentage discounted from or added to an exercise price at the time of starting a sale and buyback transaction.

2. Hedge ratio applicable to each sale and buyback transaction shall be agreed upon by the two partners themselves. In case of necessity, the HASTC may specify the ceiling hedge ratio.

3. Hedge ratios are fixed throughout the term of sale and buyback transactions.

Article 27. - Government bond yields in sale and buyback transactions

1. The right to enjoy the coupon interest and related yields (if any) from government bonds in sale and buyback transactions belongs to the seller.

2. In case the buyer receives the coupon interest at time(s) within the tern of a sale and buyback transaction, the buyer shall refund to the seller the coupon interest amount he/she/it has received upon the completion of the sale and buyback transaction. Upon starting to conduct the sale and buyback transaction, the two parties shall reach agreement on the coupon interest rate (if any).

Article 28. - Information on partners in sale and buyback transactions

1. Members joining a sale and buyback transaction as dealers or brokers shall assure that information of partners involved in the transaction is kept confidential. The disclosure of information is made only when:

a/ Involved parties give written consent;

b/ Functional agencies so request;

c/ The transaction is officially regarded as being impossible for the reason that involved parties refuse to perform or are unable to perform their obligations in the transaction.

2. When conducting sale and buyback transactions, members shall notify their partners of their capacity in these transactions as dealers or brokers.

Chapter VI

DISCLOSURE OF INFORMATION

Article 29. - Principles of disclosure of information

l. Disclosed information must be sufficient, accurate and timely as provided for by law.

2. The disclosure of information must be conducted by directors or directors general or persons authorized by directors or directors general to disclose information.

3. Information must be disclosed simultaneously on all the mass media.

Article 30. - Categories of information to be disclosed

Information to be disclosed is of the following categories:

1. Periodical information.

2. Extraordinary information.

3. Requested information.

Article 31. - Media and forms of information disclosure

1. Media: The disclosure of information must be conducted through the following media:

a/ Annual statements and reports, websites and other publications of organizations obliged to disclose information;

b/ The SSC’s media for information disclosure, including; annual statements and reports, websites and other publications;

c/ The HASTC’s media for information disclosure, including: the securities market bulletin, its website, and terminals at the Stock Exchange and the Securities Trading Center;

d/ The mass media.

2. Form: Information may be disclosed in the form of documents or electronic data.

Article 32. - Entities obliged to disclose information

Obliged to disclose information are government bond trading members and the HASTC.

Article 33. - Disclosure of information by ordinary members

Ordinary members shall perform the obligation to disclose information under the guidance information disclosure by securities companies provided in the Finance Ministry’s Circular No. 38/2007/TT-BTC dated April 18, 2008, guiding the disclosure of information on the securities market.

Article 34. - Disclosure of information by special members

1. Periodical disclosure of information:

a/ Information to be disclosed: Summarized annual financial statements (made according to a set form, not printed herein);

b/ Places of disclosure: Periodical information on a special member shall be published on a central newspaper and a local newspaper of the locality where this member is headquartered for three consecutive issues or through the SSC's and the HASTC's information disclosure media, and disclosed on its annual statements or reports, website and other publications;

c/ Time limit for disclosure: Information shall be disclosed within one hundred (100) days after the end of a fiscal year.

2. Extraordinary disclosure of information:

a/ Information to be disclosed by a special member:

- A decision on institution of legal proceedings against a member of the Board of Directors or the Members' Council, the President, the director or the Director General, the Deputy Director or the Deputy Director General, or the Chief Accountant;

- A decision of the Shareholders' General Meeting or the Members’ Council or the Company Proprietor approving a merger contract with another company;

- Changes in members of the Board of Directors or the Members’ Council, the President, the Director or the Director General, the Deputy Director or the Deputy Director General;

- Important changes in the business operation of the special member (a bank), including: a loss equal to ten per cent (10%) or more of its asset value; voluntary cessation of its business operation or blockading of its trading activities; revocation of its business registration certificate or establishment and operation license or operation license; a decision on amendments and supplements to its charter; its renaming; a decision on increase or decrease of its charter capital.

b/ Places of disclosure: Extraordinary information must be disclosed on publications and websites of special members and through the SSC’s and the HASTC'S information disclosure media.

3.Time limit for disclosure: Within twenty four (24) hours after the occurrence of any of aforesaid events, a special member shall disclose the information.

4. Requested disclosure of information:

a/ Information to be disclosed:

- Information on members which affects benefits of investors and trading entities on the market;

- Information on abnormal activities of members which needs to be verified.

Information to be disclosed must clearly indicate events requested by the SSC and the HASTC to be disclosed; causes and reliability of information of these events.

b/ Places of disclosure: The above information must be disclosed on publications and websites of members and through the mass media or the SSC’s and the HASTC'S information disclosure media.

c/ Time limit for disclosure: Within twenty four (24) hours after receiving a request of the SSC or the HASTC, a special member shall disclose the information.

Article 35. - Disclosure of information by HASTC ,

The HASTC is obliged to disclose the following information:

1. Information on bond transactions on its trading system:

a/ Information on types of bond permitted to be traded;

b/ Total number of types of bond to be traded on a day;

c/ Information on traded bonds, including bond term, coupon interest rate and maturity date;

d/ Information on the price and latest exercise quantity of each type of bond;

e/ Information on two (2) prices being the best ask and the best bid for bond quantities offered and bid at such prices;

f/ Information on bond quantities under offering/bid orders and their respective values for each type of bond;

g/ Total bond volume traded on the whole market for each type of transaction: ordinary transactions or sale and buyback transactions;

h/ Information on the standard yield curve (if any);

i/ Other information as requested by the SSC.

2. Information on trading members:

a/ List and dossiers of members;

b/ Information on admission of members;

c/ Information on penalization of members;

d/ Information on termination of membership;

e/ Information disclosed by members;

f/ Other information.

3. Information on listing activities:

a/ Titles, quantities and par values of bonds;

b/ Information on initial listing;

c/ Information on additional listing;

d/ Information on delisting;

e/ Information on listing changes;

f/ Other information.

Chapter VII

ORGANIZATION OF IMPLEMENTATION

Article 36. - Implementation provisions

1. Entities participating in the bond trading at the HASTC shall implement this Regulation.

2. The HASTC shall supervise the observance of this Regulation by its members.

3. The HASTC shall promulgate professional regulations and processes compliant with this Regulation.

4. The amendment and supplementation of this Regulation shall be decided by the Minister of Finance.