Thông tư 120/2020/TT-BTC

CIRCULAR

PROVIDING FOR TRADING OF LISTED AND REGISTERD SHARES, FUND CERTIFICATES, CORPORATE BONDS AND SECURED WARRANTS LISTED ON SECURITIES TRADING SYSTEMS

Pursuant to the Law on Securities No. 54/2019/QH14 dated November 26, 2019;

Pursuant to the Government’s Decree No. 155/2020/ND-CP dated December 31, 2020 on elaboration of the Law on Securities;

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

At the request of the President of the State Securities Commission;

The Minister of Finance hereby promulgates a Circular providing for trading of listed and registered shares, fund certificates, corporate bonds and secured warrants listed on securities trading systems.

Article 1. Scope and regulated entities

1. This Circular provides for trading of listed and registered shares, fund certificates, corporate bonds and secured warrants listed on securities trading systems.

2. Regulated entities:

a) Investors;

b) Securities companies, depository members, clearing members and securities investment fund management companies;

c) Vietnam Stock Exchange (VSE); Hanoi Stock Exchange, Ho Chi Minh City Stock Exchange (hereinafter referred to as “the Stock Exchange” (SE));

d) Vietnam Securities Depository and Clearing Corporation (VSDCC);

dd) Other relevant organizations and individuals.

Article 2. Definitions

For the purposes of this Circular, the terms below shall be construed as follows:

1. “price fluctuation limit” means the price fluctuation limit of securities set in a trading date which is calculated as a percentage (%) compared with the reference price.

2. “market-wide circuit breaker” means a mechanism for automatically halting transactions in a trading session when the price of a security or securities index moves in excess of some preset threshold on the securities trading system.

3. “reference price” means the price determined by the SE and used as the basis for determining the highest price (ceiling price) and the lowest price (floor price) in a trading date.

4. “centralized order matching method” means a trading method whereby the securities trading system matches securities buy and sell orders. The centralized order matching method includes periodic order matching and continuous order matching.

5. “periodic order matching” means a trading method whereby the securities trading system matches securities buy and sell orders at a specific time.

6. “continuous order matching” means a trading method whereby the securities trading system matches securities buy and sell orders after they are inputted into the securities trading system.

7. “put-through trading method” means a trading method whereby trading parties shall, through the trading member, negotiate on the trading conditions; or the trading parties shall deal and execute the trading themselves and then, their trading results shall be entered into the trading system by the trading member.

8. “day trading” means the act of buying and selling the same ticker symbol the investors does not own with the same trading volume, on the same account and within the same trading day.

9. “buy-in” means an act of buying securities to ensure that there is a sufficient quantity of securities to pay for transactions that are short of securities in accordance with law.

10. “margin trading at a securities company” (hereinafter referred to as "margin trading”) means the method of buying securities with cash borrowed from a securities company, using the bought securities and other marginable securities of the investor as collateral for the aforesaid loan.

11. “short selling with collateral” (hereinafter referred to as “secured short selling”) means a transaction in which a seller sells securities that have been borrowed from the securities borrowing and lending system of the VSDCC. The seller then has the obligation to buy back the securities to repay the loan.

12. “securities pending settlement” mean securities successfully purchased by an investor on the trading system pending completion of ownership transfer procedures.

13. “odd-lot securities transaction” means a transaction in which an amount of securities is less than one trading unit.

Article 3. Organization of securities trading

1. Every SE shall organize securities trading by adopting the centralized order matching method and put-through trading method according to the following principles:

a) The centralized order matching method executed on the trading system must ensure the principle of prioritizing price and time;

b) The put-through trading method executed on the trading system must comply with the principle that the trading parties negotiate on the trading contents themselves.

2. The securities specified in Clause 1 Article 1 of this Circular shall be traded on the securities trading system, excluding the cases of transfer of ownership out of the securities trading system in accordance with regulations of law on securities registration, depositing, clearing and payment. The SE is allowed to organize buy-in sessions through the securities trading system.

3. The VSE shall promulgate regulations on securities trading containing the following contents: trading method; trading time; methods for determining reference price; securities price fluctuation limit; market-wide circuit breaker (if any); types of trading orders; change or cancellation of trading orders; confirmation or rejection of securities trading; trading suspension; partial or full suspension of a ticker symbol from trading; publishing of trading results and other relevant contents.

Article 4. Price fluctuation limit

1. The VSE shall decide on the price fluctuation limit after obtaining approval from the SSC.

2. If the market stabilization is needed, the SSC shall make a decision on change of the price fluctuation limit and publish it on its web portal.

Article 5. Circuit breaker

1. The VSE shall trigger the market-wide circuit breaker after obtaining approval from the SSC.

2. According to the practical market conditions, the SSC shall decide to apply either the market-wide circuit breaker or price fluctuation limit mechanism or both of them.

Article 6. Securities trading accounts

1. The investor is forced to open a securities trading account at a securities company to carry out securities transactions as prescribed in this Circular and is also responsible for providing sufficient and accurate information for customer identity information during the course of opening a trading account and complying with the following regulations:

a) During the period of time over which the securities clearing and payment have yet to be carried out through the central counterparty clearing, the investor shall conduct securities transactions and pay for securities transactions via the securities trading account and securities depository account without having to open a clearing margin account.

b) After carrying out securities clearing and payment through the central counterparty clearing, the investor must open a clearing margin account before carrying out a securities transaction. If the investor opens a clearing margin account at a clearing member which is the depository bank, such investor is only allowed to open a securities trading account at a trading member which is the clearing member or a non-clearing trading member signing a clearing or payment entrustment contract with the joint clearing member which is the depository bank where the investor open its/his/her clearing margin account.

2. An investor is allowed to open multiple securities trading accounts according to the principle that the investor is allowed to open only 01 trading account at each securities company, except for the cases in Clauses 4, 5, 6, 7 and 8 of this Article, Articles 9, 10 and 11 of this Circular.

3. With each of its/his/her securities trading account, the investor is allowed to open only 01 clearing margin account at the clearing member.

4. The securities investment fund management company is allowed to open multiple securities trading accounts at each securities company according to the following principles:

a) 01 securities trading account is opened to carry out its own securities trading activities;

b) 02 securities trading accounts are opened to manage the investment portfolio of entrusting investors, including 01 account serving securities trading activities of domestic entrusting investors and 01 account serving securities trading activities of foreign entrusting investors.

c) Each investment fund or securities investment company managed by the fund management company is entitled to open 01 securities trading account under its name at each securities company.

5. A branch in Vietnam of a foreign fund management company is entitled to open 02 securities trading accounts at each securities company, including 01 account serving its own securities trading activities and 01 account serving securities trading activities of foreign entrusting investors.

6. Each securities company is allowed to open securities trading accounts according to the following principles:

a) The securities company that engages in proprietary trading and is a member of the VSE is allowed to open only 01 proprietary trading account right at such securities company and is not allowed to open any securities trading account at other securities companies, except for the case in Point d of this Clause.

b) If the securities company cancels its membership of the VSE, it may use a securities trading account at another securities company that is a member of the VSE to handle the remaining securities on proprietary trading account.

c) The securities company is allowed to open 01 market-making account for the listed and registered securities and 01 secured warrant hedging account at such company to carry out transactions for these operations.

d) The securities company that is not a member establishing the exchange-traded fund (ETF) is allowed to open a securities trading account at the member establishing the exchange-traded fund, This account is used to exchange ETF certificates on the primary market and sell ETF certificates on the secondary market with respect to component securities and ETF certificates obtained from the exchange and purchase of component securities and ETF certificates on the secondary market to carry out exchange transactions, and not used to carry out other securities transactions.

dd) Other securities trading accounts prescribed by law.

7. A foreign securities-trading organization is allowed to open 02 securities trading accounts at each securities company as follows:

a) 01 trading securities account is opened to carry out its proprietary trading.

b) 01 brokerage trading account is opened to provide brokerage services to other foreign investors.

8. An insurer is allowed to open 02 securities trading accounts at each securities company as follows:

a) 01 securities trading account is used to carry out trading using the equity. Regarding the insurer over 50% of charter capital of which is held by the foreign investor, the securities trading on this account is subject to regulations of law on foreign ownership on securities market.

b) 01 securities trading account is opened to carry out trading using the revenue from domestic insurance premiums of policyholder funds in accordance with regulations of law on business insurance. The securities trading on this account are not governed by regulations of law on foreign ownership on securities market.

9. Securities companies are not allowed to reuse codes of the closed securities trading accounts to open accounts for new customers.

Article 7. Securities trading

1. During the period of time over which the securities clearing and payment have yet to be carried out through the central counterparty clearing, securities shall be bought as follows:

a) The investor is only allowed to place a buy order if having sufficient cash in its/his/her securities trading account, except for the margin trading specified in Article 9 of this Circular. If the investor opens a depository account at a depository bank and a securities trading account at a securities company, the investor is entitled to place buy orders and the securities company is entitled to execute the buy orders when having the payment guarantee or confirmation of the depository bank that the depository bank accepts the request for securities payment made by the investor.

b) The securities company shall monitor the cash/securities balance (except for the case in which the investor opens a depository account at the depository bank) and check the validity and legitimacy of the investor's trading orders.

2. After carrying out securities clearing and payment through the central counterparty clearing, securities shall be bought as follows:

a) The investor placing buy orders must have sufficient collateral deposited as clearing margin at the clearing member in accordance with regulations of law on securities registration, depositing, clearing and payment.

b) The securities company where the investor opens the securities trading account is only allowed to input orders into the securities trading system if the investor has fulfilled the requirements concerning clearing margin and requirements imposed by the clearing member. If the investor opens a trading account or clearing margin account at a securities company and a depository account at a depository bank, the securities company shall input orders into the securities trading system if there is a guarantee or confirmation of the depository bank of investor’s fulfillment of requirements concerning clearing margin and payment by negotiation between the securities and depository bank.

c) The monitoring and conformation of securities and cash balance prior to securities trading shall comply with regulations of law on securities clearing and payment.

3. The investor is only allowed to place buy orders with respect to marketable securities available on its/his/her depository account on the trading day, except for the following cases: the member establishing the ETF is allowed to sell ETF certificates and component securities when there are sufficient ETF certificates and component securities to be transferred prior to the maturity in accordance with the VSDCC's Regulation; day trading specified in Article 10 of this Circular; sale of securities waiting to be transferred.

Depending on the market situation, the SSC shall sell securities pending settlement.

4. The investor is not allowed to simultaneously place buy orders and sell orders on the same ticker symbol within a periodic order matching period, except for the orders that have been inputted into the securities trading system at the previous trading session and have yet to be matched but are still valid.

5. The securities company has the responsibility to control the placement of simultaneous buy and sell orders within a periodic order matching period by investors on the trading accounts opened at such company.

6. A foreign securities-trading organization is allowed to use the brokerage trading account specified in Point b Clause 7 Article 6 of this Circular to simultaneously place buy orders and sell orders on the same ticker symbol in each order matching (periodic or continuous) period or execute the put-through trading method but is required to follow the principle that the buy and sell orders are not placed by the same foreign investor.

Article 8. Share repurchase by a public company

1. A public company that repurchases its own shares on the securities trading system must comply with the following regulations:

a) It must repurchase its own shares as prescribed in Clause 4 Article 37 of the Law on Securities.

b) Principle of determining price for repurchasing shares of the public company adopting the order matching methods or put-through method is as follows:

- Repurchase price ≤ Reference price + (Reference price x 50% of price fluctuation limit of shares).

- Volume of shares to be purchased: Within each trading date, the total volume of shares to be purchased is at least 3% but does not exceed 10% of the trading volume registered with the SSC (the volume of shares to be purchased excludes the volume of cancelled orders and this regulation is exempt if the remaining volume of shares to be purchased is less than 3%).

This regulation shall apply until the public company completes its share repurchase with the volume registered with the SSC.

2. The public company that repurchases its own shares may sell the shares right after they are repurchased as prescribed in Clause 7 Article 36 of the Law on Securities. The sale of shares through the securities trading system shall comply with the trading regulations of VSE or outside the securities trading system shall comply with regulations of law on securities registration, depositing, clearing and payment.

3. Except for the case in Clause 2 of this Article, the public company that repurchases its own shares before January 01, 2021 shall sell the repurchased shares adopting the order matching method or put-through method as follows:

- Repurchase price ≥ Reference price - (Reference price x 50% of price fluctuation limit of shares).

- Volume of shares to be sold: Within each trading date, the total volume of shares to be sold is at least 3% does not exceed 10% of the trading volume registered with the SSC (the volume of shares to be sold excludes the volume of cancelled orders and this regulation is exempt if the remaining volume of shares to be sold is less than 3%).

Article 9. Margin trading

1. Before the investor conducts margin trading, it/he/she must enter into a margin trading contract with the securities company licensed to grant loans for purchase of securities as prescribed by law. The margin trading contract is also the contract for loans on the margin trading account. The margin trading contract must contain at least information about collateral for margin trading, duration of making additional margin, settlement of collateral for margin trading in case of the investor’s failure to make additional margin; methods for settling disputes; specify risks and damage that may occur, and costs to be paid by customers.

2. Foreign investors are not allowed to conduct margin trading.

3. At each securities company where the investor opens its/his/her securities trading account, the investor is only allowed to 01 margin trading account. The margin trading account is a separate account or is separately managed or recorded as a sub-account of the investor's existing securities trading account. The securities company must record the margin trading account of an investor separately from the securities trading account of that investor and separately from the margin trading accounts and securities trading accounts of other investors.

4. Marginable securities are shares or fund certificates that have been listed or registered on securities trading systems and have fulfilled the basic criteria concerning listing time, trading registration; minimum capital and financial performance of the issuer; liquidity and price fluctuation (if any); transparence of information and other criteria set by the SSC. On the basis of the criteria set by the SSC, the SE shall publish a list of marginable securities or list of securities prohibited from margin trading.

5. On the basis of the list of marginable securities or list of non-marginable securities published by the SE, the securities company shall compile a list of securities that are allowed to be traded on margin at the company and make it publicly available as prescribed by law.

6. The investor has the obligation to maintain the initial and maintenance margin ratio under the contract with the securities company. If the margin ratio on the investor’s margin trading account is less than the maintenance margin ratio, the securities company shall issue a margin call. Non-marginable securities shall not be used as collateral when determining the initial and maintenance margin ratio. If the investor fails to make additional margin, the securities company is entitled to sell securities that are collateral under the contract for opening margin trading account. Before selling securities that are collateral, the securities company shall disclose information as prescribed by law and notify the investor of the result of sale of securities that are collateral for fulfillment of the obligation to report ownership and disclose trading information as prescribed by law (if any).

7. The securities company that no longer satisfies the conditions for granting loans for purchase of securities must immediately stop signing new contracts or extending contracts for opening margin trading accounts and granting loans for margin trading, and submit reports to the SSC within 48 hours since the aforesaid event occurred.

8. The SSC shall promulgate regulations on guidelines for margin trading at securities companies.

9. If the market stabilization is needed, the SSC is entitled to request securities companies to suspend margin trading.

Article 10. Day trading

1. An investor is entitled to conduct day trading after concluding a day trading contract with the securities company licensed to securities lending services. Day-trading contract must include terms allowing the securities company to carry out loan and buy-in transactions to support payment in case of shortage of securities for transfer in accordance with regulations of law on securities clearing and payment. The contract must specify risks and damage that may occur, and costs to be paid by the investor.

2. Intraday transactions must comply with the following principles:

a) At each securities company where the investor opens its/his/her securities trading account, the investor is only allowed to 01 day trading account. The day trading account is a separate account or is separately managed or recorded as a sub-account of the investor's existing securities trading account. The securities company must record the day trading account separately from the securities trading account and the margin trading account (if any) of each investor;

b) The investor conducting day trading must comply with the regulations set out in Clause 4 Article 7 of this Circular and must not conduct day trading activities for odd-lot trading or put-through trading;

c) The securities company is entitled to select ticker symbols on the list of listed or registered securities that are allowed to be trade on margin at such securities company to provide day trading services to investors. The list of securities eligible for day trading must be published on the securities company’s website.

d) Every investor shall place trading orders and ensure that the total number of securities in sell orders is equal to total number of securities with the same ticker symbols in buy orders within a trading date and vice versa. If the total number of securities of executed sell orders exceeds the total number of securities of executed buy orders or vice versa, the securities company shall, on behalf of the investor, make up for the deficit cash amount or securities volume on the payment date;

dd) The securities company must refuse to execute the investor’s day trading order if there is not enough cash for payment and enough securities for transfer on the payment date;

e) The investor shall compensate for damage and make payments to the securities company for any costs incurred in connection with buy-in activities, securities loan or cash loan for payment support in the event that there is not enough cash for payment or securities for transfer on the payment date under the regulations set out in the day trading contract with the securities company, and relevant laws;

g) The securities company is entitled to request investors to deposit cash or securities before allowing such investors to conduct day trading;

h) Within a trading date, the total value of day trading (which is determined on the basis of total value of executed buy orders and total value of executed sell orders) at each securities company must not exceed a given percentage of its equity. The volume of securities traded within a day at each securities company must not exceed a given percentage of the volume of securities in circulation. The aforesaid percentages shall comply with SSC’s regulations.

3.  Intraday transactions that are meant to exercise shareholders' rights associated with ticker symbols traded in the same day must not be conducted during the 5-day period before the registration deadline.

4. If the market stabilization is needed, the SSC is entitled to request suspension of intraday transactions.

5. The securities company that fails to satisfy the conditions for providing securities lending services must immediately stop signing new contracts or extending day trading contracts and allowing investors to conduct day trading, and submit reports to the SSC within 48 hours since the aforesaid event occurred.

6. Depending on the market situation, the SSC shall conduct day trading and promulgate regulations on guidelines for day trading.

Article 11. Secured short selling

1. A contract for borrowing securities from the securities borrowing and lending system at the VSDCC to conduct secured short selling transactions must include at least information about collateral, loan interest rate, loan term, extension of the lending period, settlement of collateral in case of investor’s failure to return its/his/her securities, method for settlement of any dispute that arises, and specify risks and damage that may occur, and cost.

2. An investor shall open a secured short selling account at a securities company licensed to provide securities lending services where its/his/her trading account is opened to make secured short selling transactions. The secured shorting selling account is a separate account or recorded as a sub-account of the investor's existing securities trading account. The securities company must record the secured shorting selling account separately from the margin trading account, the day trading account and the securities trading account of each investor.

3. Securities eligible for secured shorting selling are shares or fund certificates that have been listed or registered on securities trading systems and have fulfilled several criteria concerning listing time, trading registration; minimum capital and financial performance of the issuer; liquidity and price fluctuation (if any); transparence of information and other criteria set by the SSC. On the basis of the criteria set by the SSC, the SE shall publish a list of securities eligible for secured short selling or list of securities prohibited from secured short selling.

4. Secured shorting selling that is meant to exercise shareholders' rights associated with ticker symbols that are sold short must not be conducted during the 5-day period before the registration deadline.

5. Depending on the market situation, the SSC shall conduct secured short selling. The SSC shall promulgate regulations on guidance on secured short selling.

6. Where necessary, the SSC may request securities companies to suspend secured short selling to ensure safety of the securities market.

Article 12. Market making transactions

1. Market-making activities must comply with the following principles:

a) Every market maker must honestly perform market-making functions with goodwill for the purpose of ensuring effective and stable operation of the market;

b) Depending on the market conditions, every market maker is entitled to maintain two-way quote or one-way quote for the ticker symbols registered for market-making transactions under the VSE’s regulations and market making contract. In case a ticker symbol needs liquidity, the market-making period, quotation methods, limit of difference between the bid price and the ask price, quote ratio, quote maintenance period and cases in which trading is suspended shall adhere to the VSE’s regulations and market-making contract (if any);

c) The market maker is only allowed to place limit orders for market-making trading. A market maker can simultaneously conduct market-making trading and proprietary trading provided that price principle in the VSE's regulations is adhered to.

2. A market maker is entitled to maintain a quote to simultaneously buy and sell ticker symbols to be traded by the trader that acts as the market maker in the same order matching period. These transactions must be made on the market making account.

3. The SE shall formulate and promulgate regulations on guidelines for market making after obtaining the SSC’s approval.

4. The VSE is entitled to terminate or suspend the market making for one or more securities if the market maker fails to fulfill all obligations and comply with the VSE’s regulations, and violates terms of the market making contract (if any).

Article 13. Effect

This Circular comes into force from February 15, 2021 and supersedes the Circular No. 203/2015/TT-BTC dated December 21, 2015.

Article 14. Implementation

The State Securities Commission, Vietnam Stock Exchange, Hanoi Stock Exchange, Ho Chi Minh City Stock Exchange, Vietnam Securities Depository and Clearing Corporation, securities companies, depository members, clearing members, securities investment fund management companies and other relevant organizations and individuals are responsible for the implementation of this Circular./.