MINISTRY OF FINANCE | SOCIALIST REPUBLIC OF VIETNAM |
No. 95/2020/TT-BTC | Hanoi, November 16, 2020 |
CIRCULAR
GUIDANCE ON SUPERVISION OF SECURITIES TRANSACTIONS ON THE SECURITIES MARKET
Pursuant to the Labor on Securities dated November 26, 2019;
Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 on functions, tasks, powers and organizational structure of the Ministry of Finance;
At the request of the President of State Securities Commission;
The Minister of Finance promulgates a Circular providing guidance on supervision of securities transactions on the securities market
Chapter I
GENERAL PROVISIONS
Article 1. Scope
This Circular provides guidance on supervision of transactions of securities that are listed or registered for transaction on the securities market.
Article 2. Regulated entities
This Circular applies to the following supervising entities and supervised entities:
1. Supervising entities:
a) State Securities Commission (SSC);
b) Vietnam Exchange (VNX);
c) Subsidiary companies of VNX: Hanoi Stock Exchange (HNX), Ho Chi Minh City Stock Exchange (HOSE) (hereinafter referred to as “Stock Exchanges”);
d) Vietnam Securities Depository and Clearing Corporation (VSDCC);
d) Trading members (excluding special trading members on the derivatives and government bond market).
2. Supervised entities that are organizations and individuals participating in the transaction and provision of services relevant to securities transactions on the securities market, including:
a) Listed organizations; organizations registered for transaction;
b) Trading members, special trading members;
c) Members of VSDCC, including depository members and offsetting members;
d) Securities investment funds and securities investment fund management companies, investment companies;
dd) Stock Exchanges, VSDCC when providing services relevant to securities transactions, clearing and payment;
e) Investors that conduct securities transactions;
g) Supervisory banks, commercial banks that open securities accounts;
h) Relevant entities.
Article 3. Definitions
For the purposes of this Circular, the following terms are interpreted as follows:
1. “securities transaction” means the purchase or sale of securities through the securities transactions system of a Stock Exchange.
2. “unusual transaction” means a transaction that has any of the warning sign of the supervision criteria established by VNX.
3. “suspicious transaction” means an unusual transaction that has been analyzed and classified by VNX as a suspicious transaction that may affect developments of price or volume of one or some securities over a certain period of time against securities laws.
4. “violating transaction” means a transaction that is conducted against securities laws as determined by SSC.
5. “supervision criteria” are criteria established by SSC and applied by trading members to supervise securities transactions.
6. A “rumor” means information about an listed organization, registered public companies, securities or securities transactions that might be true or false and has not been verified when it is initially spread.
Chapter II
ORGANIZATION OF SECURITIES TRANSACTION SUPERVISION
Section 1. Securities transaction supervision by SSC
Article 4. Responsibilities and entitlements of SSC
1. Supervise securities transactions on the securities market in order to detect, prevent and take actions against use of internal information for securities trade, manipulation of the securities market and other violations against regulations of law on securities transactions.
2. Request supervised entities to report, provide explanation, information and documents about their securities transactions.
3. Supervise investors' compliance to regulations of law on securities transactions.
4. Issue warnings against suspicious transactions and actions in order to prevent violations against regulations of law on securities transactions by supervised entities.
5. Consider approving criteria established by VNX for securities transaction supervision and supervision reporting applied to trading members; position limits applied to derivatives market; method for calculation of initial margin asset ratio (AR); AR supervision thresholds or frequency of supervision of margin depositing established by VSDCC.
6. Promulgate regulations on cooperation in securities transactions between SSC, VNX and its subsidiary companies, VSDCC and trading members.
7. dd) Take charge and cooperate with relevant units in inspecting securities transactions and provision of relevant services.
8. Submit reports to the Ministry of Finance on securities transaction supervision when requested.
Article 5. Contents of supervision by SSC
Contents of supervision by SSC include:
1. On the basis of reports submitted by trading members, VNX, its subsidiary companies and VSDCC, supervision results at SSC and other sources of information, SSC shall analyze signs of violations in suspicious transactions and take appropriate actions.
2. Supervise the operation of VNX and its subsidiary companies in organization and supervision of securities transactions in each market region under its management according to Section 2 of this Chapter.
3. Supervise the operation of VSDCC in management of position limits on the derivatives market, AR or initial margin depositing according to Section 3 of this Chapter.
4. Take charge and cooperate with VNX, its subsidiary companies and VSDCC in analyzing transactions that may affect the securities market; ensure lawful rights and interests of investors and market stability.
5. Supervise provision of services relevant to securities transactions by the entities specified in Points b, c, d, dd, g, h Clause 2 Article 2 of this Circular.
Article 6. Methods for securities transaction supervision by SSC
1. Supervision according to information from the following sources:
a) Supervision reports submitted by VNX and its subsidiary companies, VSDCC and its members;
b) Reports submitted by listed and registered public companies;
c) Information provided by organizations and individuals participating in the securities market;
d) Information on the media and securities-related rumors;
dd) Other sources of information.
2. Pursuant to the reports and information mentioned in Clause 1 of this Article, transaction data of VNX, its subsidiary companies and VSDCC, SSC shall analyze the transactions that are suspected of violating regulations of law on securities and the securities market.
3. Carry out ad hoc inspections of supervised entities through discovery of suspicious transactions reported by VNX, its subsidiary companies, trading members, VSDCC, its members, organizations and individuals that participate in transactions and provide securities transaction-related services.
Section 2. SECURITIES TRANSACTION SUPERVISION BY VNX AND ITS SUBSIDIARY COMPANIES
Article 7. Rights and obligations of VNX and its subsidiary companies
1. Rights and obligations of VNX:
a) Promulgate the regulations on supervision of securities transactions after they are approved by SSC; establish supervision procedures in order to ensure effectiveness of supervision;
b) Assume responsibility for overall supervision of securities transactions on the securities market;
c) Establish supervision criteria applied to its subsidiary companies and reporting criteria applied to trading members;
d) Submit supervision reports to SSC.
2. Rights and obligations of Stock Exchanges that are subsidiary companies of VNX:
a) Directly supervise securities transactions within their regions;
b) Develop a database system serving securities transactions as prescribed in Article 11 of this Circular;
c) Supervise day trading and swing trading, and periodic developments of transactions; identify suspicious transactions;
d) Verify information on the media and rumors about unusual transactions;
dd) Supervise the process of information disclosure and reporting according to applicable regulations on securities transactions by trading members, listed and registered public companies, securities investment fund management companies, securities investment funds, investment companies and investors;
e) Request VNX to take actions against trading members that violate securities transaction regulations; request SSC to take actions against violations against regulations of law on securities transactions.
3. In addition to the aforementioned rights and obligations, VNX and its subsidiary companies also have the following rights and obligations:
a) Supervise transaction supervision by trading members;
b) Request organizations and individuals that are relevant to the transaction to provide information and documents serving securities transaction supervision;
c) Prepare and submit periodic and ad hoc securities transaction supervision reports to SSC in accordance with Article 13, Article 14 and Article 15 of this Circular;
d) Cooperate with SSC in carrying out ad hoc inspections of transactions that are likely to violate regulations of law on securities and the securities market;
dd) Cooperate with VSDCC in ensuring safety and effectiveness of securities transactions, clearing and payment.
Article 8. Supervision contents
1. Supervision by VNX and its subsidiary companies is meant to detect unusual and suspicious transactions, including:
a) Use of internal information in securities trading;
b) Manipulation of the securities market;
c) Other violations against regulations of law on securities transactions and the securities market.
2. Supervision of transactions, information disclosure and reporting transaction of listed and registered securities of listed and registered public companies, trading members, securities investment fund management companies, securities investment funds, investment companies, major shareholders and groups of related persons holding at least 5% of voting shares of a public company or public investment company; investors and groups of related persons holding at least 5% of fund certificates of a closed-end fund; groups of related foreign investors holding at least 5% of voting shares of an issuer or at least 5% of fund certificates of a closed-end fund; internal actors, their related persons and other entities of listed and registered public companies, internal actors of listed closed-end public funds and related persons; persons authorized to disclose information and investors in accordance with applicable regulations.
3. Supervision of repurchase of their own shares, tender offer and other transactions of listed and registered public companies in accordance with regulations of law on securities and the securities market.
Article 9. Securities transaction supervision criteria
1. VNX shall establish and promulgate a system of criteria for supervision of transaction of securities that are listed and registered at its subsidiary companies, criteria for supervision of inter-market transactions (interactions between the primary securities market and derivatives market; between transactions of primary securities and secured warrant transactions) as the basis for day trading and swing trading supervision; promulgate criteria for securities transaction supervision reporting by trading members.
2. The system of supervision criteria shall have specific contents and parameters; criteria for securities transaction supervision reporting by trading members must be periodically reviewed and assessed.
Article 10. Securities transaction supervision methods
1. VNX shall carry out supervision through reports of the Stock Exchanges.
2. Stock Exchanges shall supervise in-day transactions of listed and registered securities in real time on their supervision system in order to detect suspicious transactions.
3. Stock exchanges shall supervise swing trading based on one or some of the following sources:
a) Securities transactions database;
b) Information provided by trading members, listed and registered public companies and investors which is disclosed in accordance with regulations of law on securities and the securities market;
c) Relevant information from VSDCC as prescribed in Article 19 of this Circular;
d) Information on the media and securities-related rumors;
dd) Other sources of information.
4. Requesting organizations and individuals that are relevant to unusual transactions to provide information and explanation.
Article 11. Database system serving supervision of securities transactions
Stock Exchanges shall develop a database system serving securities transactions. Such a system shall have at least:
1. Data about transactions conducted at the Stock Exchanges.
2. Lists and information entities that are supervised by the Stock Exchanges and commit violations against securities laws or VNX’s regulations.
3. Reports and information about securities transactions that have been disclosed through information disclosure systems of the Stock Exchanges; reports and information that have been provided for SSC and VNX.
4. Data relevant to investors’ securities accounts;
5. Other data relevant to securities transactions.
Article 12. Supervising trading members
1. Trading members will be requested to provide reports, explanation, information and documents relevant to the transactions under the management of the Stock Exchanges.
2. Stock Exchanges shall report signs of violations to VNX or SSC for handling.
3. Signs violations discovered by VNX shall be handled by VNX within its jurisdiction. The handling results will be reported to SSC.
4. VNX shall request SSC to take actions against violations committed by trading members if they are beyond VNX’s jurisdiction.
Article 13. Periodic supervision reports
1. Within the first 02 working days of the next week, the Stock Exchange shall submit the weekly supervision report to SSC, which shall contain:
a) Securities transaction data, including: numbers of orders placed, orders matched, transactions that involve primary securities, derivatives and other securities being traded on the market in the week according to information on the transaction system of the Stock Exchange. Information about market-wide transactions managed by the Stock Exchange as prescribed by regulations of law on disclosure of information on the securities market, except information about open interests of each type of derivatives;
b) Results of weekly securities transaction supervision; information about ratios of all shares in the market basket serving market evaluation (Form 01 in Appendix I hereof).
2. Within the first 10 working days of the next month, on the basis of reports of the subsidiary companies, VNX shall submit a monthly report (Form No. 02 in Appendix I hereof) to SSC with the following primary contents:
- Its operation and supervision of securities transactions during its operation;
- Results of supervision by VNX and its subsidiary companies of unusual transactions and actions taken;
- Results of supervision of transactions by trading members and actions taken against violations committed by trading members;
- The report on supervision of unusual transactions and ad hoc reports prepared during the period;
- Proposals (if any).
3. Within the first 20 working days of the next year, on the basis of reports of the subsidiary companies, VNX shall submit an annual report (Form No. 03 in Appendix I hereof) to SSC with the following primary contents:
- Its operation and supervision of securities transactions during its operation;
- Results of supervision by VNX and its subsidiary companies of unusual transactions and actions taken;
- Results of supervision of transactions by trading members and actions taken against violations committed by trading members;
- The report on supervision of unusual transactions and ad hoc reports prepared during the period.
4. The reports mentioned in Clauses 1, 2, 3 of this Article shall be made in both physical and electronic form, except for reports mentioned in Point a Clause 1 of this Article, which can be made in electronic forms only. These reports will be sent electronically if digital signatures are used by SSC, VNX and its subsidiary companies. VNX and subsidiary companies shall retain reported information as prescribed by law.
Article 14. Unusual transaction reports
1. Stock Exchanges shall send SSC and VNX reports on unusual transactions that are detected within 24 hours after the unusual transaction analysis results are available.
2. The unusual transaction reports mentioned in Clause 1 of this Article shall be case-specific. Each report shall specify the unusual signs, relevant information, opinions and proposed actions to be taken by the Stock Exchanges (or another authority if the case is beyond its jurisdiction).
3. Unusual transaction reports shall be sent and received in accordance with Clause 4 Article 13 of this Circular.
Article 15. Ad hoc supervision reports
1. VNX and its subsidiary companies shall send supervision reports when requested in writing by SSC.
2. The reports mentioned in Clause 1 of this Article shall be made in both physical and electronic forms, have the contents and are sent by the deadline specified by SSC.
Section 3. SUPERVISION BY VIETNAM SECURITIES DEPOSITORY AND CLEARING CORPORATION (VSDCC)
Article 16. Rights and obligations of VSDCC
1. Supervise the process of clearing, position limits, margin depositing in securities transactions as per regulations.
2. In case unusual signs are detected during clearing or payment process, or limits on positions or deposits are exceeded, VSDCC shall request relevant organizations and individuals to report and provide explanation, info and documents serving the supervision process; send a report to SSC and a notification to VNX and its subsidiary companies for cooperation in supervision.
3. Retain adequate information about operations of VSDCC, violations against regulations on deposit and position limits; share information about securities transactions with VNX and its subsidiary companies for supervision.
4. Cooperate with VNX and its subsidiary companies in maintaining and supervising safety and effectiveness of securities transactions, clearing and payment as per regulations.
5. Cooperate with SSC in carrying out periodic and ad hoc inspections of entities supervised by VSDCC.
6. Handle violations within its jurisdiction; report the cases beyond its jurisdiction to SSC.
7. Prepare and submit periodic, ad hoc and on-demand supervision reports to SSC in accordance with Article 20, Article 21 and Article 22 of this Circular.
Article 17. Contents of supervision by VSDCC
1. Supervise members of VSDCC performing operations relevant to securities clearing and payment according to regulations of law on securities and the securities market.
2. Supervise the asset ratio or initial margin depositing by investors’ accounts for derivatives, or by clearing members for primary securities.
3. Supervise position limits of investors trading in derivatives.
Article 18. Methods of supervision by VSDCC
1. VSDCC shall formulate and promulgate its regulations on position limits and supervision thereof by investors’ accounts, thresholds for supervision of AR or time and method for margin depositing, and supervise individual accounts of investors trading in derivatives; specify time and method of margin depositing and supervise individual clearing members for primary securities market in its operating regulations after they are approved by SSC.
2. The contents and thresholds of supervision shall be specified and adjusted according developments of the securities market; ensure effective supervision by VSDCC.
3. Supervise violations against regulations on securities payment and clearing; violations against regulations on position limits for derivatives; violations against regulations on AR or initial margin depositing based on one or some of the following sources of information:
a) Data about position and clearing margin of clearing members and investors;
b) Periodic reports and information provided by members of VSDCC and other participants in the derivatives market;
c) Information on the mainstream media;
d) Other sources of information.
4. Request members that are supervised by VSDCC to provide information and explanation to clarify the unusual signs mentioned in Clause 2 Article 16 of this Circular.
5. Cooperate with SSC in carrying out periodic and ad hoc inspections of entities supervised by VSDCC.
Article 19. Retention of data serving supervisions
VSDCC shall fully retain data about:
1. Securities payment and clearing on the securities market.
2. Investors trading in securities and derivatives that are daily updated by securities companies.
3. Information relevant to position limits and clearing margin or each type of securities and derivatives by type of investors in the derivatives market.
4. Transactions outside of the system.
5. Violations against regulations on payment, clearing, position limit and margin depositing by clearing members, and actions taken against these violations.
Article 20. Periodic supervision reports
1. By 16:30 of the trading day, VSDCC shall send SSC information about day-end opening quantity of each type of derivatives (Form 01 in Appendix II hereof.
2. Within the first 02 working days of the next week, VSDCC shall submit a weekly report (Form No. 02 in Appendix II hereof) to SSC with the following primary contents:
a) Error corrections, payment deadline extensions, payment cancellations;
b) Securities transferred outside the transaction system of Stock Exchanges: tender offers; transfer of ownership from lenders to borrowers and vice versa (except loans for payment of securities in case depository members of VSDCC do not have adequate securities for payment due to errors and for providing ETF members with adequate securities for capital contribution and conduct transaction with ETF); transfer ownership of collateral that is securities from the borrower to the lender in case the borrower defaults on the loan; transfer of ownership after settlement of collateral that is securities in pledging, margining transactions, and other cases of ownership transfer after comments are given by SSC;
c) Information and identity of securities accounts of investors that are opened, closed or changed at securities companies;
d) List of major shareholders of companies whose securities are registered at VSDCC.
3. Within the first 10 working days of the next month, VSDCC shall submit a monthly report (Form No. 03 in Appendix II hereof) with the following primary contents:
a) Actions taken against violations committed by members of VSDCC;
b) Assistance for clearing members that have gone insolvent;
c) Issuance of ticker symbols;
d) Total clearing margin and list of collateral deposited as clearing margin by day in the whole market;
dd) Violations against AR or depositing of initial margins by clearing members by day in the derivatives market.
4. The periodic reports mentioned in Clauses 1, 2, 3 of this Article shall be made in both physical and electronic forms (with digital signature). The reports mentioned in Clause 2, Points d and dd Clause 3 of this Article shall be made in electronic form. VSDCC shall retain reported information as prescribed by law.
Article 21. Ad hoc supervision reports
1. VSDCC shall submit an ad hoc supervision reports to SSC whenever a violation against regulations on margining, position limit, clearing or payment is discovered and not rectified within the same day.
2. The ad hoc reports shall be made in both physical and electronic forms and sent to SSC within 24 hours after a violation is discovered.
3. The ad hoc report prepared by VSDCC shall contain its comments and proposed actions to be taken by VSDCC (or another authority if the case is beyond its jurisdiction).
Article 22. On-demand supervision reports
1. VSDCC shall send supervision reports when requested in writing by SSC.
2. The reports mentioned in Clause 1 of this Article shall be made in both physical and electronic forms, have the contents and are sent by the deadline specified by SSC.
Section 4. SUPERVISION BY TRADING MEMBERS
Article 23. Obligations and responsibilities of trading members
1. Apply the system of criteria for securities transaction supervision as instructed by VNX.
2. Supervise day trading and swing trading by investors that open accounts or carry out transactions where the trading members provide services.
3. Supervise the compliance to regulations of law on securities transactions by organizations and individuals that open accounts or carry out transactions where the trading members provide services.
4. Update and fully retain documents and information about investors, transactions of investors and trading members.
5. Cooperation in supervision:
a) Cooperate with SSC, VNX, its subsidiary companies and VSDCC in supervising securities transactions when requested;
b) Cooperate with SSC in inviting investors to work with inspectorates of SSC regarding unusual transactions and transactions suspected of violating regulations of law on securities and the securities market;
6. Report transactions with signs of violations of regulations on securities transactions to VNX, its subsidiary companies and SSC.
7. Prepare and send ad hoc reports and on-demand reports on securities transactions to VNX, its subsidiary companies and SSC; propose necessary actions (if any).
8. Take responsibility for the accuracy and truthfulness of the information and supervision reports provided for SSC, VNX, its subsidiary companies and VSDCC.
Article 24. Retention of transaction supervision data
Trading member shall retain at least the following data about securities transaction supervision:
1. Data about securities transactions conducted where the trading members provide their services.
2. Information about investors that open accounts or conduct transactions where the trading members provide their services.
3. Data relevant to margin trading and other financial services where the trading members provide their services.
4. Other data relevant to securities transactions where the trading members provide their services.
Article 25. Supervision reports of trading members
1. Trading members shall send VNX and its subsidiary companies periodic, ad hoc and on-demand reports on results of securities transaction supervision.
2. Trading members shall send SSC ad hoc and on-demand reports on securities transaction supervision.
3. The contents, forms and methods of preparing and sending reports of trading members shall comply with regulations of VNX.
Chapter III
OBLIGATIONS OF SUPERVISING ENTITIES
Article 26. Obligation to provide information and explanation of organizations and individuals participating in securities transactions and provision of securities transaction-related services
1. Organizations and individuals participating in securities transactions and provision of securities transaction-related services shall cooperate with SSC, VNX and its subsidiary companies, VSDCC, trading members and competent authorities when requested.
2. Organizations and individuals participating in securities transactions shall provide adequate information, documents and data as requested by SSC, VNX, its subsidiary companies and VSDCC as prescribed by law; provide explanation as requested by SSC, VNX and its subsidiary companies for the incidents relevant to securities transactions as prescribed by law; disclose information about securities transactions in accordance with regulations of law on securities and the securities market.
3. Commercial banks where investors’ securities accounts are opened shall provide information about their account balance when requested by SSC and competent authorities as prescribed by law.
4. Supervisory banks shall provide data about investments and securities transactions by securities investment funds they supervise when requested by SSC and competent authorities as prescribed by law.
5. Organizations and individuals that participate in securities transactions and provision of securities transaction-related services but fail to cooperate with the authorities as prescribed in Clause 1 of this Article will be dealt with as prescribed by law.
Chapter IV
IMPLEMENTATION CLAUSES
Article 27. Implementation clauses
1. This Circular comes into force from January 01, 2021.
2. From the effective date of this Circular, the following documents and regulations will cease to have effect: Circular No. 115/2017/TT-BTC dated October 25, 2017 of the Minister of Finance providing guidance on supervision of securities transactions on the securities market (hereinafter referred to as “Circular No. 115/2017/TT-BTC"); Article 1 of Circular No. 35/2019/TT-BTC dated June 12, 2019 of the Minister of Finance on amendments to Circular No. 115/2017/TT-BTC and Circular No. 116/2017/TT-BTC dated October 25, 2017 providing guidance on compliance supervision by SSC over securities-related activities of Stock Exchanges and the Vietnam Securities Depository (VSD) (hereinafter referred to as “Circular No. 35/2019/TT-BTC").
3. HNX, HOSE and VSD shall continue supervision securities transactions; trading members shall continue cooperating with SSC in securities transaction supervision in accordance with Circular No. 115/2017/TT-BTC and Circular No. 35/2019/TT-BTC until VNX and VSDCC are put into operation under the Law on Securities No. 54/2019/QH14.
4. VSDCC shall supervise margin depositing by clearing members in the primary securities market after the Ministry of Finance issues an official decision on central counterparty clearing houses.
Article 28. Organization of implementation
1. SSC, VNX, HNX, HOSE, VSDCC, trading members, members of VSD, listed and registered public companies, securities investment fund management companies, securities investment funds, investment companies, relevant organizations and individuals are responsible for the implementation of this Circular.
2. Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Finance for consideration./.
| PP MINISTER |
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