HA NOI (VNS) — The Ministry of Finance has officially published the content of the much anticipated Circular No 203/2015/TT-BTC on guiding securities transaction activities which for the first time allows intraday trading.
The new circular, effective from July 1, 2016, replaces Circular No 74/2011-TT-BTC dated June 1, 2011. A number of new regulations in this circular are expected to boost liquidity and increase attractiveness of Viet Nam's securities market.
For the first time, investors will be allowed to buy and sell the same kind of stock within the same trading day on the same account as well as sell stocks which are pending settlement. These transactions are not allowed in Circular No 74.
However, such transactions must guarantee the principle that the total volume of stocks in sell orders must be equal to that in the buy orders and vice versa.
"In essence, this is a new product which helps increase the frequency of transactions, thus boosting liquidity in the market," Nguyen Son, head of the State Securities Commission's Stock Market Development Department said.
According to the current regulation, investors must wait for two business days after the trade day for stocks arrive in their accounts to be able to sell, but now they can sell stocks pending settlement that will increase transactions.
Intraday trading contains risks, thus in case of necessity, the State Securities Commission may request the suspension of these transaction activities.
Foreign investors are not allowed to carry out margin trading, intraday trading or short selling activities.
In addition, Circular 203 gives supplementary provisions related to treasury stock (reacquired stocks by the issuer) transactions.
The new regulation prohibits issuers (listing companies) from registering to buy or sell treasury shares, but not carrying out transactions or put buy or sell orders with the prices not compatible with the trading band of those shares during the registered trading time.
Issuers are also banned from disclosing estimated prices for the purchase or sale of their treasury stocks. Information of the treasury stock transactions must be published within seven days prior to the execution.
To ensure that brokers have enough financial capacity to provide marginal trading and intraday trading services, the new circular sets strict financial criteria for participating securities firms including minimum charter capital of at least VND300 billion (US$13 million), accumulated losses which are less than 50 per cent of charter capital and debt/equity ratio not exceeding 300 per cent.
The circular also add new rules regarding settlement for intraday trading transactions, market making rules and securities transactions of foreign-invested companies.
The domestic securities market has been on a downtrend since the beginning of this year with the benchmark VN-Index losing 3.3 per cent so far. According to analysts at Sai Gon-Ha Noi Securities Co, the market is being heavily influenced by global stocks and oil price volatility.
"However, the new regulations will support the market in medium and long term," analysts wrote in a report. — VNS