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Brokers to report client holdings more often

Update: March, 26/2012 - 09:45

HA NOI — The State Securities Commission (SSC) has called on securities firms to report the balance of customer deposits every two weeks while increasing supervision on company operations.

The move is seen as a bid to force securities firms to comply with the requirement of separating investor accounts from company accounts.

Investors have recently complained that they could not withdraw their money from accounts at some securities companies, a sign that their capital is likely being abused.

Three months ago, the SSC fined VSM Securities with VND60 million (US$2,900) for not separating money in investor trading accounts from the company's accounts during January-September 2011. Earlier, four other companies, including Vietnam Industry Securities, An Phat Securities, Cho Lon Securities and Asia Pacific Securities, were also punished for similar reasons.

Currently, only 19 out of 100 securities companies have separated investor deposit accounts from their own accounts, according to Dau tu chung khoan (Securities Investment) newspaper.

According to many companies, it is not easy to separate deposit accounts for each investor due to limited bank technology. However, there are at least six banks now implementing such management services, including BIDV, Asia Commercial Bank (ACB), Vietcombank, Vietnam International Bank (VIB) and Orient Commercial Bank (OCB).

Pham Hong Son, director of the SSC Securities Business Management Department, said that on the basis of international market practices and recommendations from the International Organisation of Securities Commissions (IOSCO), it planned to add regulations on the management of investor money in a draft circular replacing Decision 27 based on establishment and operation of securities companies.

Under such new regulations, securities firms will be forbidden to use customer money in any manner as well as transfer money between client sub-accounts.

Transactions related to customer money will be allowed only if consistent with existing laws. Securities companies have to draw up two methods of money management for customers to choose from, which involve opening accounts at banks to manage customer money or customers directly opening accounts at banks selected by securities firms themselves. — VNS

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