Are securities companies allowed to lend money? What are the regulations on total liability of securities companies in Vietnam?
Are securities companies in Vietnam allowed to lend money?
According to the provisions of Article 27 of Circular No. 121/2020/TT-BTC on this content as follows:
Restrictions on lending
1. Except as provided by clause 1 of Article 86 in the Law on Securities, securities companies are not allowed to lend money or securities in any form.
2. Securities companies are not allowed to put up money or assets in their or customers’ ownership as security for third-party payment obligations.
3. Securities companies are not allowed to offer loans in any form to owners, major shareholders, members of the Supervisory Boards, members of the Governing Boards, members of the Members' Councils, members of the Boards of Directors, Chief Accountants, other officeholders appointed by the Governing Boards and related persons of the aforesaid persons.
4. Any securities company which is allowed to perform trades on margin in accordance with laws, can lend money to customers to buy securities in the form of margin trading under the guidance of the Ministry of Finance.
5. Securities company may lend securities to correct transaction errors, or perform swaps of exchange traded funds or other transactions in accordance with relevant laws.
Thus, securities companies are only allowed to lend money in the following activities:
- Receive and manage securities trading accounts of individuals; distribute securities or act as securities distribution agent; manage securities trading account; manage other enterprises’ lists of securities holders;
- Provide online securities trading services; provide or cooperate with credit institutions granting loans for purchase of securities or securities lending; provide or cooperate with credit institutions in advancing payment for securities; securities depository; offset and pay securities; provide other derivative-related services.
Are securities companies allowed to lend money? What are the regulations on total liability of securities companies in Vietnam?
What are the regulations on total liability of securities companies in Vietnam?
According to the provisions of Article 26 of Circular No. 121/2020/TT-BTC as follows:
Restrictions on borrowing
1. Total liability of a securities company is not over 5 times more than its equity. Total liability prescribed herein does not include the followings:
a) Customers' funds held in trust for trading of stocks;
b) Reward and welfare fund;
c) Redundancy or lay-off provisions;
d) Provisions for compensation for investor’s losses.
2. The maximum short-term liability of a securities company is equal to total short-term asset.
3. Securities companies offering securities for sale shall comply with regulations laid down in Article 31 in the Law on Securities, the Decree elaborating on the implementation of several articles of the Law on Securities, laws on issuance of corporate securities, and must comply with the ratio prescribed in clause 1 and 2 of this Article.
Thus, total liability of a securities company is not over 5 times more than its equity. Total liability does not include the followings:
+ Customers' funds held in trust for trading of stocks;
+ Reward and welfare fund;
+ Redundancy or lay-off provisions;
+ Provisions for compensation for investor’s losses.
What regulations must a securities company comply with when providing online securities trading services?
According to the provisions of Article 20 of Circular No. 121/2020/TT-BTC on online securities trading activities of securities companies as follows:
- Obligations of securities companies to provision of online securities trading services
+ Ensuring continuous and smooth services;
+ Ensuring security, safety and confidentiality for data of the trading system;
+ Having a standby system or an alternative in case of failure or emergency;
+ Separating from their other electronic information systems;
+ Issuing the procedures for operation, management and operation of the online securities trading system.
- When providing online securities trading services to customers, securities companies must sign contracts or annexure to contracts to have customer’s accounts opened, including the following terms and conditions:
+ Disclosure of the risks that can occur when trading securities online;
+ Stipulations as to the responsibility of customers and securities companies for the confidentiality of information about customers' online transactions.
- At the same time, securities companies must report to the State Securities Commission on online securities trading activities, the condition of the online securities trading system and disclose information in accordance with the laws on instructions about electronic trading activities.
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