Are securities companies in Vietnam allowed to provide advance payment for securities?
What services does a securities company provide?
Pursuant to the provisions of Article 86 of the 2019 Law on Securities in Vietnam stipulating the services that a securities company licensed to provide as follows:
Operation of securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies
1. A securities company licensed to provide securities brokerage services may:
a) 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;
b) 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.
2. A securities company licensed for proprietary trading may trade securities on its proprietary trading account, make investment, contribute capital, issue and offer financial products.
3. A securities company licensed for securities underwriting may provide securities offering consultancy services; perform pre-offering procedures; act as an agent for securities depository, payment, transfer; provide consultancy on restructuring, consolidation, acquisition, rearrangement of enterprises; provide consultancy of enterprise administration, business strategies; provide consultancy on offering, listing, registration of securities; provide consultancy on enterprise equitization.
4. A securities company licensed to provide securities investment consultancy services may provide services for its clients in accordance with Clause 32 Article 4 of this Law.
5. In addition to the services specified in Clause 1, 2, 3, 4 of this Article, a securities company may only provide other finance services conformable with regulations of law after a written report is submitted to SSC. SSC is entitled to suspend or terminate provision of other financial services of a securities company if it is not conformable with law or poses a risk to the securities market system.
6. A fund management company may mobilize and manage foreign funds in Vietnam; manage voluntary pension funds in accordance with relevant laws; provide online securities trading services.
7. The branch in Vietnam of a foreign securities company may only provide securities investment consultancy services. The branch in Vietnam of a foreign fund management company may only provide asset management services for capital raised overseas.
Thus, securities companies are allowed to carry out activities within the framework of the law as prescribed above.
Are securities companies in Vietnam allowed to provide advance payment for securities? (Image from the Internet)
Are securities companies in Vietnam allowed to provide advance payment for securities?
Pursuant to Article 86 of the 2019 Law on Securities in Vietnam, the securities company's service provision activities are as follows:
Operation of securities companies, fund management companies, branches and representative offices in Vietnam of foreign securities companies and foreign fund management companies
1. A securities company licensed to provide securities brokerage services may:
a) 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;
b) 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.
Thus, a securities company licensed to provide securities brokerage services may provide advance payment for securities.
What are the conditions for a securities company to provide advance payment for securities?
Pursuant to Article 198 of Decree No. 155/2020/ND-CP stipulating the conditions for provision of advance payment for securities as follows:
- It is licensed to provide securities brokerage services and its Board of Directors, Board of Members or owner approves the provision of margin trading services or advance payment for securities;
- It is not facing warning, being put under control, special control, suspension or termination, or undergoing consolidation, merger, dissolution or bankruptcy;
- The ratio of total debt to equity is conformable with regulations of the Ministry of Finance; equity is not smaller than the minimum charter capital specified in Article 175 of Decree No. 155/2020/ND-CP;
At the same time, Article 200 of Decree No. 155/2020/ND-CP on conditions for a securities company to provide advance payment for securities as follows:
Conditions for a securities company to cooperate with credit institutions in provision of margin trading services and advance payment for securities
1. It is licensed to provide securities brokerage services and its Board of Directors, Board of Members or owner approves the provision of margin trading services or advance payment for securities in cooperation with other credit institutions.
2. It is not undergoing termination, suspension, consolidation, merger, dissolution or bankruptcy.
3. There are contracts on principle with the Vietnamese credit institutions for provision of margin trading services and advance payment for securities, which specify responsibilities of the parties, lending ratios, pledged securities as prescribed by law.
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