How long can a securities company be suspended from derivative trading by the State Securities Commission of Vietnam?
- How long can a securities company be suspended from derivative trading by the State Securities Commission of Vietnam?
- After receiving the document of operation suspension, what responsibilities does the derivative trading organization have?
- When is a derivative trading organization forced to terminate its derivative trading operations?
How long can a securities company be suspended from derivative trading by the State Securities Commission of Vietnam?
According to the provisions of Clause 1, Article 6 of Decree No. 158/2020/ND-CP on suspension of derivative trading activities as follows:
Suspension and resumption of derivative trading operations
1. State Securities Commission of Vietnam (SSC) shall issue a decision to suspend one or some of derivative trading operations of the derivative trading organization for a maximum period of 12 months in the following cases:
a) The securities company fails to meet one or some of the requirements in Points b, c, d, dd Clause 2 Article 4 hereof within 06 consecutive months; the fund management company fails to meet one or some of the requirements in Point dd Clause 2, Points a, b Clause 3 Article 4 hereof within 06 consecutive months;
b) Operations are suspended in accordance with regulations of law.
Thus, a securities company engaged in derivative trading that does not satisfy the conditions on charter capital, equity, internal control, etc. may be issued a decision by the State Securities Commission to suspend one or several derivative trading activities for up to 12 months.
How long can a securities company be suspended from derivative trading by the State Securities Commission of Vietnam?
After receiving the document of operation suspension, what responsibilities does the derivative trading organization have?
According to the provisions of Clauses 2 and 3, Article 6 of Decree No. 158/2020/ND-CP:
Suspension and resumption of derivative trading operations
…
2. From the receipt of SSC’s decision to suspend derivative trading operation(s):
a) Within 24 hours, the derivative trading organization shall disclose information about the suspension;
b) Within 05 business days, the derivative trading organization shall disclose information about the plan, time limit and roadmap for settling unexpired contracts and notify the plan to each client. The time limit for settling unexpired contracts must include a minimum period of at least 45 days provided for clients to settle their positions and transfer margins to other accounts but shall not exceed 60 days from the date of information disclosure.
3. During the suspension period, the derivative trading organization shall:
a) On a monthly basis or at the request of SSC, submit reports and disclose information about its status and relevant activities; not sign new derivative trading contracts and suspend all derivative trading operations, except the cases specified in Points b, c, d of this Clause;
b) With regard to unexpired derivative trading contracts, the securities company shall:
- Only receive and execute clients’ orders for matched sale-purchase transactions; only receive additional margins from clients;
- Determine account balances and close accounts for clients; liquidate positions and return margins to clients; reach agreements and transfer rights, responsibilities, obligations, accounts, margins and open positions of clients to the substitute securities company at their requests;
- Conduct transactions at the request of Vietnam Securities Depository and Clearing Corporation (VSDCC) and Stock Exchange (SE) to reduce clients’ positions;
c) Liquidate or close positions on proprietary trading accounts and market making accounts (if any), and ensure the priority in performing clients’ transactions over its own position-closing transactions;
d) Fully pay taxes, service prices, debts and other financial liabilities related to derivative trading operations (if any).
Thus, after a decision is made to suspend one or several derivative trading activities, the derivative trading organization shall disclose information on the suspension of derivative trading activities as well as conduct liquidation and payment of all taxes, debts and other financial obligations.
When is a derivative trading organization forced to terminate its derivative trading operations?
According to the provisions of Article 8 of Decree No. 158/2020/ND-CP, a derivative trading organization is forced to terminate its derivative trading operations in the following cases:
Compulsory termination of derivative trading operations
1. The derivative trading organization is required to terminate derivative trading operations in the following cases:
a) It fails to rectify the causes of suspension of derivative trading operations by the end of suspension period;
b) It is dissolved, declared bankrupt, or has its operations suspended or its license for establishment and operation revoked; the organization established after full or partial division, consolidation or merger fails to meet one of the requirements in Clauses 2, 3 Article 4 hereof.
2. Within 30 days from the day on which the derivative trading organization is determined to fall in one of the cases specified in Clause 1 of this Article, SSC shall request the derivative trading organization in writing to follow procedures for termination of derivative trading operations.
3. From the receipt of SSC’s request for compulsory termination of derivative trading operations, the derivative trading organization shall disclose information and send notification to clients as prescribed in Clause 5 Article 7 hereof.
4. The derivative trading organization shall comply with regulations laid down in Clauses 6, 7 Article 7 hereof for following procedures for termination of derivative trading operations and send reports on results to SSC.
5. Within 05 business days from the receipt of reports on termination of derivative trading operations, SSC shall revise the certificate of eligibility to trade derivatives (if one or some derivative trading operations are terminated) or issue a decision to revoke the certificate of eligibility to trade derivatives (if all derivative trading operations are terminated).
Thus, a derivative trading organization is required to terminate its derivative trading operations in the cases specified above.
LawNet
