What requirements must a derivative trading organization meet to be issued with a certificate of eligibility to trade derivatives in Vietnam?
- Requirements to be issued with a certificate of eligibility to trade derivatives in Vietnam?
- What requirements does a fund management company need to meet in order to be issued with a certificate of eligibility to trade derivatives in Vietnam?
- Application and procedures for issuance and revision of certificate of eligibility to trade derivatives in Vietnam?
Requirements to be issued with a certificate of eligibility to trade derivatives in Vietnam?
According to the provisions of Clause 2, Article 4 of Decree No. 158/2020/ND-CP on the requirements for securities companies to be issued with certificate of eligibility to trade derivatives as follows:
- Be sufficiently licensed to perform securities trading operations;
- Meet the following charter capital and equity requirements:
+ For derivative brokerage: the minimum charter capital or equity is VND 800 billion;
+ For derivative proprietary trading: the minimum charter capital or equity is VND 600 billion;
+ For derivative investment consulting: the minimum charter capital or equity is VND 250 billion;
+ If a securities company engages in all of derivative brokerage, derivative proprietary trading and derivative investment consulting, its minimum charter capital or equity is VND 800 billion;
- Meet internal control and risk management requirements for securities trading operations in accordance with regulations of law on operations of securities companies;
- Meet personnel requirements: Director (General Director), Deputy Director (Deputy General Director) in charge of specific operations and at least 05 employees for each derivative trading operation must have securities professional certificates suitable for their operations as prescribed by law and professional certificate in derivatives and derivative market;
- Maintain a working capital ratio of at least 220% in the last continuous 12 months; have sufficiently contributed to provisions as prescribed by law;
- Incur no loss in the last 02 years;
- Receive unqualified opinions from the accredited audit organizations for the latest audited annual financial statements and the latest reviewed mid-year financial statements (in case an application for certificate of eligibility to trade derivatives is submitted after June 30);
- It is not following procedures for reorganization, dissolution or bankruptcy; it is not subject to any decision on suspension of business operations issued by competent authorities.
What requirements must a derivative trading organization meet to be issued with a certificate of eligibility to trade derivatives in Vietnam? (Image from the internet)
What requirements does a fund management company need to meet in order to be issued with a certificate of eligibility to trade derivatives in Vietnam?
According to the provisions of Clause 3, Article 4 of Decree No. 158/2020/ND-CP, the requirements for a fund management company to be issued with certificate of eligibility to trade derivatives are as follows:
Requirements for issuance of certificate of eligibility to trade derivatives
…
3. In order to be issued with certificate of eligibility to trade derivatives, a fund management company is required to meet the following requirements:
a) Maintain the charter capital or equity of at least VND 25 billion;
b) Arrange Director (General Director) and Deputy Director (Deputy General Director) in charge of specific operations and at least 05 employees for derivative investment consulting who must have securities professional certificates suitable for their operations as prescribed by law and professional certificate in derivatives and derivative market;
c) Meet the requirements in Points dd, e, g, h Clause 2 of this Article.
Thus, the fund management company needs to meet the requirements for charter capital, equity, executive and other regulations at Point dd, Point e, Point g, Point h Clause 2 Article 4 of Decree No. 158/2020/ND-CP.
Application and procedures for issuance and revision of certificate of eligibility to trade derivatives in Vietnam?
According to the provisions of Article 5 of Decree No. 158/2020/ND-CP, the application and procedures for issuance and revision of certificate of eligibility to trade derivatives include:
- An application for issuance of certificate of eligibility to trade derivatives consists of:
+ The application form made using Form No. 01 in the Appendix enclosed herewith;
+ The resolution of the General Meeting of Shareholders, Board of Members or the owner’s decision on conduct of derivative trading operations;
+ The audited financial statements of the last 02 fiscal years and the latest reviewed mid-year financial statements (in case an application for certificate of eligibility to trade derivatives is submitted after June 30); the prudential ratio reports in the last 12 months;
+ List of Director (General Director) and Deputy Director (Deputy General Director) in charge of specific operations and employees for each derivative trading operation which is prepared using Form No. 02 in the Appendix enclosed herewith, enclosed with their personal records. A personal record shall, inter alia, include: ID card or citizen’s identity card or passport, securities professional certificate, professional certificate in derivatives and derivative market, and employment contract;
+ Internal control and risk management procedures for derivative trading operations.
- The documents specified in Clause 1 of this Article are not required if they have been sent to State Securities Commission in accordance with regulations on reporting and information disclosure.
- A full set of original application documents is required. If a copy of document is submitted, it must be a copy extracted from master register or a certified copy. The application shall be submitted to State Securities Commission directly, by post or through the online public service system as regulated by the Minister of Finance.
- Within 05 business days from the receipt of the application, State Securities Commission shall request the applicant in writing to revise the application (if necessary).
- Within 15 days from the receipt of the adequate and valid application, State Securities Commission shall issue the certificate of eligibility to trade derivatives. If an application is refused, State Securities Commission shall provide written reasons for such refusal.
- Within 12 months from the issuance of the certificate of eligibility to trade derivatives, the securities company licensed to provide derivative brokerage shall apply for registration as trading member. If it fails to follow procedures for registration of trading members, State Securities Commission shall issue a decision to revoke the certificate of eligibility to trade derivatives.
- Revision of the certificate of eligibility to trade derivatives due to addition of derivative trading operations shall comply with corresponding regulations on issuance of certificate of eligibility to trade derivatives in Article 4, Clauses 1 through 5 Article 5 hereof.
LawNet
