Vietnam: Warning to a securities-trading organization when the ratio of liquid capital reaches how much?
- Securities trading organizations are put on alert when there is a ratio of liquid capital in Vietnam?
- Is it public for securities trading organizations to be put on alert in Vietnam?
- How is the financial adequacy ratio report used to demonstrate that the securities trading organization is eligible to be taken out of the audited alert status in Vietnam?
Securities trading organizations are put on alert when there is a ratio of liquid capital in Vietnam?
Pursuant to Article 13 of Circular 91/2020 / TT-BTC, there are regulations on the warning status for securities trading organizations as follows:
Article 13. Warning
1. The SSC shall issue the decision to issue warning to a securities-trading organization in the following cases:
a) The liquid capital ratio reaches from 150% to below 180% during the reporting periods in three (03) consecutive months; or
b) The liquid capital ratio that has been examined or audited by an accredited audit organization reaches from 150% to below 180%; or
c) The prudential indicator report about which the accredited audit organization issue a dissenting or contrary opinion, or a disclaimer of opinion, or fails to give any opinion, or issues a qualified opinion, the liquid capital ratio is from 150% to below 180%, if the exceptions are not included in the liquid capitals.
2. The warning period begins when a warning is issued against the securities-trading organization and ends when SSC issues a decision to lift the warning.
3. SSC will consider lifting the warning when the securities-trading organization’s liquid capital ratio reaches 180% or more in three (03) consecutive months, the liquid capital ratio during the last reporting period has been audited by an accredited audit organization, and the securities-trading organization has submitted a report according to Appendix XI hereof to SSC.
According to the above provisions, the State Securities Commission shall issue a decision to put a securities trading organization in a state of warning when there is a ratio of liquid capital from 150% to less than 180% in the following cases:
- Capital availability ratio from 150% to less than 180% in all reporting periods for three (03) consecutive months; or
- The percentage of liquid capital that has been reviewed or audited by an approved auditing organization ranges from 150% to less than 180%; or
- The financial adequacy ratio report in which the approved auditing organization gives an opinion that does not approve (or an opinion to the contrary), refuses to give an opinion (or cannot give an opinion), an opinion except for some indicators of this report that, if excluded from the liquid capital, will lead to the ratio of liquid capital from 150% to less than 180%.
Vietnam: Warning to a securities-trading organization when the ratio of liquid capital reaches how much?
Is it public for securities trading organizations to be put on alert in Vietnam?
In this regard, Article 11 of Circular 91/2020 / TT-BTC stipulates as follows:
1. The liquid capital ratio shall be determined according to the following rules:
2. The SSC shall issue the decision to issue warning to the securities-trading organization according to Article 13 of this Circular, place it under control or under special control according to Article 14 and Article 16 of this Circular respectively. Within 24 hours from the issuance of the decision, SSC shall post such decision on the website of SSC and the securities-trading organization shall publish information about such decision on the websites of SSC, VNX and the securities-trading organization.
Accordingly, the fact that securities trading organizations are put on alert will be published by the State Securities Commission on the website of the State Securities Commission.
Securities trading organizations publish information about this decision on the websites of the State Securities Commission, Stock Exchanges, and securities trading organizations.
How is the financial adequacy ratio report used to demonstrate that the securities trading organization is eligible to be taken out of the audited alert status in Vietnam?
According to the provisions of Clause 5 Article 3 of Circular 91/2020 / TT-BTC stated as follows:
Article 3. Rules for application of prudential indicators
…
5. The prudential indicator reports of June 30 shall be examined by accredited audit organizations according to Vietnam’s Audit Standards for examination contracts. The prudential indicator report of December 31 and the prudential indicator report used for proving that a securities-trading organization is eligible to have warning, control or special control lifted must be audited by an accredited audit organization according to the Vietnam’s Audit Standard - Special considerations – Audits of financial statements prepared in accordance with special purpose frameworks and other relevant Audit Standards.
Accordingly, the financial safety ratio report used to prove that the securities trading organization is eligible to be taken out of the warning status must be audited by an auditing organization approved in accordance with Vietnamese auditing standards on notes when auditing financial statements prepared according to the framework of preparing and presenting financial statements for special purpose and other relevant auditing standards.
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