What is derivatives trading? What is the application for issuance of certificate of eligibility to trade derivatives in Vietnam?
Vietnam: What is derivatives trading?
Pursuant to Clause 1, Article 3 of Decree 158/2020/ND-CP, the “derivative trading” means the conduct of one, several or all of the following operations: derivative brokerage, derivative proprietary trading, and derivative investment consulting.
What is derivatives trading? What is the application for issuance of certificate of eligibility to trade derivatives in Vietnam?
What is the application for issuance of certificate of eligibility to trade derivatives in Vietnam?
Pursuant to Clause 1, Article 5 of Decree 158/2020/ND-CP stipulates as follows:
Application and procedures for issuance and revision of certificate of eligibility to trade derivatives
1. An application for issuance of certificate of eligibility to trade derivatives consists of:
a) The application form made using Form No. 01 in the Appendix enclosed herewith;
b) The resolution of the General Meeting of Shareholders, Board of Members or the owner’s decision on conduct of derivative trading operations;
c) 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;
d) 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;
dd) Internal control and risk management procedures for derivative trading operations.
Accordingly, the application for issuance of certificate of eligibility to trade derivatives includes:
- 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.
What are the requirements for issuance of certificate of eligibility to trade derivatives for securities companies in Vietnam?
Pursuant to the provisions of Clause 2, Article 4 of Decree 158/2020/ND-CP, the requirements for issuance of certificate of eligibility to trade derivatives are specifically 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.
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