06 cases are not allowed to invest in derivatives on the derivative market in Vietnam from 2021

According to the Decree No. 158/2020/NĐ-CP of the Vietnam’s Government, organizations and individuals are allowed to invest in derivatives on the derivative market, except the following cases:

-  An entity is banned by a competent authority from performing activities related to securities and securities market for a fixed period or permanently due to commission of securities-related offenses;

- Securities companies shall invest in derivatives only after they have been issued by the State Securities Commission of Vietnam (SSC) with certificate of eligibility to conduct derivative proprietary trading;

- Fund management companies shall only use trusted capital from their investment portfolio management to invest in derivatives for the purpose of preventing risks to list of securities they are holding; and use capital sources of securities investment funds or securities investment companies to invest in derivatives for the purpose of risk prevention as prescribed by the law on securities investment funds. Fund management companies shall not use their own capital, borrowed funds and other lawful funding sources to invest in derivatives;

- Credit institutions and foreign branch banks (FBB) shall invest in derivatives only after obtaining written approval from the State Bank of Vietnam;

- Insurers and branches of foreign insurers shall only invest in derivatives in accordance with regulations of law on insurance business;

- State-owned economic groups, state-owned corporations and state-owned enterprises shall invest in derivatives only after obtaining permission from competent authorities in accordance with regulations of law on management and use of state capital in business operations of enterprises.

Note: In the course of investing in or trading derivatives, entities shall themselves be responsible for risks and comply with regulations of law, and avoid committing prohibited acts in accordance with regulations of law on securities and securities market.

More details at the Decree No. 158/2020/NĐ-CP of the Vietnam’s Government, effective from January 01, 2021.

Ty Na

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