Covered Short Sale Transactions in the Securities Market

Conditions and methods for carrying out secured short-selling transactions are specified in the Draft Circular guiding transactions on the stock market as follows:

Illustrative image of secured short-selling transactions on the stock market

+ Regarding the contract content:

- The contract for securities borrowing transactions on the securities borrowing and lending system at the Vietnam Securities Depository and Clearing Corporation to perform secured short-selling transactions must at least include content on collateral, borrowing/lending interest rates, borrowing period, loan extension, handling of collateral when the investor does not return securities, dispute resolution methods, clearly stating potential risks, damages that may arise, and costs.

+ Implementation regulations:

- Investors open a secured short-selling transaction account at the securities company that provides securities lending services, where the investor opens a trading account to carry out secured short-selling transactions.- The secured short-selling transaction account is a separate account or is accounted for in the form of a sub-account.- Securities permitted for secured short-selling transactions are listed stocks, fund certificates registered for trading on the Stock Exchange and must meet the criteria of listing/registration time, the scale of capital and business results of the issuing organization, liquidity, and price volatility (if any), transparency of information, and other criteria as guided by the State Securities Commission.- Based on the criteria prescribed by the State Securities Commission, the Stock Exchange publishes the list of securities permitted for secured short-selling transactions or not permitted for secured short-selling transactions.- Depending on market conditions, the State Securities Commission implements secured short-selling activities after approval by the Ministry of Finance.- If necessary to ensure the safety of the stock market operations, the State Securities Commission may require securities companies to temporarily suspend secured short-selling transaction activities.- The State Securities Commission issues the Regulation guiding secured short-selling transactions after approval by the Ministry of Finance.- Securities companies must report to the Stock Exchange and the State Securities Commission on secured short-selling transactions according to the Regulations of the State Securities Commission.

+ Prohibited Subjects: Subjects not allowed to perform secured short-selling transactions as guided by the State Securities Commission.

See details in the Draft Circular guiding transactions on the stock market.

Long Binh

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