Determination of operational risk value of securities-trading organizations in Vietnam

According to Article 8 of the Circular No. 91/2020/TT-BTC of the Ministry of Finance of Vietnam, the operational risk of a securities-trading organization is either 25% of such trader's operating costs in twelve (12) months by the time of calculation or 20% of the minimum charter capital for business operations of the securities-trading organization, whichever is greater. The operating cost of a securities-trading organization equals (=) the total costs incurred in a period minus (-):

- Depreciated cost;

- Cost or reversal of provision for impairment of short-term financial assets and collateral;

- Cost or reversal of provision for impairment of long-term financial assets;

- Cost or reversal of provision for impairment of receivables;

- Cost or reversal of provision for impairment of other short-term financial assets;

- Decreases due to revaluation of financial assets recorded as profit/loss;

- Loan interest.

Note: The operating cost of a fund management company equals (=) the total costs incurred in a period minus (-):

- Depreciated cost;

- Cost or reversal of provision for impairment of short-term investments;

- Cost or reversal of provision for impairment of long-term investments;

- Cost or reversal of provision for non-performing receivables.

In case a securities-trading organization that has operated for less than one (01) year, its operational risk shall be either three (03) times the average monthly operating cost beginning from the time this trader commences its operation or 20% of minimal charter capital for business operations of the securities-trading organization, whichever is greater.

View more details at the Circular No. 91/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from January 01, 2021.

Le Vy

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