General Provisions on Market Making Activities in Securities

General regulations on market-making activities in securities (illustrative image)

To conduct market-making transactions, it is necessary to comply with the regulations outlined in the Draft Circular guiding transactions in the securities market. Specifically:

+ Principles of implementation:

- Members engaging in market-making must be honest and act in good faith when performing market-making functions to ensure that the market operates efficiently and stably;- Depending on market conditions, members participating in market-making must continuously maintain two-way quotes or may also maintain one-way quotes for the securities registered for market-making in accordance with the regulations of the Stock Exchange. The securities requiring liquidity, the market-making duration, the quoting methods, the price spread limit between bid and ask prices, the quoting ratio, the maintenance duration of quotes, and cases of temporary trading suspension are governed by the regulations of the Stock Exchange and the market-making contract;- Members participating in market-making are only allowed to place limit orders for market-making transactions. These members can simultaneously engage in market-making and proprietary trading but must ensure price principles according to the regulations issued by the Stock Exchange.

+ Management authority:

- The Stock Exchange has the authority to terminate or suspend the market-making activities of a member for one or several securities in cases where the member fails to fulfill their obligations or breaches other contract terms according to the regulations of the Stock Exchange.- The Stock Exchange is responsible for drafting and issuing regulations guiding market-making activities after approval from the State Securities Commission.

For more details, see the Draft Circular guiding transactions in the securities market.

Long Binh

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