Mechanism for day trading on the securities market in Vietnam

Mechanism for day trading on the securities market in Vietnam (illustrative image)

The day trading regulations are specified in the Draft Circular providing guidance on trading on the securities market as follows:

+ Participant Conditions:

- Investors may execute day trading after signing an day trading contract with the securities company providing securities lending services. The day trading contract must include a clause allowing the securities company to conduct borrowings, mandatory purchases to facilitate settlement in the event of a securities shortfall for delivery. The day trading contract must clearly outline any arising risks, damages, and costs that the investor must pay.

+ Operating Principles:

- At each securities company where the investor opens a trading account, the investor is allowed to open only one (01) day trading account. The day trading account can be a separate account, managed separately, or accounted for as a sub-account of the investor's existing trading account. The securities company must account separately for the day trading account from the trading account and margin trading account (if any) of each investor.- Investors executing day trading must comply with regulations; they are not allowed to conduct day trading for odd-lot or negotiated transactions;- The securities company may select securities from the list of margin-traded listed securities for day trading for the investor. The list of securities available for day trading must be publicly disclosed on the securities company's website;- Investors are responsible for placing orders, ensuring the total number of securities in sell orders must be equal to the total number of securities of the same code in buy orders on the same trading day, and vice versa. If the total number of securities of executed sell orders exceeds the total number of executed buy orders, or vice versa, the securities company is responsible for settling the shortfall of cash or securities on the settlement date on behalf of the investor;- The securities company must refuse to execute the investor's intraday order if it cannot ensure sufficient funds for settlement and securities for delivery on the settlement date;- Investors are responsible for compensating for damages and paying the securities company for all incurred costs related to forced purchases, securities borrowing, and cash borrowing for settlement support in cases of insufficient funds or securities on the settlement date as per relevant legal provisions;- The securities company has the right to require the investor to post cash or securities collateral before allowing the investor to execute day trading;- In a trading day, the total value of day trading (determined based on the total value of executed buy and sell orders) at each securities company must not exceed a regulated ratio in relation to the company's equity, and must also not exceed a regulated ratio in relation to the company's average trading value/day of the preceding month. The volume of intraday traded securities at each securities company must not exceed a regulated ratio in relation to the outstanding volume of securities. These levels and ratios are implemented according to the Regulations of the State Securities Commission.

+ Timing:

- day trading activities are not allowed within five (05) days before the record date for closing shareholder entitlements of that particular security.

See details in the Draft Circular providing guidance on trading on the securities market.

Long Binh

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