Regulations on prudential indicators for securities-trading organizations in Vietnam

Circular No. 87/2017/TT-BTC of the Ministry of Finance of Vietnam deals with the determination of prudential indicators, regulation on report on prudential ratios of securities-trading organizations, actions against and responsibilities of relevant parties to securities-trading organizations that fail to achieve prudential indicators. The Circular shall not apply to the determination of tax payable to the state budget by securities-trading organizations.

Regulated entities of this Circular include: securities companies, branches of foreign securities companies in Vietnam, fund management companies, branches of foreign fund management companies in Vietnam; relevant organizations and individuals.

According to Circular No. 87/2017/TT-BTC, the securities-trading organization shall calculate its prudential indicators and take responsibility for the accuracy of the calculations.

Assets and capital sources used for calculation of the liquid capital value and risk values up to the time of calculation shall be updated.

The securities-trading organization is not required to calculate the value of various risks against assets which have been deducted from liquid capital as prescribed in Articles 5 and 6 of this Circular.

The securities-trading organization that has subsidiaries shall calculate prudential indicators according to its own financial terms.

The prudential ratio report of June 30 must be examined by an accredited audit organization according to Vietnam's Audit Standard for Examination.

The prudential ratio report of December 31 and the prudential ratio report used for proving that a securities-trading organization is eligible to have warning, control or special control lifted must be audited by an accredited audit organization according to the Vietnam’s Audit Standard - Special considerations – Audits of financial statements prepared in accordance with special purpose frameworks and other relevant Audit Standards.

The securities-trading organization must establish an internal control and information system for recording, monitoring, and updating the financial information and detailed information serving the preparation, examination, and audit of the prudential ratio reports.

The Board of Directors (administration board) of the securities-trading organization shall prepare and present the prudential ratio report as prescribed in this Circular.

Circular No. 87/2017/TT-BTC of the Ministry of Finance of Vietnam takes effect from October 10, 2017 and replaces Circular No. 226/2010/TT-BTC dated December 31, 2010 and Circular No. 165/2012/TT-BTC dated October 09, 2012 of the Minister of Finance of Finance.

Source: Finance Magazine

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