In order to trade derivatives legally, securities companies are required to meet all the requirements for issuance of certificate of eligibility to trade derivatives specified in the Decree No. 158/2020/NĐ-CP on derivatives and derivative markets of Vietnam.
Article table of contents
Pursuant to Article 4 of the Decree No. 158/2020/NĐ-CP of the Vietnam Government on the requirements for issuance of certificate of eligibility to trade derivatives, securities companies and securities investment fund management companies shall only trade derivatives after obtaining certificate of eligibility to trade derivatives from the State Securities Commission of Vietnam, particularly as following:
- Securities companies may carry out one, several or all of derivative trading operations, including: derivative brokerage, derivative proprietary trading and derivative investment consulting;
- Fund management companies may only provide derivative investment consulting.
* Requirements for securities company to be issued with certificate of eligibility to trade derivatives include:
- Be sufficiently licensed to perform securities trading operations;
- Meet the following charter capital and equity requirements:
+ For derivative brokerage: the minimum charter capital or equity is VND 800 billion;
+ For derivative proprietary trading: the minimum charter capital or equity is VND 600 billion;
+ For derivative investment consulting: the minimum charter capital or equity is VND 250 billion; (new provision)
+ If a securities company engages in all of derivative brokerage, derivative proprietary trading and derivative investment consulting, its minimum charter capital or equity is VND 800 billion;
- Meet internal control and risk management requirements for securities trading operations in accordance with regulations of law on operations of securities companies; (new provision)
- Meet personnel requirements: Director (General Director), Deputy Director (Deputy General Director) in charge of specific operations and at least 05 employees for each derivative trading operation must have securities professional certificates suitable for their operations as prescribed by law and professional certificate in derivatives and derivative market;
- Maintain a working capital ratio of at least 220% in the last continuous 12 months; have sufficiently contributed to provisions as prescribed by law; (new provision)
- Incur no loss in the last 02 years; (new provision)
- Receive unqualified opinions from the accredited audit organizations for the latest audited annual financial statements and the latest reviewed mid-year financial statements (in case an application for certificate of eligibility to trade derivatives is submitted after June 30); (new provision)
- It is not following procedures for reorganization, dissolution or bankruptcy; it is not subject to any decision on suspension of business operations issued by competent authorities.
* Requirements for a fund management company to be issued with certificate of eligibility to trade derivatives include:
- Maintain the charter capital or equity of at least VND 25 billion;
- Arrange Director (General Director) and Deputy Director (Deputy General Director) in charge of specific operations and at least 05 employees for derivative investment consulting who must have securities professional certificates suitable for their operations as prescribed by law and professional certificate in derivatives and derivative market;
0 Meet the requirements in Points dd, e, g, h Clause 2 of Article 4 of the Decree No. 158/2020/NĐ-CP of the Vietnam Government.
It can be seen that, compared with the previous provisions of the Decree No. 42/2015/ND-CP, Decree No. 158/2020/NĐ-CP has supplemented more conditions for derivative trading organizations to be granted a certificate of eligibility to trade derivatives from January 01, 2021. Securities companies and fund management companies should pay attention to these regulations in order to comply with the law.
- Key word:
- Decree No. 158/2020/NĐ-CP
