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Fund management companies ineligible to invest in derivatives with their own capital in Vietnam

Lê Trang

14:13, 15/02/2021

Below is an important specified in Decree 158/2020/ND-CP on derivatives and derivative market in Vietnam.

According to Article 16 of Vietnam's Decree 158/2020/ND-CP, entities are allowed to invest in derivatives on the derivative market, except cases where an entity is banned by a competent authority from performing activities related to securities and securities market for a fixed period or permanently due to commission of securities-related offences, and specific conditional investments as follows:

Securities companies shall invest in derivatives only after they have been issued by SSC with certificate of eligibility to conduct derivative proprietary trading;
Fund management companies shall only use trusted capital from their investment portfolio management to invest in derivatives for the purpose of preventing risks to list of securities they are holding; and use capital sources of securities investment funds or securities investment companies to invest in derivatives for the purpose of risk prevention as prescribed by the law on securities investment funds. Fund management companies shall not use their own capital, borrowed funds and other lawful funding sources to invest in derivatives;
Credit institutions and FBBs shall invest in derivatives only after obtaining written approval from SBV;
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More details can be found in Vietnam's Decree 158/2020/ND-CP, effective from January 1, 2021, replacing Vietnam's Decree 42/2015/ND-CP.

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