Regulations on day trading in Vietnam

What is day trading?

Pursuant to the provisions of Circular 120/2020/TT-BTC, day trading means the act of buying and selling the same ticker symbol the investors does not own with the same trading volume, on the same account and within the same trading day.

Regulations on day trading in Vietnam (Internet image)

Regulations on day trading in Vietnam

- An investor is entitled to conduct day trading after concluding a day trading contract with the securities company licensed to securities lending services. Day-trading contract must include terms allowing the securities company to carry out loan and buy-in transactions to support payment in case of shortage of securities for transfer in accordance with regulations of law on securities clearing and payment. The contract must specify risks and damage that may occur, and costs to be paid by the investor.

- Intraday transactions must comply with the following principles:

+ At each securities company where the investor opens its/his/her securities trading account, the investor is only allowed to 01 day trading account. The day trading account is a separate account or is separately managed or recorded as a sub-account of the investor's existing securities trading account.

The securities company must record the day trading account separately from the securities trading account and the margin trading account (if any) of each investor;

+ The investor conducting day trading must comply with the regulations set out in Clause 4 Article 7 of this Circular and must not conduct day trading activities for odd-lot trading or put-through trading;

+ The securities company is entitled to select ticker symbols on the list of listed or registered securities that are allowed to be trade on margin at such securities company to provide day trading services to investors. The list of securities eligible for day trading must be published on the securities company’s website.

+ Every investor shall place trading orders and ensure that the total number of securities in sell orders is equal to total number of securities with the same ticker symbols in buy orders within a trading date and vice versa.

If the total number of securities of executed sell orders exceeds the total number of securities of executed buy orders or vice versa, the securities company shall, on behalf of the investor, make up for the deficit cash amount or securities volume on the payment date;

+ The securities company must refuse to execute the investor’s day trading order if there is not enough cash for payment and enough securities for transfer on the payment date;

+ The investor shall compensate for damage and make payments to the securities company for any costs incurred in connection with buy-in activities, securities loan or cash loan for payment support in the event that there is not enough cash for payment or securities for transfer on the payment date under the regulations set out in the day trading contract with the securities company, and relevant laws;

+ The securities company is entitled to request investors to deposit cash or securities before allowing such investors to conduct day trading;

+ Within a trading date, the total value of day trading (which is determined on the basis of total value of executed buy orders and total value of executed sell orders) at each securities company must not exceed a given percentage of its equity.

The volume of securities traded within a day at each securities company must not exceed a given percentage of the volume of securities in circulation. The aforesaid percentages shall comply with SSC’s regulations.

-  Intraday transactions that are meant to exercise shareholders' rights associated with ticker symbols traded in the same day must not be conducted during the 5-day period before the registration deadline.

- If the market stabilization is needed, the SSC is entitled to request suspension of intraday transactions.

- The securities company that fails to satisfy the conditions for providing securities lending services must immediately stop signing new contracts or extending day trading contracts and allowing investors to conduct day trading, and submit reports to the SSC within 48 hours since the aforesaid event occurred.

- Depending on the market situation, the SSC shall conduct day trading and promulgate regulations on guidelines for day trading.

Pursuant to: Article 10 of Circular 120/2020/TT-BTC

Mai Thanh Loi

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