October 1, 2024 – The State Securities Commission of Vietnam (SSC) has announced significant regulatory changes under Circular No. 68/2024/TT-BTC, recently issued by the Ministry of Finance. The new rules, which take effect on November 2, 2024, are expected to open new opportunities for foreign institutional investors and strengthen Vietnam’s capital market.
Key Highlights of the New Regulation
- No Pre-Funding Requirement for Foreign Institutional Investors
Starting November 2, foreign institutional investors will be allowed to place buy orders for stocks without being required to have the full amount of cash in advance. Securities companies will instead assess settlement risks for these investors and determine the required level of funds based on mutual agreements. - Settlement Obligations
Foreign institutional investors must have sufficient funds in their accounts before the custodian member transfers payment to the settlement bank. If investors fail to meet this obligation, the Vietnam Securities Depository and Clearing Corporation (VSDC) will assign the payment obligation to the relevant securities company, which must ensure full settlement or face regulatory penalties. - Ownership Transfers and Risk Controls
Securities firms may transfer ownership of stocks from their proprietary accounts to foreign institutional investors who lack sufficient funds to settle transactions. The circular also sets a cap on the total value of buy orders placed by foreign institutional investors, linked to a securities company’s equity capital and margin lending exposure. - Restrictions to Prevent Cross-Ownership
Securities companies are prohibited from accepting buy orders of their own shares or those of their parent companies to avoid conflicts of interest and cross-ownership risks. - Enhanced Disclosure Requirements
Securities firms must disclose and report to the SSC and stock exchanges when transaction values reach VND 50 million or more in a single day, or VND 200 million or more in a month, including off-exchange transfers. Reports must be made within 24 hours. - Bilingual Disclosure for Listed Companies
Public companies will be required to disclose information in both Vietnamese and English, starting from January 1, 2025 for large-cap firms, as part of Vietnam’s effort to enhance market transparency and accessibility to foreign investors.
Market Impact
This regulatory change is widely expected to improve foreign investor access, increase liquidity, and align Vietnam’s securities market more closely with international practices. By easing pre-funding requirements while strengthening risk management and transparency, the SSC aims to encourage greater institutional participation and support the sustainable development of Vietnam’s capital market.
