GUIDE TO SECURITIES TRADING IN VIETNAM International ...

1

Guide to Securities Trading in Vietnam for Offshore Fund

GUIDE TO SECURITIES TRADING IN VIETNAM

International Institutional Clients

2022.01OFFSHORE FUND

2


TABLE OF CONTENTS

1. LOCAL CUSTODY AND SECURITIES TRADING ACCOUNT OPENING FOR OFFSHORE FUND .. 3

1.1 Option for Securities Custody in Vietnam for Offshore Fund .......................................... 3

1.2 Three Steps to Onshore Custody ..................................................................................... 4

1.3 Securities Trading Account Opening ................................................................................ 4

1.4 Trading Days and Hours: .................................................................................................. 5

1.5 Price Ranges ..................................................................................................................... 6

1.6 Order Types ...................................................................................................................... 6

1.7 Matching Principles .......................................................................................................... 8

1.8 Modification and Cancellation of Orders: ........................................................................ 8

1.9 Price Unit .......................................................................................................................... 8

1.10 Trading Units (Board Lots) ................................................................................................ 9

1.11 Trading of Foreign Investors ............................................................................................ 9

1.12 Foreign Ownership Limits................................................................................................. 9

2. SETTLEMENT AND TAX RULES ....................................................................................... 10

2.1 Settlement Procedure .................................................................................................... 10

2.2 Tax Regulations .............................................................................................................. 11

3. OTHER PROCEDURES FOR LOCAL CUSTODY ................................................................... 11

3.1 Transferring Foreign Currency or VND to the IICA ......................................................... 12

3.2 Withdrawal or outbound transfer of funds ................................................................... 12

Our Contact ............................................................................................................................... 13

3


1. LOCAL CUSTODY AND SECURITIES TRADING ACCOUNT OPENING FOR OFFSHORE FUND

1.1 Options for Securities Custody in Vietnam for Offshore Funds

I. Use an offshore custodian bank offering custodian services for Vietnamese securities outside Vietnam.

II. Use an onshore custodian and setup to directly hold securities and cash accounts in Vietnam.

List of Custodian Banks in Vietnam:

No. Bank Address Website Phone/Email

1 Citibank - Ha Noi Branch

International Center, 1st Floor, 17 Ngo Quyen Street, Ha Noi

www.citibank.com.vn [email protected]

2 Deutsche Bank AG - Ho Chi Minh Branch

4th Floor, Saigon Center Tower, District 1, 65 Le Loi Boulevard, Ho Chi Minh City

www.db.com +84 286 299 9000

3 Far East National Bank - Ho Chi Minh Branch

2A-4A Ton Duc Thang Street, District 1, Ho Chi Minh City

www.fareastnationalbank.com +84 283 822 0566

4 JP Morgan Chase - Ho Chi Minh Branch

Unit 1505, Floor 15, Saigon Tower, 29 Le Duan Street, Ben Nghe Ward, District 1, Ho Chi Minh City

www.jpmorgan.com +84 283 823 6270

5 HSBC Vietnam The Metropolitan, 235 Dong Khoi Street, District 1, Ho Chi Minh City

www.hsbc.com.vn +84 283 829 2288

6 Shinhan Vietnam

138-142 Hai Ba Trung Street, Da Kao Ward, District 1, Ho Chi Minh City

www.shinhan.com.vn +84 283 829 1581

7 Woori Bank Vietnam Limited

Floor 34, Keangnam Hanoi Landmark Tower, E6 Pham Hung Street, Me Tri Ward, Nam Tu Liem District, Ha Noi City

www.woori.com.vn [email protected]

8 Standard Chartered Vietnam - Ha Noi Branch

Ground floor, CDC Building, 25 Le Dai Hanh Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi City

www.sc.com +84 243 696 0000

9 Tien Phong Commercial JS Bank

3, 4th Floor, TTC building, Duy Tan Street, Cau Giay District, Hanoi

www.tpb.com.vn +84 243 768 8998

10 JS Commercial Bank for Foreign Trade of Vietnam (VCB)

198 Tran Quang Khai Street, Hoan Kiem District, Hanoi City

www.vietcombank.com.vn +84 243 934 3137

11

JS Commercial Bank for Investment and Development of Vietnam (BIDV)

74, Tho Nhuom Street, Tran Hung Dao Ward, Hoan Kiem District, Hanoi City

www.bidv.com.vn +84 243 941 1831

4


1.2 Three Steps to Onshore Custody

In order to directly invest in Vietnamese securities, foreign institutional investors must complete the following steps:

Step 1: Open custody accounts including securities and cash accounts (Indirect Investment Capital Account)

at a custodian bank.

Step 2: Obtain a Securities Trading Code (“STC”), your unique account code. This code also assists in

monitoring foreign ownership limits (“FOL”).

Step 3: Open trading account(s) with licensed broker: Mirae Asset Securities (Vietnam) JSC.

Note: For step 1 and step 2, instruction will be provided by custodian bank. Step 3 will be instructed in the 1.3 section.

1.3 Securities Trading Account Opening

According to Circular No. 74/2011/TT-BTC following by Official Letter No. 2327/UBCK-PTTT, Clients can use the

services of more than one (1) securities company (i.e., more than one broker can be chosen for execution services).

List of required documents to open a securities trading account at Mirae Asset Securities (Vietnam) JSC (“MAS”):

No. Document Number of copy

1 Securities trading code (“STC”) 1 PDF file of each unique “STC”.

2 Securities company Account Opening Contract

2 Originals. Each with wet-ink

signature(s) and stamp (if any). We keep

one (1) original. Client gets one (1)

original.

3

• Business Registration Information of Asset Management

Company and Trust Agreement of Fund

• Or Fund Establishment License

1 PDF file or website link(s).

4

Passport of Portfolio Manager or Legal representative, signing (if Client

uses more than one signatory, provide matching signer passport ID

pages)

1 copy.

5

If required:

POA rights: for authorized person who will sign with MAS on behalf of

Portfolio Manager or legal representative

1 original with signatures and stamp (if

any).

6 Passport ID of the authorized people (if any) 1 copy.

7 Cover Letter announcing list of Authorized Traders able to place Orders

with MAS (Signed by your Representative). Stamp if any.

1 original with signatures and stamp (if

any).

8 Passport ID(s) of trader(s) 1 copy for each.

Email: send a soft copy of your account and all documents to: [email protected]

Courier: two (2), wet-ink originals of the Mirae Asset account opening agreement to:

Mirae Asset Securities (Vietnam) JSC

Att: Institutional Sales, 7th Floor, Le Meridien building,

3C Ton Duc Thang street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam.

mailto:[email protected]

5


TRADING RULES

1.4 Trading Days and Hours:

Trading days: Monday to Friday (except national holidays)

Trading sessions in a trading day:

Trading hours on the HSX

Session Trading Hours Trading Method Order Type

Morning

09:00-09:15 Opening periodic order-matching to determine opening

price LO, ATO

09:15-11:30 Continuous Matching session I LO, MP

09:00-11:30 Put-through transactions

- Block equities trading/ Bond trading

Break 11:30-13:00

Afternoon

13:00-14:30 Continuous Matching session II LO, MP

14:30-14:45 Closing periodic order-matching to determine closing price LO, ATC


- Block equities trading/ Bond trading

Trading hours on the HNX


Morning 09:00-11:30 Continuous Matching and Put through transactions LO, MTL, MAK,

MOK

Break 11:30-13:00

Afternoon

13:00-14:30 Continuous Matching LO, MTL, MAK,

MOK

14:30-14:45 Closing periodic order-matching to determine closing

price LO, ATC

14:45-15:00 After-hours trading session PLO


6


Trading hours on the UPCoM


Morning 09:00-11:30 Continuous Matching and Put through transactions LO

Break 11:30-13:00

Afternoon 13:00-15:00 Continuous Matching and Put through transactions LO

1.5 Price Ranges

For shares/investment fund certificates:

HSX HNX UPCoM

Ceiling price = Reference price + 7% Ceiling price = Reference price +

10%

Ceiling price = Reference price +

15%

Floor Price = Reference price - 7% Floor Price = Reference price - 10% Floor Price = Reference price - 15%

On the first listing day, a particular

stock can fluctuate + or – 20% to

the reference price



the reference price



the reference price

Note on reference prices:

For HSX and HNX, the reference price of the particular stock/investment fund certificate is its closing price

from the previous day. For UPCoM, the reference price of the particular stock/investment fund certificate is

its average trading price on the previous day.

The closing price of the particular stock/investment fund certificate is the matching price of the closing

periodic order matching session (session 3). If a security is not transacted in session 3, then the closing price

of that particular stock/investment fund certificate will be the last price at which it was transacted that day.

On the ex-right date, the reference price shall be determined by adjusting the previous trading day’s closing

price by the value of dividend or right accordingly.

The reference price for the first listing stock is announced by the listed company with the approval from the

listing exchange.

For Bonds: No price range

1.6 Order Types

Limit Order (LO):

o Orders to be matched at a pre-specified price or better price.

o Limit orders receive the lowest priority compared to other orders.

o Limit orders can be entered into the system at any time. The orders remain effective until the end of the

trading day or until canceled in the system.

At the Opening Order (ATO)

7


o Orders to be matched at the opening price. ATO orders are only placed during the opening periodic order-

matching to determine opening price.

o ATO orders receive higher priority than limit orders.

o ATO orders cannot be cancelled once inputted into the trading system. Partially filled or unmatched ATO

orders will be automatically canceled at the end of the opening session.

At the Closing Order (ATC)

o Orders to be matched at the closing price. ATC orders are only placed during the closing periodic order-

matching to determine closing price.

o ATC orders receive higher priority than limit orders.

o ATC orders cannot be cancelled once inputted into the trading system. Partially filled or unmatched ATC

orders will be automatically canceled at the end of the closing session.

Market order (MP)

o It is an order to buy or sell shares immediately at the best available current price.

o Once inputted into the trading system, the MP sell order will be immediately executed at the highest bid

price and the MP buy order will be immediately executed at the lowest offer price.

o If the MP order is executed partially, the remaining volume of the MP buy order and the MP sell order will

be changed to next higher price unit and next lower price unit respectively compared to the last executed

price.

o If the last executed price is ceiling price/floor price, the MP order will be changed to limit order at ceiling

price/floor price.

o The MP order is valid in continuous order-matching session only.

o The MP order will be automatically cancelled if there is no corresponding limit order at the time the MP

order is input into the trading system.

o The MP orders of foreign investors will be automatically cancelled if the Foreign Ownership Limited (FOL)

of the certain stock is no longer available.

Market to limit order (MTL)

o A market order if not fully executed, the remaining of the order will be changed to a buying limit order

with price higher than the latest executed price one more tick size or the celling price if the latest equal to

ceiling price (for buy order) / a selling limit order with price lower than the latest executed price one more

tick size or the floor price if the latest is floor price (for sell order).

Market Fill or Kill order (MOK)

o A market order that must be entire executed; otherwise, the order will be cancelled immediately after

input into the trading system.

Market Fill and Kill order (MAK)

o A market order that is executed fully or partially, the remaining of the order will be cancelled immediately

after matching.

Post Close Order (PLO)

o PLO is a buy/sell order at the closing price after the end of ATC session.

8


o Order is entered into the trading system in the after-hours trading session.

o Order is executed right after input into the trading system if available counter order. The executed price is

the closing price of the trading date.

o PLO is not allowed to adjust/cancel.

o In case in the continuous order matching session and the closing periodic order matching session cannot

determine the executed price, PLO will not be entered into the system.

o End of after-hours trading session, the PLO which is not executed or the rest of order is not fully executed

will be cancelled automatically.

1.7 Matching Principles

Price priority

o Buy orders at higher prices take precedence. o Sell orders at lower prices take precedence.

Time priority

o For buy or sell orders at the same price, those entered into the trading system earlier shall take precedence

in execution.

1.8 Modification and Cancellation of Orders:

Modification and cancellation of orders are implemented for unmatched buy/sell orders or the rest of partially-

filled orders which have not been executed.

In the continuous order matching, Limit orders are allowed to modify price, volume and cancel on the trading

time. The priority of modified orders is determined as follows:

o Modify to reduce volume: the priority of modified orders is unchanged.

o Modify to increase volume and / or modify price: the priority of modified orders is determined since

the modified orders are put into the trading.

Cancellation/Amendment of orders in periodic order-matching session is not allowed (including orders in

previous continuous order matching session).

1.9 Price Unit

On HSX:

Price level (VND) Shares, Certificates (VND) Bonds (VND)

<10,000 10 1

10,000 – 49,950 50 1

≥50,000 100 1

Note: No price tick applied for stock put through on HSX.

On HNX:

o Tick size for shares in order matching method: 100 VND

9


o Price tick for ETC fund certificates: 1 VND.

o No price tick applied for stock put through.

o Bonds: not regulated

1.10 Trading Units (Board Lots)

Trading unit: On HSX, HNX and UPCom: 1 lot = 100 shares

Face value of stocks or investment fund certificates: VND10,000

Face value of bonds: VND100,000

For Put-through transaction:

o On HSX: > = 20,000 shares

o On HNX: > = 5,000 shares for stock and >= 1,000 bonds for bond

1.11 Trading of Foreign Investors

In the time of order matching trading:

o Buying volume of shares and closed fund certificates will be deducted from the number available for

foreign investors immediately after the buy order is executed.

o Selling volume of shares and closed fund certificates of foreign investors will be added to the number

available for foreign investors right after ending the settlement (T+2).

o Buy orders or the rest of partially-filled buy orders of foreign investors which are not executed will be

automatically cancelled if ownership limit for foreigners is hit and buy orders inputted into the trading

system will not be accepted.

In the time of put through trading:

o Volume of shares and closed fund certificates available for foreign investors will be deducted immediately

if transaction is executed between a buying foreign investor and a selling domestic investor.

o Volume of shares and closed fund certificates available for foreign investors will be increased after the end

of settlement if transaction is executed between a selling foreign investor and a buying domestic investor.

o Total number of shares, closed fund certificates available for foreign investors will remain unchanged if

the transaction is negotiated between two foreign investors.

1.12 Foreign Ownership Limits

Regulations regulating the foreign ownership limit (FOL) are covered by Decree 60/2015/ND-CP dated June 26,

2015 in amendment of Decree 58/2012/ND-CP. These decisions provide the FOLs for the Vietnamese securities

market and foreign investors’ contribution of capital and purchase of shares in Vietnamese enterprises. Except

for the restricted sectors, public companies will now be allowed to decide by themselves their own FOL which

is indicated in the company charter. Accordingly, in most cases, it is possible to buy 100% of the capital of a

Vietnamese company

The FOL of listed or unlisted banks is limited to 30% of the total charter capital and maximum holding for an

individual foreign investor is 5%, for an institutional foreign investor is 15%, and for a strategic foreign investor

is 20%.

10


A shareholder holding 5% of the total shareholding in a company or more is considered as a major shareholder.

A major shareholder directly or through its custodian bank or appointed representative must report to the

HSX/HNX when it becomes a major shareholder and must also declare/announce in the daily Stock Exchange

Bulletin for certain transactions.

2. SETTLEMENT AND TAX RULES

2.1 Settlement Procedure

Vietnam is a pre-funding market. Only transactions against payment are allowed. For offshore funds, both stock and

cash are kept at custodian bank.

Securities Type Settlement period

Stocks and fund certificates T+2

Bonds T+1

For Equity

o On trade date (T date), after trading session closure at 15:00, the HOSE/HNX processes all trades and

completes data feeding to the VSD. Depository members receive VSD’s transaction report via VSD system

in the afternoon of T date. Upon pre-matching of broker trade confirmations against VSD transaction

report, custodians capture such deals into their own systems.

o No later than 16:00 p.m. T+1, custodian bank, based on VSD’s notification of cash payable/receivable

(netting), transfers respective funds required to the designated bank. It is treated as a violation of VSD’s

KOP if fund is transferred after 16:00 T+2.

o For equity purchase trades (RVP), the client is required to give trade instructions on T date and settlement

instruction on T+1 14:30 p.m. to enable matching or rectification purposes (if any) before T+2 8:30 a.m.

per VSD’s key operating procedures (KOP). By law, as mentioned above, the client is required to fund his

cash accounts at least one day before T date. By end of T date, his account is blocked with value date T+2

upon receipt of the broker’s deal-done confirmation and the VSD’s reconfirmation.

For Bonds

o On T date after trading session closure at 15:00, the HOSE/HNX processes all trades and completes data

feeding to the VSD.

o Depository members receive VSD’s transaction report via VSD system in the afternoon of T date. Upon

pre-matching of broker trade confirmations against VSD transaction report, custodians capture such deals

into their own systems.

o No later than 11:00 a.m. T+1, custodian bank, based on VSD’s notification of cash payable/receivable

(netting), transfers respective funds required to the designated bank. It is a violation of VSD’s KOP if fund

is transferred after 11:00 a.m. T+1.

o The client is required to give settlement instructions on T date by no later than 16:00 a.m. to enable

matching or rectification purpose (if any) to VSD by no later than 8:30 a.m. T+1 per VSD’s KOP.

Pre-Matching

11


o The executed trade report made by the VSD will be downloaded from the VSD’s system by the depository

members around 15:30-16:00 on T date. For trades that are mis-matched or un-matched, the broker will

notify the custodian bank and investors immediately. The broker will have to send a trade rectification

notification, in which custodian bank affirms correct transaction details, to the VSD by no later than 8:30 a.m.

on T+2 for equities, and on T+1 for bonds. For trades that are matched, no notification or affirmation from

the depository members to the VSD is required.

2.2 Tax Regulations

Withholding Tax (WHT)

WHT Duties and Tax

Equity dividends Exempt for non-resident institutional investors

Bond interest 5% on coupon received on pay date for non-resident institutional

investors

Sales Transaction Tax

o Non-resident institutional investors are levied a flat tax rate of 0.1% on sale proceeds from selling

listed/registered public company’s shares and certificates and bonds.

Capital Gain Tax

o In case of selling unlisted/non-registered public company’s equity, securities, non-resident institutional

investors are required to pay 25% on taxable income (i.e. selling price – purchasing price – Transaction

related costs). The issuing company is responsible to withhold and declare capital gain tax on behalf of the

investors.

Value added Tax (VAT)

o Custody and brokerage services are exempt from VAT.

Depository Fees

Services Fee

Depository for stocks preparing to be listed but not yet deposited at

the Vietnam Securities Depository Free

Custody Fee for stocks and fund certificates VND 0.3/ share/ month

Custody Fee for bonds VND 0.2/ share/ month

Transfer depository to terminate accounts (for each ticker) VND 0.5 / share (max VND 500,000)

3. OTHER PROCEDURES FOR LOCAL CUSTODY

12


3.1 Transferring Foreign Currency or VND to the IICA

For incoming and outgoing funds from the IICA for indirect investment activities of foreign investors, the authorized

bank is required to check supporting documents in relation to the transactions. The supporting documents may

include: the client’s incoming remittance instructions, FX conversion instructions, dividend payment receipts,

securities sales proceed advice, settlement instructions, investment contracts/agreements.

Dividend/interest income and capital gains can be freely repatriated with the provision of supporting documents

proving that the money had been remitted to and invested in the Vietnamese market and evidence/clearance from

the tax office that all tax obligations have been fulfilled.

The local custodian bank normally offers FX facilities through its dealing department, where foreign currency versus

VND deals and vice versa can be executed on every business day from 8.00 AM to 3.30 PM.

Under Circular 05, foreign investors are no longer allowed to use balances in the indirect investment capital account

(“IICA”) for placing VND term deposits and saving deposits with banks. Payment of interest on IICA balances is not

compulsory but can be agreed with the local custodian bank on a case to case basis and is subject to market conditions.

All fund transfers must be transacted in accordance with Vietnamese anti-money laundering laws. Investors are

responsible for the legality of the funds transferred into Vietnam for the purpose of trading securities.

3.2 Withdrawal or outbound transfer of funds

There are no restrictions on the repatriation of funds by foreign investors as long as the investor has complied with

all current tax laws and regulations.

The use of IICA is restricted to invest in indirect investment, to do FX for repatriation, and to pay legalized fees for

services incurred in Vietnam only.

13


Our Contact

Mirae Asset Securities (Vietnam) JSC

Address: 7th Floor, Le Meridien Building, 3C Ton Duc Thang, Ben Nghe Ward, District 1, Ho Chi Minh city, Vietnam

Tel: (+84) 28 3911 0016

Fax: (+84) 28 3910 7222

Email:

[email protected] (Trading, Order Placement)

[email protected] (Sales service, Account opening support, and all non-trading related matters)

14903608 is our Bloomberg UUID

MASVN TRADER is our name on BBG

Alex Wholesale Director Phone: +84 28 3911 0016 Email: [email protected]

Steven Brown Head of Institutional Clients Phone: +84 28 3911 2222 (#388) Mobile: +84 938 056 725 Email: [email protected]

Thien Dinh (“Peter”) Sales Manager Phone: +84 28 3910 2222 (#115) Email: [email protected]

Loan Huynh (“Loan”) Head of Trading Phone: +84 28 3910 2222 (#105) Email: [email protected]

Thang Nguyen (“Thang”) Senior Trader Phone: +84 28 3910 2222 (#170) Email: [email protected]

My Nguyen (“My”) Trader Phone: +84 28 3910 2222 (#178) Email: [email protected]

Anh Kim (“Anh”) Trader Phone: +84 28 3910 2222 (#183) Email: [email protected]

Thu Tran (“Thu”) Trader Phone: +84 28 3910 2222 (#202) Email: [email protected]

Tuan Vu (“Tuan”) Trader Phone: +84 28 3910 2222 (#286) Email: [email protected]

Tai Dong (“Tai”) Analyst Phone: +84 28 3910 2222 (#196) Email: [email protected]

Minh Truong (“Minh”) Sales Manager Phone: +84 24 7309 3968 (#820) Email: [email protected]

Khoa Nguyen (“Khoa”) Trader Phone: +84 24 7309 3968 (#813) Email: [email protected]

Nguyet Nguyen (”Nguyet”) Trader Phone: +84 24 7309 3968 (#800) Email: [email protected]



GUIDE TO SECURITIES TRADING IN VIETNAM International ...

Documents

Transcript of GUIDE TO SECURITIES TRADING IN VIETNAM International ...