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Draft circular proposes shift to intra-day trade
The State Securities Commission on Thursday introduced a draft circular to replace an older one on the guidelines of securities trading to collect opinions from market participants.
One of the most important proposals in the draft circular is that investors would be allowed to buy and sell shares in a single company on the same trading day, applicable to the continuous order matching session and shares in the VN30 and HNX30 baskets.
VN30 and HNX30 track the top 30 shares by market value and liquidity on the HCM Stock Exchange and Ha Noi Stock Exchange.
The current Circular 74/2011/TT-BTC, dated June 1, 2011, stipulates investors must use one account for buy/sell orders on a single share listing, but these orders must not be made simultaneously in a matching session.
The draft circular would remove the one-account regulation but would require these trades to be made in the continuous matching session. These trades are also not applicable to odd-lot sales and negotiated transactions.
Eligible shares for intra-day trading include stocks in the VN30 and HNX30 baskets and fund certificates on the stock exchanges.
Under the draft regulation, the number of securities placed for sale must not be higher than that of securities bought, including shares available in the investor's account, shares pending arrival in the account and shares purchased on the same day.
Strict conditions
The total value of buys or sells on the trading day for each investor must not surpass the amount specified by the securities company.
In addition, the draft circular also stipulates strict conditions for securities brokers who are permitted to provide intra-day trading services.
Following implementation of the circular, the securities company must have equity capital or charter capital of VND800 billion (US$36.7 million); full appropriate reserves to hedge share declines; and a working capital ratio of at least 220 per cent in the last 12 months and must not have incurred losses in the previous two years.
These companies must also not have undergone any process related to mergers, consolidation or dissolution or have been placed under control, special control status or suspension by a competent authority.
Apart from the regulations related to intra-day trading, the draft circular also forbids issuers from disclosing information on transactions related to their share buy-backs or share sales where the shares do not perform within the registered period or have been traded at prices beyond the permitted trading bands.
At the same time, the new regulation prohibits issuers from revealing the expected buying/selling prices when making these trades.
On the same day, the State Securities Commission also posted a new draft regulation that will shorten the payment period from three days (T+3) to two days (T+2) for public opinion collection.
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