Intraday trading, short selling soon available: draft circular

Thursday, Aug 27, 2020 08:08

The view of Noi Bai International Airport in Ha Noi. The airport is run by the Airports Corporation of Vietnam, which is trading shares on the Unlisted Public Company Market (UPCoM) as ACV. — Photo

Investors may be able to buy and sell shares within the day if the securities firm is allowed to balance the shortage of securities to settle the transactions, according to the Ministry of Finance.

Investors must sign a contract with their securities companies and the contract should clarify the risks, expenses and losses that investors must pay for, the ministry said in a draft circular to guide the securities market trading.

Each of investors can only open one intraday trading account at the same securities firm where they have the main trading accounts.

The intraday trading account must be separated from the main account or it should sub for the main account. The securities firm is obliged to split an investor’s main account, intraday trading account and depository account (if any) from one another.

The list of stocks available for intraday trading will be picked by the securities company and those stocks should be the ones available for margin lending at the stock exchanges.

The brokerage must post the list of stocks available for intraday trading on its website.

Within the trading day, if the total quantity of stocks bought by the investor outclasses the quantity of stocks offered for sale or vice versa, the brokerage house is obliged to balance the cash or the stock difference when the transactions are settled.

On the other hand, investors are required to pay all expenses to the securities firm for its support to settle the transactions. In return, the brokerage may ask the investors to deposit collaterals for their transactions in cash or securities.

The total value of all intraday trading deals at each securities firm cannot exceed a specific rate compared to its equity capital. The figure cannot beat the rate compared to the firm’s daily average trading value made in the previous month. The rates will be regulated by the State Securities Commission (SSC).

The SSC is also empowered to halt the intraday trading session to settle the market amid potential turbulence.

In addition, investors are able to short-sell if they open short accounts at the eligible brokerages where their main trading accounts are managed. The short account is a sub to the main account or it should be a separate account.

Under the draft circular, stocks traded on the Unlisted Public Company Market (UPCoM) may be available for margin lending.

According to Bao Viet Securities Co (BVSC), the regulations on intraday trading and short selling may give the market a boost if the circular gets approved as the two methods will attract more investors and increase the market trading liquidity.

The company also said that the two tools will help Viet Nam meet the standards set by the two international finance firms FTSE and MSCI, improving its chance to be upgraded to the emerging market level and draw more foreign capital. — VNS

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