introductory presentation - financial services agency · introductory presentation chapter 1-...

Introductory Presentation

Chapter 1- Overview of securities market in Vietnam

Vietnam at a glance

- Total Area: 331,230.8 km2

- Population: 92,695,100 (2016 estimate)

- Density: 280 ppl/km2

Source: General Statistics Office (GSO)

Geography

3/4 territory: low mountains and hilly regions.

Long coastline of 3,260 km

Tropical zone:

(1) Northern (from HaiVan Pass): humid tropical monsoon climate with 4seasons;

(2) Southern: moderate tropical with dry and rainy seasons.

Source: MOFA, DOSM under MONRE

People

Multi-ethnic country with 54 ethnic groups

Kinh people account for 86% of the population.

The most populous minorities are Tay, Thai, Muong,

Hoa, Khmer, and Nung

Each ethnicity has its own culture, thus, the

Vietnamese culture is diversified

The most popular custom is ancestor worship

Major religions: Buddhism, Catholicism ...

Source: MOFA

Economy

GDP (nominal, 2017): US$223 billions

GDP per capita (nominal, 2017): US$ 2,385

Source: GSO

Economy

Major sectors (Source: GSO):

Economy

Total investment in the

Economy in 2017

Total: ~USD 73bil.

Equals to 33%GDP

(Source: GSO)

Currency

Currency: VND

(Vietnam Dong)

Banknote samples

Current forex rate:

~22,800VND/1USD

Source: SBV, VCB,

Vietnamnet

Tourism

Total foreign tourists in

2017: 12,922,200

Number of tourist by

regions (in thousand)

Source: GSO

Tourism

Scenery of

Vietnam:

PhongNha Cave

Tourism

Scenery of

Vietnam:

TrangAn (old

capital)

HISTORY :

1993: Capital Market Development Board under the State Bank of Vietnam (SBV) was set up to research and prepare for the establishment of the securities market

1996: Establishment of the SSC as a governmental agency with 08 divisions

1998: Prepared to set up 02 Securities Trading Centers (STCs) in Hanoi (HASTC) and in Ho Chi Minh City (HOSTC)

2000: HOSTC was inaugurated and first trading session

2004: SSC was placed under the management of the Ministry of Finance

2005: HASTC was inaugurated

2006: First Securities Law was promulgated

2017: Derivatives Market started

2018: Proposal to revise Securities Law for next stage of development

Securities Market

Government

Ministry of Finance (MOF)

State Securities Commission (SSC)

Hanoi Stock Exchange (HNX)

Hochiminh City Stock Exchange (HSX or HOSE)

Vietnam Securities Depository (VSD)

SSC

Organization

Government: Approve Long-term Development Strategy, issue Decree

MOF: Approve Annual Plan, issue Circular

SSC: Overall supervision, licensing, inspection and administrative penalty

HSX: List stocks of mostly large companies, investment fund certificates

HNX: List stocks of mostly small and medium companies; organize

trading platform for unlisted public companies (Upcom); auction and

trade government bond; derivatives

VSD: Stock deposit, clearing; CCP for derivatives

SBV: Settlement for Government bonds

BIDV: Settlement for Stocks

Functions

Current situation2000 2017

Capitalization/GDP (%) 0.3 70.2

Number of listed securities 5 2,037

▪ Stocks /Certificates5 1.426 (732 listed, 690 Upcom,

02 ETF, 02 Certificate)

▪ Bonds 0 610 (571 Gov., 39 Corp.)

▪ Derivative - 1 (VN30 Future)

Average traded value per session (mil. USD) 0.06 220

Indirect foreign portfolio value (bil. USD) - 32.9

Number of brokerage firms 7 85

Number of fund management firms 0 46

Number of funds 0 36

Value of managed asset (bil. USD) - 10

Number of investor accounts 2,997 1,921,554 (22,561 foreign)

Current situationMajor Indexes Movement in 2017 (Source: SSC annual report)

Current situation

Percentage in the total market capitalization (Source: SSC annual report)

Current situation

- Policies:

Drafting new Securities Law

Plan to consolidate 2 stock exchanges

Continue measures to upgrade to emerging-market status at MSCI

- Some challenges:

Improve corporate governance

Effective enforcement of laws and regulations

Protect investor

Introductory Presentation

Chapter II- Enforcement

Supervision

MSD

Insider trading

Manipulation

Dept. of Public

Companies

Reporting and

Corporate Governance

of Public Companies

Approved Auditors/Au

diting Companies

Dept. of Brokerage

Firm

Compliance of

Brokers/Brokerage Firms

Dept. of Fund

Management

Compliance of Fund

Managers/Firms

Exchanges

Reporting of listed

companies/ members

Reporting of transaction of

internal person (directors, chief accountant …

and their relatives)

Inspection/Examination

MSD

Examination by case

Insider trading,

Manipulation

Dept. of Public

Companies

Examination periodic/by

case

Public Companies,

Auditing Companies

Dept. of Brokerage

Firm

Examination periodic/by

case

Brokerage Firms

Dept. of Fund

Management

Examination periodic/by

case

Fund Management

Firms

Inspectorate

Inspection and

Examination

Periodic/by case

All

Violation Handling

MSD

Refer to Inspectorate

Dept. of Public

Companies

Refer to Inspectorate

Cease and desist order, disapprove of auditing

Dept. of Brokerage

Firm

Refer to Inspectorate

Cease and desist order, suspend of licensed

operation

Dept. of Fund

Management

Refer to Inspectorate

Cease and desist order, suspend of licensed

operation

Inspectorate

Cease and desist order

Impose administrative

fines

Refer to Police

Violation Handling

04 securities violation considered crimes (Criminal Code of 2015)

(1) Provision of false information or concealment of information in securities activities:

Any person who deliberately provides false information or conceals information in offering, listing, trading securities, market organization, registration, depositing, clearing, or paying for securities in any of the following cases:

a) The loss incurred by investors is from VND 1bil (US$45,000);

b) b) The illegal profit is from VND 500mil (US$22,500);

c) c) The offender previously incurred a civil penalty for the same offence.

Violation Handling

04 securities violation considered crimes (Criminal Code of 2015)

(2) Use of inside information for trading securities:

Any person who has information about a public company or public fund which has not been published and could remarkably affect securities price of that public company or public fund but and uses such information to deal in securities or discloses it or provides it for another person for trading securities and:

- earns an illegal profit of from VND 300 mil.(US$14,000)

- or causes a loss to investors of from VND 500mil (US$22,500)

Violation Handling

04 securities violation considered crimes (Criminal

Code of 2015)

(3) Manipulation of securities market

A person who deliberately commits any of the (manipulating)

acts and: earns a profit of from VND 500mil (US$22,500) or

causes a loss to investors of from VND 1bil. (US$ 45,000)

(4) Forging documents in offering or listing profile

A person who forges documents of the offering or listing profile

and: earns a profit of from VND 1bil.(US$45,000) or causes a

loss to investors from VND 1bil.(US$45,000)

Punitive Measures

Administrative sanction:

- Main sanction: warning (lesser violation), money fines up to VND 2bil (US$90,000) for companies and VND 1bil (US$45,000) for individuals; suspension of licensed operation (representative office of brokerage firms, fund management firms) or licensed practioners, up to 24 months.

- Additional sanction: suspension of licensed operation (listing, business, tender offer…), up to 24 months; confiscation of violating instruments

- Remedy: forced to make remedy measures (disclosure correction, withdraw the issued share and refund the buyer…)

Punitive Measures

Administrative sanction:

2014 2015 2016 2017

Public, Listed Companies 50 44 56 122

Manipulation, Insider trading 2 4 6 7

Major shareholder, internal

share holders

33 60 51 199

Brokerage, Fund Firms 33 29 14 21

Others 3 13

Total 121 150 133 349

Punitive Measures

Criminal sanction:

Individual:

- Imprisonment up to 7 years;

- Fined of money up to VND5 Bil.

- Prohibited from taking certain profession, position

Starting from Jan. 1st 2018: criminal sanction on legal

entity for crimes from (1) to (3).

Challenges for enforcement

- Lacks the power to effectively collect evidence,

proof

- Challenges in cases involving cross-border

violation (committed by foreigners or foreign

entities)

- Connection between the brokers and violators in

market manipulation cases

Current situation

Proposing changes in Securities Law to address those issues:

- Enhance the power of SSC: powers to collect information, evidence from 3rd parties, banking account, personal statement/declaration when conducting inspection, examination

- Authority in sharing and conducting investigative/inspective request from other Regulators within MMoU, thus could request cooperation of other Regulators in cross-border inspection

- Require securities firms/brokers to supervise and report suspected transactions

Those presented above are of my specific interest.

Looking toward learning more from JFSA, and all

other participants.

THANK YOU VERY MUCH!

Thank you