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The Ministry of Finance has issued Circular No. 68/2024/TT-BTC, which introduces significant amendments to securities transaction regulations, particularly affecting foreign institutional investors. The new circular, effective from November 2, 2024, modifies several existing regulations regarding securities trading, clearing, and payment procedures.
Key Changes for Foreign Institutional Investors
A notable amendment introduced through Clause 1, Article 1 of the circular is the supplement of Article 9a Circular No. 120/2020/TT-BTC, which establishes new provisions for foreign institutional investors’ stock purchase transactions with exempted fund requirements.
Risk Assessment and Payment Requirements
Securities companies are now required to conduct thorough evaluations of payment risks associated with foreign institutional investors before determining the necessary funds for stock purchase orders. This assessment helps maintain market stability while providing more flexibility for institutional investors.
Settlement Obligations
The circular introduces clear guidelines for handling cases of payment defaults:
- When foreign institutional investors fail to complete full payment for stock purchases, the settlement obligation automatically transfers to the securities companies where the orders were placed, using their proprietary trading accounts.
- Depository banks managing securities depository accounts for foreign institutional investors become responsible for the following:
- Settling unpaid transactions
- Covering any additional expenses that may arise
- Taking responsibility in cases where incorrect confirmation of deposit balances leads to insufficient funds
Transfer and Sale Provisions
Securities companies have been granted specific rights to handle unpaid transactions:
- They may transfer ownership outside the securities trading system
- They can sell stocks through put-through trading within the system to foreign individual organizations
- These actions must be completed by the trading date immediately before the stocks are recorded in the securities companies’ proprietary trading accounts
- All transactions must comply with legal limits on foreign investor holding rates
This new regulation aims to enhance market efficiency while maintaining proper risk management in securities transactions involving foreign institutional investors.
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