The Ministry of Finance yesterday promulgated Circular 68/2024/TT-BTC (referred to as Circular 68), which revises and enhances several provisions of existing circulars concerning securities trading on the securities trading system, the clearing and settlement of securities transactions, the operations of securities firms, and the disclosure of information in the stock market.
Notably, Circular 68 has added regulations on stock purchase transactions, requiring foreign investors who are organizations to have sufficient funds when placing orders.
Specifically, Circular 68 has added Article 9a after Article 9 of Circular 120/2020/TT-BTC regulating that stock purchase transactions do not require sufficient funds when placing orders by foreign investors in the stock market who are organizations. This amendment allows foreign investors who are organizations to place orders for stock purchases without having to ensure they have sufficient funds at the time of placing the order.
According to the new circular, securities companies where the foreign institutional investor places orders through its proprietary trading account will be responsible for ensuring that the necessary funds are available for the transaction. This helps to protect the integrity of the market and ensures that all transactions are properly funded.
Additionally, Circular 68 specifies that the custodian bank must ensure that the foreign investor has sufficient funds in their account to cover the purchase of stocks before executing the transaction.
This move will pave the way for removing bottlenecks as Vietnam remains on the watch list for a possible reclassification from frontier to secondary emerging market and will be updated to waiting list status for upgrading according to the FTSE Country Classification released recently.
