Introductory Presentation. Chapter 1- Overview of securities market in Vietnam

Transcription

1 Introductory Presentation Chapter 1- Overview of securities market in Vietnam

2 Vietnam at a glance - Total Area: 331,230.8 km 2 - Population: 92,695,100 (2016 estimate) - Density: 280 ppl/km 2 Source: General Statistics Office (GSO)

3 Geography 3/4 territory: low mountains and hilly regions. Long coastline of 3,260 km Tropical zone: (1) Northern (from Hai Van Pass): humid tropical monsoon climate with 4 seasons; (2) Southern: moderate tropical with dry and rainy seasons. Source: MOFA, DOSM under MONRE

4 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

5 Economy GDP (nominal, 2017): US$223 billions GDP per capita (nominal, 2017): US$ 2,385 Source: GSO

6 Economy Major sectors (Source: GSO):

7 Economy Total investment in the Economy in 2017 Total: ~USD 73bil. Equals to 33%GDP (Source: GSO)

8 Currency Currency: VND (Vietnam Dong) Banknote samples Current forex rate: ~22,800VND/1USD Source: SBV, VCB, Vietnamnet

9 Tourism Total foreign tourists in 2017: 12,922,200 Number of tourist by regions (in thousand) Source: GSO

10 Tourism Scenery of Vietnam: PhongNha Cave

11 Tourism Scenery of Vietnam: TrangAn (old capital)

12 Securities Market 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

13 Government Ministry of Finance (MOF) State Securities Commission (SSC) Vietnam Securities Depository (VSD) Hanoi Stock Exchange (HNX) Hochiminh City Stock Exchange (HSX or HOSE)

14 SSC Organization

15 Functions 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

16 Current situation Capitalization/GDP (%) Number of listed securities 5 2,037 Stocks /Certificates (732 listed, 690 Upcom, 02 ETF, 02 Certificate) Bonds (571 Gov., 39 Corp.) Derivative - 1 (VN30 Future) Average traded value per session (mil. USD) Indirect foreign portfolio value (bil. USD) 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)

17 Current situation Major Indexes Movement in 2017 (Source: SSC annual report)

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

19 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

20 Introductory Presentation Chapter II- Enforcement

21 Supervision MSD Dept. of Public Companies Dept. of Brokerage Firm Dept. of Fund Management Exchanges Insider trading Manipulation Reporting and Corporate Governance of Public Companies Approved Auditors/Au diting Companies Compliance of Brokers/Bro kerage Firms Compliance of Fund Managers/Fir ms Reporting of listed companies/ members Reporting of transaction of internal person (directors, chief accountant and their relatives)

22 Inspection/Examination MSD Dept. of Public Companies Dept. of Brokerage Firm Dept. of Fund Management Inspectorate Examination by case Examination periodic/by case Examination periodic/by case Examination periodic/by case Inspection and Examination Periodic/by case Insider trading, Manipulation Public Companies, Auditing Companies Brokerage Firms Fund Management Firms All

23 Violation Handling MSD Dept. of Public Companies Dept. of Brokerage Firm Dept. of Fund Management Inspectorate Refer to Inspectorate Refer to Inspectorate Refer to Inspectorate Refer to Inspectorate Cease and desist order Impose administrative fines Cease and desist order, disapprove of auditing Cease and desist order, suspend of licensed operation Cease and desist order, suspend of licensed operation Refer to Police

24 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.

25 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)

26 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)

27 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 )

28 Punitive Measures Administrative sanction: Public, Listed Companies Manipulation, Insider trading Major shareholder, internal share holders Brokerage, Fund Firms Others 3 13 Total

29 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. 1 st 2018: criminal sanction on legal entity for crimes from (1) to (3).

30 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

31 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

32 Those presented above are of my specific interest. Looking toward learning more from JFSA, and all other participants. THANK YOU VERY MUCH!

33 Thank you