Financial Management topic for Vietnam Market Exchanges

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Information dissemination
procedures and settlement
procedures of Viet nam
Market Exchanges
Tutor: Mr. Nghiem Minh
Tut 2-K08 late
Presentors: Nguyen Thi Loan
Nguyen Thuy Linh
Nguyen Dieu Huyen
Cao Thi Bang
Pham Khuong Duy
Pham Thi Phuong

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Contents

General disseminating information

Dissemination procedures
Settlement procedures

Information transparency
Conclusion

www.themegallery.com

General disseminating information
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Entities required to disclose information
Issuing organizations
Listed organizations
Fund management companies
Securities companies
Securities Trading Centers (STC) or the Stock Exchange (SE).
Requirements
Completed, timely and accurate
Implemented by the general director or by an authorized
information disclosure staff member
 Reported to the State Securities Commission (SSC), STC or SE
 Means: Mass media
 Save and storage


Disseminating Information

Types
Periodical

Required

Extraordinary


 Periodical information
 Means: websites. Mass media
 Annual financial statement and financial report:
- Within 10 days after finishing
 Semi-annual financial statement:
- Within 5 days after completing financial statement.
 Included information:
- Report on result of production and business operations
- Report of cash flow: receipt of capital or contribution of capital


 Extraordinary information
 within 24 hours
-From the occurrence of any emergencies
-Bank account suspended
- Certificate of business registration (CBR) revoked
- Terminate operation.
 Within 72 hours
- Make loans or issue bonds worth of 30% paid in capital
-BOD’s decision of changes in operation strategies, companies’
charter, accounting methods...
- Announcement of Court of Justice to open bankruptcy
procedure.


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Required information
Requested by SSC, STC, or SE
Time: disseminating during 24h or 72h
Means: websites, public medium...
Contents:
- Information related to transparency
- Rumors affected price and quantity of securities


Sensitive vs Insensitive information
 Sensitive information:
 Plays important role in the Stock market.
 Has powerful and indirect influence on investers’ spychology and
stock price.
 Insensitive information
 Financial statements and periodical reports about business activities
 Unlikely lead to substantial changes in market


Trading halt
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Trading halt:
Temporary stoppage of trading
Time: usually 30 minutes
Two types of trading halt:
Regulatory halt: pending news
Nonregulatory halt: occur on exchanges.
Benefits: gives all investors opportunity to evaluate news and make
buy, sell or hold decisions


Clearing process

Trade confirmation
Clearing
Settlement and
stock transfers


- Agreement by
two parties to
settle contracts at
net value
- Applied to
transactions in
HNX

Multilateral netting

- Transaction
without
intermediaries
- Applied to
transactions in
HNX

Bilateral netting

Direct netting

Clearing process

- More than two

parties, using a
clearing-house or
central exchange
- Applied to
transactions in
HNX & HOSE



 The final stage of securities transaction
 Settlement : the actual exchange of money and securities between parties
on a settlement date, mostly done electronically.
 Followed principles:
 Stock settlement : performed by Vietnam Securities Depository.
 Cash settlement : performed by settlement banks.
 The “Delivery Versus Payment” : stocks transfers at VSD and cash transfers
at the settlement banks shall be exact and simultaneous


 Payment period
 The payment period is determined by the settlement cycle :
T+1, T+2,T+3.
 T: the day of trading
 1,2,3: the number of trading days counted from T day


Trading types
(shares and funds
certificate)

Settlement methods

Settlement cycles

Order matching

under
100,000
stocks

Multilateral netting

T+3

HOSE

Direct netting

T+1

Multilateral
netting

T+3

Bilateral netting

T+2

Direct netting

From T+1 to T+3

Negotiation
over 100,000
stocks

HNX
(optional)


Why T+3 ?
Reason:
- Recommend by G-30
- Lack of technology at securities companies
- Human resources : polite and enthusiastic but very slow


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Advantages of T+3
Avoid potential errors during stock trading sessions
Stabilize the stock market in the long-run
Put stock market’s activities under the control

 Disadvantages of T+3
 Increase the risk of losing investment opportunities for investors
 Reduce the liquidity of Vietnam stock market


Information Transparency

Macro

Business entities

Title

Market information


Information Transparency

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Macro:
Publicity porfolio
Security leak
Business entities
From Listed companies
Insider trading
Conflicts of interest in the Securities companies
Market information
Rumors

lack of information transparency


Transparency information

 Right of accessing information by investors
 Improving the transfer of information fastest
 Legislated obligations to disclose information
both from the government and business.


Vien Dong Pharmaceutical Joint Stock Co.
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22/12/2009, DVD shares officially listed on HOSE
Events in 2010:
22/6/2010, purchase 26.68% of DHT shares without open bid
20/5-29/6, DVD held 1/3 of DHT shares
Price of DHT increased 60-100,000 VND in 5 weeks
20/8, 4 big shareholders sold stimutaneously 46.7% of DHT
shares
- Provide untrue transparency information
- Stock price manipulation:
False demand and luring investors into DHT
shares at high prices


References
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Ministry of Finance 2004, Circular-Providing guidance on information
disclosure on the securities market, Circular 57/2004/TT-BTC, Ministry of
finance, Vietnam
disclosure on the securities market, Circular 38/2007/TT-BTC, Ministry of
finance, Vietnam
disclosure on the securities market, Circular 87/2007/QĐ-BTC, Ministry of
finance, Vietnam
http://www.vsd.vn/p7c32/quyet-dinh.htm
http://www.sbsc.com.vn
http://news.vneconomy.vn/20091002112452873P0C2/how-many-daysto-pay.htm
http://www.saigonmoney.com/2010/12/08/stock-price-manipulationtackled/
www.businessdictionary.com
http://www.sec.gov/answers/tradinghalt.htm

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Financial Management topic for Vietnam Market Exchanges

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