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

www.themegallery.com

Contents

Conclusion

Information transparency

Settlement procedures

Dissemination procedures

General disseminating information


General disseminating information

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 RequiredPeriodical

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.



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

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


Clearing processD

irect

net

ting - Transaction

without intermediaries

- Applied to transactions in HNX

Bila

tera

l net

ting - Agreement by

two parties to settle contracts at net value

- Applied to transactions in HNX

Mul

tilat

eral

net

ting - More than two

parties, using a clearing-house or central exchange

- Applied to transactions in HNX & HOSE

3 types



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

General information



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


Settlement proceduresTrading types(shares and funds certificate) Settlement methods Settlement cycles

Order matching

Multilateral netting T+3

Negotiation

under 100,000 stocks

over 100,000 stocks

HOSE Direct netting T+1

HNX (optional)

Multilateral netting

T+3

Bilateral netting T+2

Direct netting From T+1 to T+3



Why T+3 ?

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



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

3 levels

Title Business entities

Macro

Market information


Information Transparency

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

Problems


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.

Suggested solutions


Vien Dong Pharmaceutical Joint Stock Co.

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

Ministry of Finance 2004, Circular-Providing guidance on information disclosure on the securities market, Circular 57/2004/TT-BTC, Ministry of finance, Vietnam

Ministry of Finance 2007, Circular-Providing guidance on information disclosure on the securities market, Circular 38/2007/TT-BTC, Ministry of finance, Vietnam

Ministry of Finance 2007, Circular-Providing guidance on information 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-days-t

o-pay.htm http://www.saigonmoney.com/2010/12/08/stock-price-manipulation-

tackled/ www.businessdictionary.com http://www.sec.gov/answers/tradinghalt.htm

http://www.vsd.vn/p7c32/quyet-dinh.htm

http://www.sbsc.com.vn/

http://news.vneconomy.vn/20091002112452873P0C2/how-many-days-to-pay.htm

http://news.vneconomy.vn/20091002112452873P0C2/how-many-days-to-pay.htm

http://www.businessdictionary.com/

http://www.sec.gov/answers/tradinghalt.htm

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Financial Management topic for Vietnam Market Exchanges