Company Managing a derivatives trading fund but the equity is not enough 25 billion VND will be terminated, right?

To trade in derivatives, a fund management company must have equity capital of 25 billion VND?

Conditions for a fund management company to trade in derivatives are specified in Clause 3, Article 4 of the Decree 158/2020/ND-CP as follows:

Conditions for being granted a Certificate of eligibility for derivatives trading

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3. Conditions to be granted a Certificate of eligibility to trade derivative securities for a fund management company include:

a) Having charter capital, with minimum equity of 25 billion VND or more;

b) Director (General Director), Deputy Director (Deputy General Director) in charge of operations and at least 05 employees for derivative securities investment consulting activities with securities practice certificate and professional certificate in derivative securities and derivative securities market;

c) Meets the provisions of points dd, e, g, h, clause 2 of this Article.

Accordingly, to be granted a Certificate of eligibility for derivatives trading, the fund management company must meet the conditions specified in Clause 3, Article 4 above.

It must have charter capital or minimum equity of 25 billion VND or more.

A fund management company that trades derivative securities but the equity capital is no longer 25 billion VND will be terminated?

In cases where the fund management company is suspended from trading derivative securities, it is specified in Clause 1, Article 6 of Decree 158/2020/ND-CP as follows: following:

Suspension and restoration of derivatives trading activities

1. The State Securities Commission has a decision to suspend for a maximum of 12 months one or several derivatives trading activities of a derivatives trading organization in the following cases:

a) The securities company does not meet one or more of the provisions in Points b, c, d, dd, Clause 2, Article 4 of this Decree for 06 consecutive months; The fund management company does not meet one or more of the provisions in Point dd, Clause 2, Points a, b, Clause 3, Article 4 of this Decree for 06 consecutive months;

b) Suspended or temporarily suspended operations according to the provisions of law.

According to the above regulations, in case a fund management company trades derivative securities but its equity is no longer 25 billion VND for 6 consecutive months, its operations may be suspended for a maximum of 12 months.

After this period of suspension of operations, if the fund management company still cannot fix the problem, the company may be forced to terminate its derivatives trading activities according to the provisions of Point a, Clause 1, Article 8 of Decree 158/2020/ND-CP as follows:

Compulsory termination of derivatives trading activities

1. Derivatives trading organizations are forced to terminate derivatives trading activities in the following cases:

a) After the period of suspension of derivatives trading activities, violations still cannot be remedied leading to suspension of operations;

b) Dissolution, bankruptcy, temporary suspension of operations or revocation of establishment and operation license; is divided, separated, consolidated or merged, but the organization formed after the division, separation, consolidation or merger does not meet one of the business conditions specified in Clauses 2 and 3, Article 4 of this Decree.

When suspended from derivatives trading activities, does the fund management company have to disclose information?

Disclosure of information when suspended from securities trading activities Derivatives are regulated in Clause 2, Article 6 of Decree 158/2020/ND-CP as follows:

Suspension and restoration of derivative securities business activities

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2. From the date of receiving the document from the State Securities Commission on the suspension of derivatives trading activities:

a) Within 24 hours, the derivatives trading organization is responsible for disclosing information about the suspension of derivatives trading activities;

b) Within 05 working days, derivative securities trading organizations must disclose information about the plan, time limit and roadmap for processing valid contracts and send a notice to each of its customers about the plan for handling contracts with customers. The processing time must ensure that customers have at least 45 days to process positions and transfer margin assets, but must not exceed 60 days from the date of information disclosure.

Thus, upon receiving a document from the State Securities Commission on suspension of derivatives trading activities, the fund management company must publish information about the suspension of this activity within 24 hours.