Conditions to be granted a derivative securities trading certificate? Does a securities company need to meet personnel requirements? This article shares in detail the legal regulations surrounding the conditions for being granted a derivative securities business certificate according to current legal regulations. 

CSPL: Article 4,5 Decree 158/2020/ND-CP

1. Does a securities company need to meet personnel conditions to be granted a derivative securities business certificate?

According to the provisions of Article 4 of Decree 158/2020/ND-CP, to be granted a certificate of eligibility for derivatives trading, the following conditions must be met:

Article 4. Conditions for issuance of Certificate of eligibility for derivatives trading

1. Securities companies and securities investment fund management companies (hereinafter referred to as fund management companies) may only conduct derivatives trading after being granted a Certificate of eligibility for derivatives trading by the State Securities Commission:

a) Securities companies are allowed to carry out one or several or all derivative securities business activities, including: derivative securities brokerage, derivative securities self-trading, derivative securities investment consulting;

b) Fund management companies are only allowed to conduct derivative securities investment consulting activities.

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

a) Fully licensed for securities trading operations;

b) Meet the conditions for charter capital and equity as follows:

– For derivative securities brokerage activities: have charter capital and minimum equity of VND 800 billion or more;

– For proprietary derivatives trading activities: have charter capital and minimum equity of 600 billion VND or more;

– For derivative securities investment consulting activities: have charter capital and minimum equity of 250 billion VND or more;

– In case of business registration for both derivative securities brokerage activities, derivative securities self-trading and derivative securities investment consulting, the securities company must have charter capital and minimum equity of VND 800 billion or more;

c) Meet requirements on internal control and risk management for securities business activities according to the provisions of law on operations of securities companies;

d) Meet the personnel conditions: Director (General Director), Deputy Director (Deputy General Director) in charge of operations and at least 05 employees for each derivatives business activity expected to be registered must have a securities practice certificate in accordance with the provisions of law and a professional certificate in derivatives and derivatives market;

d) Have a liquid capital ratio of at least 220% continuously for the most recent 12 months; Make full provisions for provisions according to the provisions of law;

e) No losses in the last 02 years;

g) The opinion of the approved auditing organization in the financial statements of the most recent audited fiscal year and the most recent semi-annual financial statements that have been reviewed (in case of applying for a Certificate of eligibility for derivatives trading after June 30) must be fully accepted;

h) Not in the process of reorganization, dissolution or bankruptcy; is not in a state of suspension of operations or temporary suspension of operations according to the decision of a competent authority.

Conclude:Personnel conditions are one of the conditions that must be met to be granted a derivative securities trading certificate. Therefore, businesses need to meet this requirement if they want to receive approval from the State Securities Commission. 

2. Order and procedures for applying for a derivative securities trading certificate

2.1. Application file for a Derivative Securities Trading Certificate

– Application for a Derivative Securities Trading Certificate includes:

+ Application for issuance or adjustment of Certificate of eligibility for derivatives trading;

+ Resolution of the General Meeting of Shareholders, Council of Members or Decision of the owner on conducting derivatives trading;

+ The financial statements of the 02 most recent fiscal years have been audited and the most recent semi-annual financial statements have been reviewed (in case of applying for a Certificate of eligibility for derivatives trading after June 30); Report on financial safety ratio for the most recent 12 months;

+ List of Director (General Director), Deputy Director (Deputy General Director) in charge of operations and employees for each derivatives trading activity with personal profiles of the above individuals. Minimum personal records include: Identity card or citizen identification card or passport, securities business practice certificate, professional certificate in derivatives and derivatives market, labor contract;

+ Internal control process, risk management process for derivatives business activities.

2.2. Procedures for issuance of Certificate of derivatives trading

– Method:

+ Directly;

+ Send by post;

+ Send to the online public service system according to the instructions of the Minister of Finance main.

-Within 05 working days from the date of receiving the dossier, the State Securities Commission shall send a document to the securities company or fund management company requesting amendments and supplements to the dossier (if any).

– Within 15 days from the date of receiving the complete and valid dossier, the State Securities Commission shall issue a Certificate of eligibility to trade derivative securities. In case of refusal, the State Securities Commission must respond in writing and clearly state the reason.

– Within 12 months from the date of issuance of the Certificate of eligibility for derivatives trading, the securities company allowed to operate derivatives brokerage must register as a trading member. In case of failure to register as a trading member, the State Securities Commission shall issue a decision to revoke the Certificate of eligibility for derivatives trading.