Amending regulations on investor identification and business processes
The Ministry of Finance and the State Securities Commission (SSC) are finalizing the draft Circular amending and supplementing a number of articles of Circular No. 119/2020/TT-BTC and Circular No. 96/2020/TT-BTC, which have been amended under Circular No. 68/2024/TT-BTC. These adjustments aim to ensure that registration, storage, clearing and payment of securities transactions take place smoothly, in accordance with the features of the KRX system, while meeting the criteria for market upgrading.
According to the State Securities Commission, the draft is being developed in a shortened procedure to be promptly issued before the KRX system officially operates from the beginning of May. The new system is expected to improve market efficiency with many more modern features compared to the current system.
One of the important changes is the regulation on information to identify stock owners. On the current system, this information includes ownership registration number, issuance date and type of document. Meanwhile, the KRX system identifies investors with a 15- character identification number (SID), automatically created based on ownership registration information and investor type.
Therefore, the draft Circular supplements new definitions to unify the identification of investors in the whole system, serving the handling of registration and depository. At the same time, instead of using both paper and electronic methods today, the KRX system is completely handled through electronics. Therefore, the draft also clearly stipulates the sending of electronic documents and the principle of processing records between members and VSDC.
Regarding odd stock allocation, retail stocks will be returned to the right account. However, the KRX system will allocate odd stocks to the unpaid account of the investor at the issuing organization in case the investor has many accounts that own that stock code. The draft circular will amend the regulations to suit this change.
Rights transfer activities are also adjusted. The current system allows transfer of rights between accounts of the same investor even if the shares have been sold. However, with the KRX system, the transfer of rights is only done when there are still principal securities. The draft will amend this content to synchronize the system and operating practices.
Update payment regulations, add support tools to handle underpaid transactions
The KRX system applies many changes in clearing and settlement activities. Do not allow defer or cancel payments of under-money transactions on the day of T+2, and at the same time allow loans and securities loans according to the order matching mechanism to support payment. The system also automatically eliminates payments in case of lack of information and divides the market area according to VSDC member groups.
The draft will amend the explanation of the concept of "market sector" to include, adding Chapter I Va to guide clearing and payment activities that do not apply the CCP mechanism but are still compatible with the KRX system. The draft also updates regulations on Non-Prefunding transactions for foreign investors to avoid differences with Circular 68/2024/TT-BTC.
Notably, the draft amended regulations on use of payment support funds. Instead of supporting according to the limit as before, VSDC will be allowed to support the entire missing part at the payment date. The processing will be in the order: using the contribution of the member's insolvency, the bank's payment of payment, and then the contribution of other members. In order to limit risks, VSDC is entitled to blockade and sell mission securities of violating members and request the bank to pay the recall transfer to the support fund.
The draft also increased sanctions for violation such as suspending transaction activities in case members failed to return the fund on time. The completion of the circular is expected to ensure the operation of the stock market synchronously with the modern technological system, supporting the goal of raising the market in the near future.
According to the announcement of the Ho Chi Minh City Stock Exchange (HoSE), the KRX information technology system is expected to officially operate from May 5, 2025. This is an important step to modernize market infrastructure and prepare for new transaction features.
