SECURITIES COMPANIES

LOGO
 LOGO

A securities company is understood as an intermediary

financial institution established in accordance with the law,
performing one and/or several activities on the stock
market.

Securities Law

Regulations on establishment and operation of securities companies

????
 LOGO
Classification of Securities Companies

By property By business
nature

Partnerships General
Securities
Companies

Co., Ltd. Specialized

securities
companies

JOINT STOCK
COMPANY
 LOGO
Characteristics of the securities company
about transactions

Intermediaries about payments

on the stock about providing information
market
about the capital between
the buyer and the seller

about capital
a conditional
Characteristics business About personnel
of the securities organization.
company Facilities

Subject to strict control

Conflicts of interest
between securities
companies and
customers
 LOGO
The role of the securities company
- Create a mechanism to raise capital for businesses
and the economy.

- Contribute to the stable price of securities in the

market

Contribute to the creation of new products and services

in the market

- Help the market management agency manage and

supervise the activities in the market effectively

- Contribute to reducing transaction costs, reducing

risks and improving investment efficiency for investors
 LOGO
Principles of operation of securities companies

Financial principles

• Ensuring financial resources in securities trading

commitments
• Ensuring capital requirements, capital structure
and accounting and reporting principles in
accordance with law
• The client's money and securities must be separated
from the company's assets.
 LOGO
Principles of operation of securities companies

❖ Principles of professional ethics

❖ Fair and honest trading for the benefit of customers
• The employees of the company must be skilled, dedicated
and responsible.
• Priority is given to executing the client's order before the
company's order
• It is an obligation to keep the customer's information
confidential.
• Do not participate in business activities outside the scope of
licensing
• Failure to conduct activities that may mislead customers and
the public about the price, value and nature of securities or
activities that cause damage to customers.
• There must be a contract with the customer before
performing the service for them.
 LOGO
Activities of securities companies

❖Brokerage activities
❖Self-employed operations
❖Underwriting activities
❖Securities investment consultancy
activities
❖Other activities
 LOGO
Brokerage activities

❖It's a networking activity between those

who need to buy and those who need to
sell securities together.
❖In Vietnam, securities brokerage is the
intermediary of the stock market to buy
and sell securities to customers.
Brokerage fee: - On SGD: percentage of
total transaction value
- Otc: included in the price
 LOGO
Securities Brokerage Process

Screen
customers, Find out the
pick out specific needs Provide
Customer
potential of your services to
search
customers, customers' customers
and find ways investments.
to reach them
 LOGO
Requirements for brokerage activities

❖ The client's orders must be executed correctly.

❖ Periodically send securities reports to customers
❖ It is responsible for organizing, organizing, monitoring
and executing customer orders in the most effective
way
❖ In case the stock exchange borrows securities or
money from the customer to open an account at the
company, it must be clearly stated in the securities
trading contract.
❖ The results of the transaction must be notified to the
customer no later than the next business day on the
date of the transaction.
❖ Must ensure professional confidentiality, not to disclose
customer information
 LOGO
Securities broker's skills

- Communication skills
- Customer search skills
- Information mining skills
 LOGO
Self-employed operations

❖It is the securities company buying and

selling securities with its capital to
benefit, while also taking risks from such
activities.
On the stock exchange: performing similarly to the
buying orders of other investors

On OTC: performed directly with partners through

negotiation and through a networked computer
system
 LOGO

The purpose of self-employment

- Benefit
- Take control
- Fund management
- Take on the role of market maker

Characteristics of self-employed operations

- Large scale of investment
- Qualified staff
 LOGO
Requirements for self-employment

1) There has to be separation.

2) Priority is given to executing the client's order before the
order of the stock market
3) Stabilizing market prices
4) Create a market for newly issued securities

❖ In addition, there are a number of other requirements such

as:
Do not allow others to use the company's self-employed
account.
Do not conduct disguised transactions.
Do not take advantage of the customer's decision
information to buy and sell in advance.
Restricted investment at a certain rate
 LOGO
Self-employed operations process

Exploiting, looking Analysis and

Develop an for investment evaluation of the
investment strategy opportunities quality of investment
opportunities

Investment
management and Making investments
capital recovery
 LOGO
Underwriting activities

❖ an activity in which the securities company will help

the issuer carry out procedures before the offering
of securities, organize the distribution of securities
and help stabilize the price of securities in the early
stages after issuance.
❖ Guarantee complex:
❖ - Main guarantor
❖ - Guarantor member
❖ - Securities distribution agent
 LOGO
Form of guarantee
❖ Guarantees are certain.
❖ Guarantees try maximum
❖ Guarantee all or not
❖ Maximum or minimum guarantee
❖ Redundancy guarantee

Guarantee fee
❖ It is the difference between the purchase price from the
issuer and the selling price to the investor or a
percentage of the total value of the issuance.

❖ In the case of underwriting, the commission usually

consists of three parts: management fees, concession
fees, and guarantee fees.
 LOGO
Underwriting process

Phase 3: After the

Phase 2: Prepare and
Stage 1: before application for
submit your application
accepting the guarantee permission to be
for permission to release
released takes effect
• General appraisal • Prepare your • Release announcement
• General asset analysis application for • Distribution of
permission for release securities
• Apply for permission to • End of release
issue to the Securities
and Exchange
Commission
 LOGO
Securities investment consultancy activities

❖ It is the securities company to determine the characteristics and

conditions of securities, evaluate the stock market, analyze the
financial situation of the issuing company to help investors buy
and sell securities successfully.

❖ Form of consultation:
❖ + Direct consultation
+ Indirect advice
Advice:
+ Income advice
+ Risk advice
+ Liquidity advice
+ Advice on time.
Advising on tax considerations
+ Advising on matters related to legal constraints
 LOGO
Principles of consulting activities
1. There is no guarantee of certainty about the value of the
securities.
2. Always remind clients that their advice is based on analysis.
3. Do not exaggerate about the market, seduce, invite
4. Do not instigate customers to buy/sell securities that the
company wants to sell/buy
5. Advice should be based on objective grounds.
6. Information must be kept confidential for customers.
7. Consulting activities must be completely separate from the self-
employed activities of the securities company
 LOGO
Other activities

❖Corporate financial advisory activities

+ Listing consultancy
+ Consulting on acquisitions and mergers of enterprises
+ Financial restructuring consultancy
+ Release consultancy
+ Consulting to determine the value of the business

+ Consulting on corporate financial analysis

 LOGO
Other activities

❖Securities depository activities

❖Operations of customer ownership
❖Information provision activities
❖Credit activities:
+ Advance payment for sale of securities
+ Buy margins
+ Pledge securities
+ Stock repo
There are also some other activities.
 LOGO
Financial safety assessment
Sufficient level of capital:
- Equity/total assets
- Equity/legal capital
- Available capital ratio = available capital*100/total risk
value
Property quality:
- Ratio of total asset value after adjusting risk/total TS
(excluding fixed assets)
- Provision ratio / (short-term investment + long-term
investment + receivable)
- Ratio of receivables/ total TS
Notes:
Assets after adjusting risks are total assets (excluding fixed
assets) – the total value of potential risks in asset items
 LOGO
Assessing profitability

- Profit after tax/total revenue

- Profit after tax/equity
 LOGO
Liquidity quality assessment

- Ratio of short-term assets/short-term debt

- Cash ratio and short-term cash/debt equivalent
 LOGO

Principles for identifying insolvent members

❖ Balance closing time: 16h on T+2 day

❖ Money support mechanism:
- If the payment shortfall of the members <25 billion dong or
the total shortage of members <25 billion dong on the day of
payment → receive support money from the members
- If the payment shortfall of TVs ≥25 billion dong or the
total shortage of members ≥ 25 billion dong on the day of
payment → receive support money from the central bank
- For members that open account directly insolvently
receive support from the central bank
27
 LOGO

Principles for identifying insolvent members

❖ Penalty rate: 0.1% per day from the time of use of the Fund's
funds and must be refunded within 5 days from the date of
use of the Fund's funds. After 5 days the penalty is 0.15%
per day calculated on the amount of late payment.
- For members to open account directly: interest rate under
loan support contracts to ensure solvency

28
 LOGO

Principles for identifying members who are

insolvent of securities

❖ Time of Depository Centre announcement of lack of

securities: 16h on T+2
Depository participants must borrow securities from sources:
+ Other depository members;
+ Customers;
+ other legal sources

29