Draft Circular substitutes Circular 128/2018/TT-BTC on fee of securities-related services in Vietnam’s securities market

On August 25, 2021, the Minister of Finance announced a draft circular to substitute Circular 128/2018/TT-BTC stipulating service fee in the securities sector applicable at securities trading organizations, commercial banks participating in the Vietnamese stock market (“Alternative Circular”).

According to Mr. Pham Hong Son – Vice Chairman of the State Securities Commission (SSC), from the beginning of 2021 until this moment, Vietnam’s stock market has made a breakthrough, becoming the second strongest growth market in the world. As of August 31, 2021, the market capitalization reached approximately VND6,900 trillion, increase to 29.2% compared to the end of 2020, equivalent to 108.7% of GDP.  Liquidity in the stock market continued to explode and grow strongly thanks to the cash flow of domestic investors leading the market.

The above figures show positive results in the application of service discount regulations in the securities sector in accordance with Circular 14/2020/TT-BTC and Circular 70/2020/TT-BTC to assist organizations and individuals using services affected by the Covid-19 pandemic, promoting transactions on the stock market while ensuring the consistence of service activities, regulations and Law on price and relevant laws in reality.

The specific fee for each service in the list of service fee under Alternative Circular shall be as follows:

1. For the underlying stock market

  • The brokerage service fee for purchasing and selling shares, fund certificates or covered warrants shall be decrease from 0.5% to a maximum of 0.45% of the value of each transaction.
  • Adding the service brokerage services fee to purchase and sell shares when transferring state capital and capital of state enterprises at securities companies not through the trading system of the Stock Exchange is 0,03% of the transaction value in maximum and no greater than VND3 billion per transaction applicable for 1 organization withdrawing (sellling) capital (exclude amounts payable to the Stock Exchange and Vietnam Securities Depository and Clearing Corporation (“VSDC”) in accordance with regulations).

The service fee of issuing certificates of open-ended funds and ETFs shall be decreased from 5% to a maximum of 4.5% of the value of each transaction.

The auction service fee shall be reduced from 0.3% to 0.15% of the total value of shares and types of securities actually sold. The ceiling fee for this service is also applied to a maximum of VND150 million  per auction.

2. For the derivatives market

According to Hanoi Stock Exchange (HNX), Vietnam’s derivatives market is stable in the same direction as the global derivatives market. Currently, the VN30 index future contract is considered as a high liquidity and stable product on the market, espeically in the face of complicated developments of COVID-19 pandemic. 

Although the futures contract on Government bonds has not reached high liquidity since its inception, experts still raise much expectation for it to become a tool to prevent risk for commercial banks in long term on the Government bonds market.

For meeting the above expectations, the Alternative Circular shall reduce the futures brokerage service fee from VND15,000 to a maximum of VND5,000/Futures contract and from VND25,000 to a maximum VND8,000/Government bond futures contract.

Even though the mentioned-above service fees exclude the derivatives trading services, position management services, and margin asset management services that securities companies must pay to the Stock Exchange, VSDC, organizations and individuals using the service would not to concern about the costs and expenses when participating in the derivatives market.

The Alternative Circular is currently in the process of collecting public comment and would be published soon. 

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