Draft circular to replace Circular 127/2018/TT-BTC Prescribing prices of services in securities sector rendered by Stock exchanges and Vietnam securities depository

In the situation where Vietnam’s stock market shall continue to be affected by the complicated development of the Covid-19 pandemic, to implement the policy on supporting the stock market, the Ministry of Finance has previously issued Circular No. 14/2020/TT-BTC (“Circular 14″) to amend Circular No. 127/2018/TT-BTC  (“Circular 127“), adjust the discounts and free-of-charge some securities-related services rendered by the Stock Exchange (“SE“) and the Vietnam Securities Depository (“VSD“).

After extending the effective period of Circular 14 twice, on August 25th, 2021, the Ministry of Finance decided to issue a draft circular (“Draft Circular“) towards replacing the Circular 127, re-prescribing the prices of securities-related services applicable in the SE and the VSD, in conformity with the actual provision of services, regulations of the Pricing Law and relevant laws.

This article lists several noteworthy regulations and proposals for new service prices rendered by the SE and the VSD on the securities market:

1. General regulations on securities service prices

The Draft Circular clearly states that the prices of services in the securities sector rendered by the SE and the VSD are not subject to any value-added tax in accordance with regulations of the Law on Value-Added Tax and relevant documents on amendments thereof (if any).

For other services not specified in the prices schedule, the SE and the VSD shall solely decide the services prices in conformity with their provision of such services and must publicly post and announce the prices of their services in accordance with the Law on prices, Law on securities and relevant regulations.

Meanwhile, Vietnam’s bond market is using green bonds as a long-term capital mobilization tool for environmental protection activities and investment projects that offer environmental benefits performed by small and medium-sized enterprises. In the spirit that the Law on Environmental Protection 2020 shall come into force from January 1st, 2022, the service prices applicable to the transactions related to green bonds shall be reduced by 50% compared to the prices schedule.

2. For the underlying securities market

Securities service prices at the Hanoi Stock Exchange and the Ho Chi Minh City Stock Exchange apply to 9 services including: (1) Listing registration; (2) Listing management; (3) Trading; (4) Online connection; (5) Use of terminal device; (6) Auctions, competitive offerings, book-building; (7) Bidding for issuance of government bonds, development bonds, government-guaranteed bonds and municipal bonds; (8) Bidding for repurchase of government debt instruments, government-guaranteed bonds and municipal bonds; (9) Bidding for swap of government debt instruments, government-guaranteed bonds and municipal bonds.

The Draft Circular also details the applicable prices for each of the above services. The prices of initial listing services for shares, corporate bonds, investment fund certificates and debt instruments as prescribed in the Law on Public Debt Management is VND 10 million. For covered warrants, the price of VND 5 million is applied.  

The price of regular trading services in the SE has decreased slightly when comparing to the prices schedule in Circular 127: For shares, listed investment fund certificates decreased from 0.03% to 0.027% of the trading value; for corporate bonds decreased from 0.006% to 0.0054% of the trading value; for covered warrants decreased from 0.02% to 0.018% of the trading value, etc.

For auction services and bidding services, the prices are also adjusted to reduce up to 50% per auction, bidding when compared to the prices specified in the Circular 127.

In addition, the Draft Circular also states that the VSD shall applies the prices schedule to services including: (1) Depository member management; (2) Securities registration, partial cancellation of securities registration; (3) Securities depository; (4) Securities transfer; (5) Corporate actions services; (6) Handling errors after trading; (7) Transferring securities ownership without using the SE’s trading system; (8) Borrowing and lending securities via VSD’s system; (9) Payment of principals, interests and repurchase amounts of government bonds, development bonds, government-guaranteed bonds and municipal bonds and (10) Payment of principals, interests and repurchase amounts of trusted bills.

The prices of regular trading services are also adjusted downwards in correspondence with the prices at the SE. The price of depository services, securities transfer and corporate actions services are also reduced from 30% to 50% when compared to the prices scheduled in the Circular 127.

Particularly for the service of handling and fixing errors after trading, an accumulate formula is applied in case the depository member generates more errors in the month, the service price shall increase accordingly, up to 3 million VND /error. This regulation is expected to limit trading errors in the context that Vietnam stock market will grow rapidly with huge trading volumes.

3. For the derivatives market

According to the Draft Circular, the service prices rendered by the SE and the VSD shall not be significantly adjusted. However, when trading index futures contracts and government-bond futures contracts, 300 VND service fee shall be reduced for each contract when compared to the previous prices in Circular 127.

Additionally, two new services of the VSD are also included in the prices schedule, including: clearing service shall cost 2,550 VND /contract/ account/ day, and asset management service shall cost 0.0024% of the accumulated value of margin asset balance.

The Draft Circular is in the process of receiving comments and will soon be published in full.

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