VI Currently, securities investment trusts are attracting a lot of attention in the market. However, there are still some investors who do not clearly understand the concept and issues of receiving entrustment to manage securities trading accounts of securities companies. Through today’s article, let’s learn about this issue with Pham Consult!
1. What is a securities trading account management trust?
Securities investment trust is the transfer of money from one individual or organization to another to invest in order to seek profits.
Investment entrustment activities often involve the participation of two parties: the trustor and the entrustee. In which, the trustee will assign all responsibility for the use of capital to the trustee. The entrusted party has the duty and responsibility to invest and manage the portfolio to ensure profits and limit risks to a minimum.
2. Rights and obligations of the entrusted securities company.
According to the provisions of law on securities operations, the securities company entrusted to manage investors’ securities accounts has the rights and obligations in Clause 6, Article 19 of Circular 121/2020/TT-BTC. as follows:
Rights and obligations of the entrusted securities company
a) Act honestly and in the best interests of customers, do not use customer information to benefit yourself or cause damage to customers;
b) Require customers to provide all necessary information;
c) Buy/sell securities within the scope of trust;
d) Explain clearly and provide full information to customers about all risks that may arise in entrusting management of securities trading accounts;
d) Provide customers with monthly or extraordinary transaction statements at the request of the entrusting customer;
e) Notify the customer within 24 hours from the time the assets in the entrusting customer’s trust trading account decrease below 25% of the total value of the trust contract;
g) Monthly reports according to the form specified in Appendix II issued with this Circular or reports at the request of the State Securities Commission on management activities of entrusted trading accounts;
h) Provide a list of qualified securities practitioners for customers to choose from to manage trust accounts;
i) Establish an independent monitoring department to monitor the management and transactions of securities on the trust trading account of securities practitioners to ensure that the transactions of this account are in accordance with the agreements in entrustment contract and customer’s investment goals;
k) All trading orders under the trust contract must be accurately recorded at the time of execution;
l) Securities companies must notify and obtain written consent from customers in case of investing in securities underwritten by the company during the period the company is underwriting.
3. Can a securities company provide the service of entrusting the management of individual investors’ securities trading accounts?
The provision of entrusted services to manage securities trading accounts of individual investors is specified in Clause 1, Article 19 of Circular 121/2020/TT-BTC as follows:
Entrust management of individual investors’ securities trading accounts
- General principles
- a) Securities companies licensed to operate securities brokerage operations according to the provisions of Clause 1, Article 86 of the Securities Law may provide entrusted services to manage securities trading accounts of individual investors;
- b) Providing services to investors is carried out on the basis of contracts between securities companies and individual investors;
- c) Securities companies are not allowed to entrust all transactions on securities trading accounts on behalf of individual investors. Customers must clearly state the specific entrusted contents as prescribed in Clause 2 of this Article;
- d) Securities allowed to be entrusted to buy and sell are stocks and investment fund certificates listed on the Stock Exchange, excluding securities registered for trading on the trading system of unlisted public companies. listed (UpCom);
- d) The securities company appoints a securities practitioner with a certificate of practice in financial analysis or fund management to manage the trust trading account. This designation is clearly stated in the contract signed between the company and the individual investor.
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Thus, according to regulations, securities companies licensed to operate securities brokerage operations are allowed to provide entrusted services to manage securities trading accounts of individual investors.
4. What is the scope of entrusted management of individual investors’ securities trading accounts?
The scope of entrusted management of securities trading accounts is specified in Clause 2, Article 19 of Circular 121/2020/TT-BTC as follows:
Entrust management of individual investors’ securities trading accounts
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- Scope of entrustment includes the following contents:
- a) Type of securities traded;
- b) Maximum volume that can be bought and sold for each type of security;
- c) Maximum value for each trading order;
- d) Maximum total transaction value for one trading day;
- d) Trading method, type of trading order.
- Securities companies are responsible for synthesizing information about financial capacity, investment term, investment goals, acceptable risk level, investment restrictions, investment securities portfolio (if any) and other customer requirements before signing the contract. In case the customer does not provide complete information or provides inaccurate information, the securities company has the right to refuse to sign the contract.
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Thus, according to regulations, the scope of entrustment to manage securities trading accounts of individual investors includes the following contents:
(1) Type of securities traded;
(2) Maximum volume that can be bought and sold for each type of security;
(3) Maximum value for each trading order;
(4) Maximum total transaction value for one trading day;
(5) Trading method, type of trading order.
5. Can a securities company be entrusted to decide on all transactions on a securities trading account on behalf of an individual investor?
Receiving entrustment to decide on all transactions on securities trading accounts is specified in Clause 1, Article 19 of Circular 121/2020/TT-BTC as follows:
Entrust management of individual investors’ securities trading accounts
- General principles
- a) Securities companies licensed to operate securities brokerage operations according to the provisions of Clause 1, Article 86 of the Securities Law may provide entrusted services to manage securities trading accounts of individual investors;
- b) Providing services to investors is carried out on the basis of contracts between securities companies and individual investors;
- c) Securities companies are not allowed to entrust all transactions on securities trading accounts on behalf of individual investors. Customers must clearly state the specific entrusted contents as prescribed in Clause 2 of this Article;
- d) Securities allowed to be entrusted to buy and sell are stocks and investment fund certificates listed on the Stock Exchange, excluding securities registered for trading on the trading system of unlisted public companies. listed (UpCom);
- d) The securities company appoints a securities practitioner with a certificate of practice in financial analysis or fund management to manage the trust trading account. This designation is clearly stated in the contract signed between the company and the individual investor.
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Thus, according to regulations, securities companies are not allowed to entrust all transactions on securities trading accounts on behalf of individual investors.
So through the above article, a securities company can be entrusted to manage a securities trading account but cannot be entrusted to decide on all transactions on the securities trading account on behalf of investors. Hope the above information will help your work.
