TTCK

LECTURE PRESENTATION STOCK MARKET
Investment Analysis and

Portfolio Management
Tenth Edition
by
Frank K. Reilly & Keith C. Brown
LESSON 1
STOCK MARKET OVERVIEW
LESSON 1: STOCK MARKET OVERVIEW
• Stock is ownership in a publicly traded

company.
• Stock is a claim on the company’s assets and
earnings.
• The more stock you have, the greater your claim
as an owner.
• Watch: https://youtu.be/JrGp4ofULzQ
•
• DEFINITION:
• The stock market is where buyers and
sellers come together to trade shares in
eligible companies.
• 1.1. The process of formation and development

stock market
• Stock markets exist across the world, connecting
buyers and sellers of shares in various companies.
The concept of a company dividing up ownership
(also known as “equity”) of itself to be distributed
to investors and traded dates back hundreds of
years.

stock market
During the 1600s, European explorers would
raise money by selling shares in their company’s
ventures. Investors would purchase stock to gain
the profits of explorers’ missions, like the
company’s pursuit of foreign spices to be brought
back and sold in Europe.

stock market
The Dutch East India Company was among the
first to offer shares of itself in exchange for future
profits on Amsterdam’s stock market. The trading
of these shares formed some of the first stock
markets.
• 1.1. The process of formation and

development stock market
So, what is the history of the modern stock

market?

stock market
The first modern stock market was in London.
The combination of a lack of regulatory oversight,
growing consumer enthusiasm for stocks, and
minimal publicly available information on
companies resulted in significant volatility, risk, and
potential for fraud.
• 1.1. The process of formation and

development stock market
Those forces lead to the formation of the

London Stock Exchange in 1773 to provide a
haven for more consistent and fairer trading
of stocks.

stock market
In the United States, the first modern stock exchange
was founded in Philadelphia in 1790. Two years
later, the New York Stock Exchange (NYSE) was
established as a result of the Buttonwood Agreement,
signed by 24 stock-dealers outside of Wall Street in
Manhattan (under a buttonwood tree).

stock market
Today, the NYSE features a combination of electronic
trading and a physical trading floor with human
traders located on Wall Street. The NYSE trading
floor is now a National Historic Landmark. It’s
known for the loud bell rung every morning (at 9:30
am local time) and afternoon (at 4:00 pm) to mark
the start and close of the trading day.
stock market
In 1971, Nasdaq (National Association of Securities
Dealers Automated Quotations) began trading as the
world’s first electronic stock market. Embracing
technology, Nasdaq also became the first stock
market in the US to trade online. Unlike the NYSE, it
doesn’t have a central trading floor with human
traders. Nasdaq is now a popular venue for tech
companies to list their shares.
stock market
• The NYSE (in downtown Manhattan in New York)
and Nasdaq (in midtown Manhattan) are not only
the two largest stock markets in the world based on
the value of the shares traded on them — they’re
also fierce crosstown rivals competing for
companies that are choosing where to list their
shares for an IPO.

stock market
• Whether a company gives its rose to NYSE or
Nasdaq has little impact on you as a stock buyer or
seller. Retail investors are generally able to
purchase stocks through their brokerage account
regardless of what exchange they’re listed on.
1.2 Classification of stock market

If you own stock in a company, often it will fall into
this category. One of the key benefits of common
stock is voting rights — with each share usually
equating to one vote. Investors who hold common
stock can attend annual general meetings and vote on
corporate issues like electing people to the board,
stock splits, or general company strategy. ➔
COMMON STOCK
1.2 Classification of stock market

Investors who do not need to vote on corporate issues
and are interested in receiving a consistent dividend
check will usually choose a preferred stock. There are
many features that mirror that of a bond. For
example, preferred stock can be repurchased by the
company at an agreed price.➔
PREFERRED STOCK
• 1.3. Subjects participating in the stock

market
Stocks are bought and sold on stock markets,

which bring together buyers and sellers of
shares in publicly traded companies.

market
Stock markets operate kind of like auctions,
with potential buyers naming the highest price
they’re willing to pay (“the bid”) and potential
sellers naming the lowest price they’re willing
to accept (“the ask”).

market
The actual execution of a trade price will be
somewhere at or between the bid and the ask.
Trades can be placed by stockbrokers, usually
on behalf of portfolio managers or individual
investors like you.
• 1.3. Subjects participating in the stock market

So, Who are the participants in the stock
market?
Investors are the driving force of the stock
market — they’re the ones who want to buy or
sell stock.
But between those buyers and sellers are
important actors who earn money by providing a
service to investors. Here are some key ones:

market
Here are some key ones. Who are they?

1.3. Subjects participating in the stock market
Who are they?
1. Principals: This is a broker-dealer firm that

owns a portfolio of shares that they are willing
to sell to investors. It’s also willing to buy stock
from investors who are trying to sell.
Broker-dealers acting as principals make money
by adding a markup to stocks they sell and a
markdown to stocks they buy, kind of like how a
car dealer would mark up the price of cars sold
to its customers.
Who are they?
2.Agents: They’re in the middle. An agent helps

connect one investor’s buy or sell request with
the other side of the transaction. For that
matchmaking service, they often take a
commission.
Who are they?
3. The stock exchange: The New York Stock

Exchange and Nasdaq are the two best-known
stock exchanges in the US, but there are actually
13 total. They take a small fee for each
transaction that happens on their exchange in
return for their services. They also charge a
listing fee to the companies that offer their
shares on the exchange.
Who are they?
4. Market Makers: Market makers are like

your buddy who’s up for anything. They’re
firms that stand by, ready to buy or sell a stock
at publicly quoted prices.
• 1.4. The role of the stock market
Stocks are an important part of the global

economy, allowing companies to raise money for
the operation of their businesses by selling
shares (or pieces of ownership) to the public.
EXAMPLE
If a company has 100 shares of stock
outstanding, and you own 1 share, you own 1%
of that company. The value of your shares will
represent approximately that percentage (1%) of
the company’s market capitalization, or the value
of all outstanding shares.
An efficiently functioning stock market is

considered critical to economic development, as
it gives companies the ability to quickly access
capital from the public.
EXAMPLE
Imagine that you want to own a cupcake shop, but
you only have $1,000 to start. In order to buy the
necessary supplies (e.g., flour, icing, cupcake tins),
you might raise money from friends and family.
Let’s pretend that four of your friends each kick in
$1,000, so you have $5,000 total and you’re able to
get the business off the ground.
EXAMPLE (cont..)
In exchange for their investment, you might
agree to give each of them 20% of the business and
its profits. This is kind of how stocks work, except
on a much larger level.
• 1.5. Introducing some stock markets in the world
What are some examples of stock markets?

• The world’s two largest stock markets based on
their value by market captitalization are in the US:
The New York Stock Exchange and Nasdag.
A variety of other prominent stock exchanges

exist worldwide, including the Euronext (with
marketplaces in Amsterdam, Brussels, Dublin,
Lisbon, and Paris), Bombay Stock Exchange in
Mumbai, TMX Group in Toronto, Deutsche Boerse in
Frankfurt, the Shenzhen Stock Exchange, and the
Shanghai Stock Exchange.

• These stock markets are exchanges where
companies within a specific region tend to list their
shares. These regional markets can also be accessed
by traders globally, and stocks listed on one
exchange can sometimes trade on exchanges in
other regions too.
Which exchanges are the world’s largest stock

markets, and why?
markets, and why? (April 2021)
Rank Exchange Market Value
#1 NYSE $28.19T(trillion)
#2 Nasdaq $12.98T
#3 Japan Exchange Group $5.37T
#4 Shanghai Stock Exchange $4.92T
#5 Hong Kong Exchanges $4.48T
#6 Euronext $3.85T
#7 Shenzhen Stock Exchange $3.49T
#8 London Stock Exchange $3.13T
#9 Saudi Stock Exchange $2.15T
#10 TMX Group $1.97T


markets, and why?
==➔ the world’s largest stock markets based on their
value by market capitalization
• 1.6. Overview of Vietnam stock market and Ho Chi
Minh City Stock Exchange
HOW MANY STOCK EXCHANGES IN

VIETNAM ARE THERE?
• Read further on to see how Vietnam has two large
large stock exchanges in the main cities of Ho Chi
Minh City and Hanoi. In addition to that there is an
Unlisted Public Market.
WHAT IS THE STOCK MARKET IN
VIETNAM?
• The largest stock exchange in Vietnam is the Ho
Chi Minh Stock Exchange (HOSE). It does not
have a long history when we compare it to more
developed stock exchanges, with HOSE being
established in the year 2000.

VIETNAM?
The Hanoi Stock Exchange (HNX) was established

later in 2005 and comparatively much smaller and
tends to attract smaller companies.

VIETNAM?
Note that there is also a market for companies that are

not considered listed in Vietnam. The Unlisted Public
Market (UPCoM) contains a lot of companies.
• 1.6. Overview of Vietnam stock market and Ho

Chi Minh City Stock Exchange
The Ho Chi Minh stock exchange is a major stock

market index which tracks the performance of
equities listed on the Ho Chi Minh and Hanoi Stock
Exchange in Vietnam. It is a capitalization-weighted
index. The VN-Index has a base value of 100 as of
July 28, 2000.
• 1.6. Overview of Vietnam stock market and

Ho Chi Minh City Stock Exchange
WHAT IS THE VN INDEX?

The VN Index is probably the most common one you
come across when reading about the Vietnam stock
exchange. It is a capitalization weighted index and
commenced with a base value of 100 in the year 2000
and comprises of all the companies listed on the Ho Chi
Minh Stock Exchange (HOSE).
LARGEST 10 COMPANIES LISTED ON THE
VIETNAM STOCK MARKET.
• Vingroup Joint Stock Company (HOSE:VIC)
• Commercial Bank for Foreign Trade of Vietnam
(HOSE:VCB)
• Vinhomes Joint Stock Company (HOSE:VHM)
• Hoa Phat Group Joint Stock Company
(HOSE:HPG)
• Vietnam Commercial Bank For Industry And Trade
(HOSE:CTG)
• Commercial Bank For Investment And
Development Of Vietnam (HOSE:BID)
• Vietnam Technological And Commercial Bank
(HOSE:TCB)
• Vietnam Diary Products Joint Stock Company
(HOSE:VNM)
• Vietnam Prosperity Joint Stock Commercial Bank
(HOSE:VPB)
• Petrovietnam Gas Joint Stock Corporation
(HOSE:GAS)
• This list above gives you a bit of a sense about

some of the big listed companies in Vietnam. You
can probably now get a feel for what some of them
may do, and a top-level picture of some of the main
sectors of the Vietnam stock market.
•
Tenth Edition
by
LESSON 2
SECURITIES
AND GOING PUBLIC SECURITIES
LESSON 2: SECURITIES
• 2.1. The definition and characteristics of

marketable securities
What are marketable securities? definition
Marketable securities are financial instruments that

one can buy or sell for cash (liquidate) within a year.

What are marketable securities?
Companies need cash on hand to deal with a wide
variety of expenses. The high liquidity of marketable
securities enables a company to maintain a portion
of necessary reserves in short-term investments that
provide a financial return.
AND GOING PUBLIC

What are some examples of marketable securities?

Examples of marketable securities are:

• 1.Common stock: An equity security that gives you a
unit of ownership in a company and voting rights.
• 2.Preferred stock: Similar to common stock,
preferred stock gives you preferential treatment like
a priority on dividend payments and priority in
payment if a company were to go bankrupt.
• 3.Certificates of deposit (CDs): A deposit in a

financial institution (like a bank or credit union) that
is held for a period and grants you recurring monthly
payments or a lump-sum payment upon the CD’s
maturity. If you withdraw the deposit during the
holding period, you’re typically subject to a penalty
and lose interest payments.
• 4.Corporate bonds: To raise funds, a company issues

these short-term IOUs that grant the holder periodic
payments and the eventual repayment of the
principal
• 5.Treasury bills: The U.S. Treasury sells these short-

term debt securities, which are guaranteed by the
U.S. government. Treasury bills are also known as T-
bills.
• 6.Municipal bonds: A state or local government can

also issue short-term bonds.
• 7.Commercial paper: Another type of short-term debt

security that a company issues in exchange for
funding. A commercial paper is unsecured because
no collateral backs it.
What are the characteristics of marketable securities?
One of the principal characteristics of marketable
securities is that they are financial instruments that
provide you the potential for financial return. For
example, a preferred stock, in addition to dividends,
has the potential (all investing involves risk) of
increasing in market value. Another example is a
Treasury bill (T-bill), which sells at a price lower
than its face value and grants you the full face value
upon maturity of the T-bill.
What are the characteristics of marketable securities?
Another characteristic of marketable securities is that
they trade with relative ease on established markets.
Marketable securities are financial instruments that
actively trade on equity markets (e.g., the New York
Stock Exchange, Nasdag) and bond markets
(e.g., money market, U.S. Treasury). The active
trading of marketable securities allows buyers and
sellers to have clear expectations of the market value
range of these financial items.
• 2.2. Classification of securities and methods of

securities valuation
2.2.1 Securities may be classified according to many
categories or classification systems:
• Currency of denomination
• Ownership rights
• Terms to maturity
• Degree of liquidity
• Income payments
• 2.2. Classification of securities and methods of

securities valuation
• Tax treatment
• Credit rating
• Industrial sector or "industry". See Industry for a
discussion of some classification systems.)
• Region or country (in which the principal

securities exchange where it trades is located)
• Market capitalization
• State (typically for municipal or "tax-free"
bonds in the US)
2.2.2 securities valuation

DEFINITION:
• Valuation is the process of calculating how
much a business or a share of a company
should be worth, based on the company's
financial standing and operations.
• There are many ways to calculate the worth of

a company, small or large. Through a
valuation, an investor tries their best to
determine how much a company’s share is
really worth. The price of shares is typically
set on stock exchanges based on the price
used in recent sales.
• An investor may use the valuation process to

try and calculate how much a company’s
share should theoretically cost, based on the
business's financial situation. This may help
them find a good deal.
• For example, if an investor's valuation process

determines that a share of a company should be
worth $60, but it is trading at $50 on the stock
market, they may conclude that the stock is
undervalued and decide to make a purchase. An
investor might also value a private business to
determine how much they should pay for them.
A. Bond Valuation
• Bonds are long-term debt securities issued by
companies or government entities to raise debt
finance.
• Investors who invest in bonds receive periodic

interest payments, called coupon payments, and at
maturity, they receive the face value of the bond
along with the last coupon payment.
A. Bond Valuation
• The fundamental principle of bond

valuation =
TO THE SUM OF PRESENT
VALUE OF ITS EXPECTED CASH
FLOWS.
• THE METHOD FOR VALUATION OF
BONDS INVOLVES THREE STEPS AS
FOLLOWS:
• Step 1: Estimate the expected cash flows
• Step 2: Determine the appropriate interest rate

that should be used to discount the cash flows.
• Step 3: Calculate the present value of the

expected cash flows (step-1) using appropriate
interest rate (step- 2) i.e. discounting the
expected cash flows
• Let’s expand and understand each step in detail:
• STEP-1 – Estimating Cash Flows
• Cash flow is the cash that is estimated to be

received in future from investment in a bond.
• There are only two types of cash flows that can
be received from investment in bonds i.e. –
coupon payments and principal payment at
maturity.
• STEP-2 – Determine the appropriate interest
rate to discount the cash flows
• Once the cash flow for the bond is estimated,

the next step is to determine the appropriate
interest rate to discount cash flows.
• The minimum interest rate that an investor
should require is the interest available in the
marketplace for default-free cash flow.
• STEP-3 – Discounting the expected cash
flows
• Now that we already have values of expected
future cash flows and interest rate used to
discount the cash flow, it is time to find the
present value of cash flows.
• Present Value of a cash flow is the amount of
money that must be invested today to generate
a specific future value.
• The present value of a cash flow is more
commonly known as discounted value.
• The present value of a cash flow depends on two
determinants:
• When a cash flow will be received i.e. timing of
a cash flow &;
• The required interest rate, more widely known as
Discount Rate (rate as per Step-2)
• First, we calculate the present value of each
expected cash flow. Then we add all the
individual present values and the resultant sum is
the value of the bond.
• The formula to find the present value of one
cash flow is:
• Present Value Formula for Bond Valuation

• Present Value = Expected cash flow in the
period n/ (1+i) n
• Here,
• i = rate of return/discount rate on bond
• n = expected time to receive the cash flow
• By this formula, we will get the present
value of each individual cash flow t years
from now. The next step is to add all
individual cash flows.
• Bond Value = Present Value 1 + Present
Value 2 + ……. + Present Value n
Example
• A bond that matures in four years, has

a coupon rate of 10% and has a maturity
value of US$ 100. The bond pays interest
annually and has a discount rate of 8%.
The cash flow of this bond is:
YEAR CASH FLOW
1 US$ 10
2 US$ 10
3 US$ 10
4 US$ 110
• The present value of each cash flow is:
• Year 1 – Present Value (PV1) = $10/ (1.08)1 =
US$ 9.26
US$ 8.57
US$ 7.94
US$ 80.85
Now adding all cash flows
• Thus, Present Value of Bond =

9.25+8.57+7.94+80.85 = US$ 106.62
• There are other approaches to bond
valuation such as relative price
approach, arbitrage-free pricing approach,
and traditional approach. But this present
value approach is the most widely used
approach to bond valuation.
2.2.2 STOCK VALUATION
• In financial markets, stock valuation is the
method of calculating values of companies
and their stocks.
• The main use of these methods is to
predict future market prices, or more
generally, potential market prices, and thus
to profit from price movement.
• There are various models with different
assumptions of a period of dividends and
growth in dividends.
• The discounted cash flow (DCF) method

involves discounting of the profits (dividends,
earnings, or cash flows) that the stock will
bring to the stockholder in the foreseeable
future, and a final value on disposal.
B1.Single Period Model –
Discounted Cash Flow Model
• This method is discounting a future cash flow.

• Formula for using Single Period Model
• Value = Net Income / Discounting Rate

Example
• The same approach under the dividend
discount model can be used for calculating
the fair value of a stock with a holding
period of 1 year. Assuming a $ 5 dividend is
expected after 1 year and the stock price is
expected to be $ 20 after a year, the value of
the stock can be calculated assuming a
discounting rate of 12% :
• Value = D1/ (1+r) + P1/ (1+r)
• Where,
• D1 is the expected dividend after 1 year
• P1 is the expected price after 1 year of
holding period
• r is the required rate of return (discounting
rate)
• Value of the stock = $ 5 / (1.12) + $
20 / (1.12)
• = $ 4.46 + $ 17.86
• = $ 22.32
• For limitations faced with single period error;
the improved model, which involves using
multiple cash flow forecasting and discounting
them, is used with the intent of reducing the
estimation error.
• The said model is also known as Multi-Period
Discounted Cash Flow Model.
B2. Multi-Period Model
• How to Calculate Stock Price Using Multi-
Period Model?
• For valuing anything using a

discounting/present value formula, the first
thing that is required is the Cash Inflows. In
this case, the cash inflow is the ‘Expected
Dividend’ ought to be received every year.
• Present Value of an Equity Share = Present
Value of Future Dividends
• Po = D1/ (1+r) + D2/ (1+r) ^2 + D3/ (1+r) ^3
+ …… Dn/ (1+r) ^n
Where,
• Po = Price of the equity share
• D1 = expected dividend 1 year from now
• D2 = expected dividend 2 years from now
• Dn = expected dividend n years from now.
• r = expected rate of return (cost of equity)
Example of Multi-Period Model
• Look at an example where a particular

investor with a 5-year horizon wants to
calculate the fair value of the stock.
• Given the expected dividend stream for the
next 5 years and the expected price after 5
years, one can arrive at the intrinsic value
of the stock using an appropriate discount
rate.
Example of Multi-Period Model
(cont,..)
• The following information is available:
• D1 = $ 2, D2 = $ 3, D3 = $ 4, D4 = $ 5, D5
=$6
• Expected stock price after 5 yrs = $ 120
• Cost of equity (required rate of return) =
10%
Tenor Cash Flow Discount Rate Present Value
1 $2 10% 2 / (1+10%)^1 = 1.82
2 $3 10% 3 / (1+10%)^2 = 2.48
3 $4 10% 4 / (1+10%)^3 = 3.00
4 $5 10% 5 / (1+10%)^4 = 3.42
5 $6 10% 6 / (1+10%)^5 = 3.72
5 $ 120 10% 120 / (1+10%)^5 = 74.51

• The intrinsic value of the stock will be a
summation of all present values and in our case,
this sums up to $ 88.95.
• To estimate intrinsic value closer to reality one

needs to assume infinite periods and hence one
may look at the other multi-period dividend
discount models like the two-stage growth model
which will help the investor to reduce the error in
the estimation of fair/intrinsic value.
B3.Two-Stage Growth Model
• The two-stage dividend discount model takes

into account two stages of growth. This method
of stock valuation is not a model based on two
cash flows but is a two-stage model where the
first stage may have a high growth rate and the
second stage is usually assumed to have a stable
growth rate.
Example Calculating Value of Stock
Let’s take the example of a company (ABC Ltd.)

that has paid a dividend of $4 this year. Assuming
a higher growth for the next 3 years at 15% and
stable growth of 4% thereafter. Let’s calculate the
value using a two-stage dividend discount model.
- assuming a required rate of return of 10%.
• Current Dividend = $ 4.00
• Dividend after 1st year will be = $ 4.60 ($ 4 x
1.15 – growing at 15 %)
• After 2nd year will be = $ 5.29 ($ 4.60 x 1.15 –
growing at 15%)
• After 3rd year will be = $ 6.0835 ($ 5.29 x 1.15 –
growing at 15%)
• Since the growth in the first three years was
15%, the value of the dividend declared after 3
years will be $6.0835, as calculated above.
• The second stage has a growth rate of 4%,
so the dividend value after the 4th year will
be $6.0835 x 1.04 = $6.3268. Assuming this
as the constant dividend for the rest of the
company’s life, arriving at the present
values, as follow:
• P0 = D / (i – g)
• Where P0 = Value of the stock/equity
• D = Per-Share dividend paid by the
company at the end of each year
• i = Discount rate, which is the required rate
of return* that an investor wants for the risk
associated with the investment in equity
against investment in risk-free security.
• g = Growth rate
• Now, using the formula for calculating the
value of the firm, we can arrive at the
present value at the end of 3rd year for all
future cash flows as follows:
• Value = $6.3268 / (10% – 4%)
• = $105.45
Table Showing Present Values
Discount Present
Tenor Cash Flow
Rate Value
1 4.6 10% 4.18
2 5.29 10% 4.37
3 6.0835 10% 4.57
3 105.45 10% 79.23
• Present value calculations in the above table
are as follows:
• $4.18 = $4.60 / (1 + 10%) ^1
• $4.37 = $5.29 / (1 + 10%) ^2
• $4.57 = $6.0835 / (1 + 10%) ^3
• $79.23 = $105.45 / (1 + 10%) ^3
2.3. Going public securities

• What Is Going Public?
• Going public is the process of selling shares
that were formerly held privately and are
now available to new investors for the first
time, otherwise known as an initial public
offering (IPO).
2.3. Going public securities

• What Is Going Public?
• Through an IPO, a private company
becomes a public one by offering its stock
for the first time on a public stock exchange
to investors
LESSON 2 SECURITIES
• 2.3. Going public securities

• Ex:Imagine you have a successful private
retail business on the HCM city. You’d like to
expand nationwide, but don’t have enough
funds. One way to raise money might be to go
public. To go public, you’ll need to hire an
underwriter to assess your company’s current
financial position and help you plan your
Initial Public Offering (IPO).
• 2.3. Going public securities

Ex(cont...):That plan would include outlining
how many shares you’re going to float to the
public and the opening price you’d like to
charge for those shares. After completing your
plan with the underwriter, you’d have to register
with the SEC before members of the public start
trading shares in your company.
*In the days following an IPO, the bank

underwriters are allowed to protect the stock
price from falling too much. They may even buy
shares of the newly-listed company. Once this
support ends, the stock price has the potential to
fall below the offering price. Look for this kind
of price support in a company’s IPO registration
paperwork.
IPO stocks are considered speculative. An
investor should read the prospectus carefully.
*Typically released to the public a few weeks ahead

of the IPO, the prospectus is required paperwork
filed by the IPO’ing company. It’s designed to give
investors information that can help them decide
whether the offering is a good investment, like the
terms of the stock, disclosures regarding the
company’s financial condition, risks that the
company faces, and details regarding their business
model.
Tenth Edition
by
LESSON 3
SECURITIES TRADING
LESSON 3
SECURITIES TRADING
• 3.1. Securities trading and monitoring system

Decision No. 79/2000/QD-UBCK
dated December 29, 2000 of the State Securities
Commission promulgating the regulation on
securities membership, listing, information
disclosure and trading
LESSON 3
SECURITIES TRADING
DECISION:
 PROMULGATING THE REGULATION ON
SECURITIES;
 MEMBERSHIP;
=> LISTING;
=> INFORMATION DISCLOSURE;
=> TRADING.
3.1. Securities trading and monitoring system
• Automated trading systems use algorithmic

trading to create buy and sell orders on the
stock market or other exchanges.
• It places orders based on these strategies and

predetermined guidelines that are
programmed.
• The STC shall disclose the market information
through its means, including: electronic display-
board at the STC, end terminals or other
computerized means on the trading floor.
• The STC may use the mass media to disclose
information.
+Transaction system means the computer system
+ Order routing system means the system sending

transaction orders of investors from transaction
member to STC.
• Article 3. Organization of securities trading
• 1. The SE organizes securities trading

according to the order matching method and
agreement method.
• a) The order matching method => the principle
of prioritizing price and time;
• b) The agreement method => the SE’s
regulations.
Article 3. Organization of securities trading
2. The SE organizes trading

• => in listed and registered securities,
• => excluding transfer of ownership (out of the
trading system in accordance with the law on
securities with respect to securities registration,
depository, settlement and clearing).
3. The SE shall promulgate regulations on

securities trading after it has obtained the approval
on such regulations from the SSC.
The regulations on securities trading must contain

detailed regulations. So, what are they?????

 trading time;
 trading method;
 methods for determining preference price;
 securities price fluctuation limit;
 kinds of trading orders;

......
change or cancellation of trading orders;
confirmation or rejection of securities trading;
trading suspension;
publishing information of trading results and
other relevant contents.
4. The VSD shall allocate securities codes and

VSD is also designated to be the unique agency
allocating the International Securities
Identification Numbers (ISIN) for all securities in
Vietnam.
Securities codes and ISINs are used for listing or
trading registration.
5. VSD shall, upon the approval of the SSC,

=> promulgate process for correcting trading
errors,
=> tacking actions against trading errors
=> and rejecting trading for securities listed or
registered for trading on the SE.
LESSON 3
SECURITIES TRADING
• 3.2 Trading order

• Article 47.-A trading order to be entered into
the trading system by the order-matching mode
shall include the following:
• 1. Buying order or selling order;
• 2. Code of securities;
• 3. Quantity;
• 4. Price;
LESSON 3
SECURITIES TRADING
• Article 47.
• 5. Identification number of the investor’s trading
account;
• 6. Symbols of trading orders:
• - Dealing orders of members (P);
• - Brokerage orders of members (C);
• - Orders from foreign custody members (F);
• - Orders from domestic custody members (M).
LESSON 3
SECURITIES TRADING
Article 47.
• 7. Other details prescribed by the STC.
What are Trade Orders?
• Trade orders refer to the different types of
orders that can be placed on trading exchanges
for financial assets, such as stocks or futures
contracts.
• The order-driven style of trading mechanisms
matches buyers and sellers who have matching
order criteria. In other words, a buyer with a
buy price matching the sell price of a seller will
result in an executed trade.
What are Trade Orders?
• The different types of trade orders allow the
trader to maximize the versatility and
specificity of their trades.
• These are the most common types:

Market Order
Limit Order
Stop-loss Order
*.Trade Orders: Market Order
• The market order is the most common and

simplest of all trade orders. A market order
simply executes the trader’s desired order
volume at the best available price.
• This provides the trader with the most
liquidity but the least control on pricing.
For example:
• A buy market order for 5 shares of company
ABC?
• For more complicated market orders, a trade will
execute at the best consecutive available prices.
Let’s take our example further and say that 500
shares of company ABC are to be purchased in a
market order. ?
• => What is the result of the transaction?
The order book at trade time is as follows:
VOL PRICE
100 201.00
300 202.50
50 202.75
50 203.10
RESULT OF ODER
• => will purchase 5 shares at the current lowest
ask price in the order book.
• => Since 500 shares are not available at the best
ask price, the trade will execute continuously
until 500 shares are met at the best available
price. In this example, the total order price will
be approximately $101,142.50. The average
market order price for this trade order will be
$202.29.
VOL PRICE TOTAL
100 201.00 20.100.00
300 202.50 60.750.00
50 202.75 10.137.50
50 203.10 10.155.00
*. Trade Orders: Limit Orders
• The limit order is more complex than the
market order. It creates a new order in the
order book, often at a “lower” spot than the
best available prices on either side. Doing so
sets the ideal price a trader wishes to enter the
market at. This provides the trader with more
price control but less liquidity. Liquidity is
only provided once a counterparty is willing to
meet that trader’s price.
In example above:
• A seller wishes to add a limit ask order for
50 shares at $203.10. That would change
the order book to a total of shares available
at the $203.10 level. This trade will only
execute once buyers are willing to pay that
price, or once market orders have cleared
enough orders up to that tier.
VOL PRICE
100 201.00
300 202.50
50 202.75
100 203.10
*. Trade Orders: Stop-loss Orders
• Stop-loss orders work exactly the opposite way
that limit orders do.
• A stop-loss order is intended to provide a trader
with the most control if the market moves in the
opposite direction the trader desires.
• This type of order is intended to minimize losses,
as opposed to maximizing profits according to
the limit order strategy.
CASE STUDY
• Assume that Bank of America Corp (BAC). There are
eight traders wanting to buy BAC stock; at this given
time, this represents the demand for BAC stock. Five
traders bid for 100 shares each at $30, three traders bid
at $29.99, and one trader bids at $29.98. T
• There are also eight traders wanting to sell BAC stock;
at this given time, this represents the supply of BAC
stock. Five traders sell 100 shares each at $30.01, three
traders sell at $30.02, and one trader sells at $30.03.
These orders are listed on offer.
• Say a new trader comes in and wants to buy 800 shares
at the market price. What is the result of the order??
• The market price, in this case, is all the prices and
shares it will take to fill the order. This trader has
to buy at the offer: 500 shares at $30.01, and 300
at $30.02.
• Now the spread widens, and the price is $30 by
$30.03 because all the share offered at $30.01 and
$30.02 have been bought. Since $30.02 was the
last traded price, this is the market price.
Place Order : Types of Orders
ORDER TYPE
Limit (L) - Buy only if price falls to certain level.
Market (Mkt) - Buy/Sell at price offered on market
Stop Loss (SL) - Sell as soon as price goes below a

certain level (Trigger Price).
21
LESSON 3 (cont…)
SECURITIES TRADING
• 3.3. Matching methods

(Article 51.No79/2000/QD-UBCK - Trading orders
to be entered into the trading system shall be
matched in the following priority order):
• 1. Price priority:
a/ Buying orders with higher price shall be
executed first;
b/ Selling orders with lower price shall be
executed first.
LESSON 3
SECURITIES TRADING
• 3.3. Matching methods

2.Time priority: In cases where buying orders
or selling orders are placed with the same price,
trading orders which have been entered into the
trading system earlier shall be executed first.
(Article 51)
• Matching method means the transaction method
implemented by the trading system based on
matching the buy orders and sell orders of
securities (Price priority and time priority).
Matching methods include periodical and
continuous matching.
Matching method : is a trading mode whereby
clients’ buying orders and selling orders are
matched on the principle that the executed price
shall be determined as follows:
Matching method
• a.1. Being the price at which the maximum

securities volume is traded;
• a.2. If there are more than one price level
satisfying Point a.1 of this Article, the price level
that is equal to or closer to the executed price of
the latest order matching time shall be chosen;
• a.3. If there are still more than one price level
satisfying Point a.2. of this Article, the higher
price level shall be chosen.
Question: In VN, How is Securities trading by
foreign investors at the STC ?
• a/ The trading system controls and discloses the
securities volumes that foreigners are allowed to
buy.
• b/ Securities volume to be bought by foreigners
shall be deducted from that allowed to be bought
right after the buying orders are executed.
Securities volume to be sold by foreigners shall be
added to that allowed to be bought after the
trading settlement.
• c/ After buying orders are executed, if the
securities volume allowed to be bought has run
out, the foreigners’ securities buying orders that
have been partially executed or not yet been
executed shall be automatically canceled, while
new buying orders entered into the trading system
shall not be accepted.
LESSON 3
SECURITIES TRADING
• 3.4. Transaction time

• Article 43.-No79/2000/QĐ-UBCK
• 1. The STC shall organize securities trading
sessions on every Monday, Wednesday and Friday,
except the public holidays provided for in the Labor
Code.
• 2. The Chairman of the State Securities
Commission shall decide to change trading days
when deeming it necessary.
3.4. Transaction time
• Article 50-No79/2000/QĐ-UBCK
Time schedule for trading by order-matching
mode and negotiation mode shall be set by the
STC after obtaining consent of the SSC Chairman.
• Monday to Friday (except national holidays)
• National holidays:
January 1 – New Year
• Jan – Feb (last day of the last lunar month to the
third day of the fist lunar month inclusively) –
Vietnamese (Lunar) New Year
• April (10th day of the 3rd Lunar month) – King
Hung Commemorations
• April 30 – Liberation Day
• May 1 – Labor Day
• September 2 – National Holiday
• There are two stock exchanges located in the
US: the NYSE and the NASDAQ. Both
follow the same opening times, which you
can see listed in the table above.
• Unlike many stock exchanges around the

world – especially in Asia – neither the NYSE
or the NASDAQ closes for a lunch break. So
buying and selling takes place right through
from the opening bell at 9.30am to the closing
bell at 4pm.
• In addition to sharing the same opening
times, the NYSE and the NASDAQ have
the same holidays. There are typically nine
days each year when US exchanges are
closed, plus two when they close early.
3.5. The process of performing securities transactions
LESSON 3
SECURITIES TRADING
• 3.5. The process of performing securities

transactions
For example in VN (periodical and continuous
matching)
Continuous matching method
BUY SELL
• HOSE: from 9:15 to 14:30
• HNX: from 9:00 to 14:45
Investo Price Volume Time Investo Price Volume Time
r r
A 50,000 15,000 9h16 E 52,000 20,000 9h20
B 49,000 10,000 9h15 F M/P 8,000 9h30
(market
order)
C M/P 2,000 9h40 G 48,000 15,000 9h45
(market
order)
D 48,000 6,000 10h00 H 51,000 10,000 9h45
Time Buy Sell
9g15 3 2 1 1 2 3
Investor B
Price 49.000
Volume 10.000
Time Buy Sell
9g16 3 2 1 1 2 3
Investor B A
Price 49.000 50.000
Volume 10.000 15.000

Time Buy Sell
9g20 3 2 1 1 2 3
Investor B A E
Price 49.000 50.000 52.000
Volume 10.000 15.000 20.000

Time Buy Sell
9g30 3 2 1 1 2 3
Investor B A F E
Price 49.000 50.000 52.000

Market
order
Volume 10.000 15.000 8.000 20.000
Time Buy Sell
9g40 3 2 1 1 2 3
Investo B A C E
r
Price 49.000 50.000 Market 52.000
order
Volume 10.000 7.000 2.000 20.000
Time Buy Sell
9g45 3 2 1 1 2 3
Investo B A G H E
r
Price 49.000 50.000 48.000 51.000 52.000
Volume 10.000 7.000 15.000 10.000 18.000

Time Buy Sell
10g00 3 2 1 1 2 3
Investor B D H E
Price 49.000 48.000 51.000 52.000
Volume 2.000 6.000 10.000 18.000

Time Buyer Seller Price Volume
9h30 A F 50.000 8.000
9h40 C E 52.000 2.000
9h45 A G 50.000 7.000
9h45 B G 49.000 8.000

Periodical Matching
• only in HOSE
• opening session:
from 9:00-9:15
• closing session:
from 14:30-14:45
Tenth Edition
by
LESSON 4 SECURITIES COMPANY

4.1. General introduction about SC
• Basic Functions of Securities Companies in the
Financial System
• According to the theories of modern financial
intermediation and financial functions, roles of the
securities companies in the financial system are
mainly embodied in the following three aspects:

• 1. Risk filtration function
• 2. Products creation and asset pricing
function
• 3. Risk portfolios based on asset
appreciation
• 4.1. General introduction about SC
1. Risk Filtration Function:
Risk filtration is the elimination of incorrect
information or noise-making information in the
capital market through operations of financial
intermediations, enabling investors to have
correct information for securities investment and
to make their best decisions.
• As an important intermediary in the capital
market, securities companies work together
with accounting firms, assets evaluation
institutes, and credit rating entities, among
other financial institutions, to consolidate
and analyze information about companies.
• This ensures that investors can access the
operations, management, and future development
trends of the securities issuers (companies and
institutions) in a correct and prompt manner, which
enables them to make correct analysis of the
investment values of their targets. In this way,
securities businesses work as an effective barrier
filtering risk.
• 2. Product Creation and Asset Pricing Function
• In the financial system, investors realize risk
dispersing and value appreciation through
financial products. These financial products could
be traded in the financial market and serve mass
clients.
• The asset pricing function of securities firms is
also found in their value discovery function in
M&A practices.
• 3. Risk Portfolios Based on Assets Appreciation
The function of risk portfolios based on asset
appreciation in the modern financial system is
realized through financial intermediaries like
universal banks, as well as securities firms, mutual
funds, and asset management companies.
=➔
The three functions of financial market
intermediaries such as securities firms, as previously
discussed (risk filtration, product creation and asset
pricing, and risk portfolios based on value
appreciation) are closely interconnected and logically
complete.
EXAMPLE
SECURITIES COMPANY IN VIETNAM
CASE: LICENSING AND OPERATING
CONDITIONS
• A securities company means an enterprise
established and operating under the securities
law to perform one, some, or all securities
transactions.
• SO HOW TO OPERATE CONDITIONS AND
HOW THE SECURITIES COMPANY IN
VIETNAM WORKS?
• SECURITIES COMPANY IN VIETNAM:
LICENSING AND OPERATING
CONDITIONS
*Legal basis
• - Law on Securities 2019 No. 54/2019/QH14;
• - Law on Enterprise 2020 No. 59/2020/QH14;
• - Law on Investment 2020 No. 61/2020/QH14;
• - Decree 155/2020 /ND-CP Detailing The
Implementation Of A Number Of Articles Of The
Securities Law.
*Conditions for securities company
establishment in Vietnam
• 1. Conditions of the office
• - Having a working office to ensure securities
trading;
• - Having sufficient material, technical facilities,
office equipment, and technology systems
suitable to the professional process of securities
trading.
*Conditions for securities company
establishment in Vietnam
• 2. Capital conditions
• Enterprises wishing to conduct securities business
must have contributed capital at the time of the
establishment of the company at least equal to the
legal capital level prescribed for each transaction
as follows:
• - Securities brokerage: 25 billion VND;
• - Securities dealing: 100 billion VND;
* Conditions for securities company establishment
in Vietnam
• 2. Capital conditions
• - Securities underwriting: 165 billion VND;
• - Securities investment consultancy: 10 billion
VND.
• In case an enterprise applies for a license for many
business operations, the legal capital is the total
legal capital corresponding to each operation
applying for the license.
• 3. Conditions of personnel
• There is a General Director (Director), at least 03
employees with a securities practice certificate
suitable for each securities trading operation
applying for the license, and at least 01
compliance controller. The General Director
(Director) must meet the following criteria:
• - Not being subject to criminal prosecution or
serving a prison sentence or prohibited from
securities practice;
• - Have at least 02 years of experience working in
professional departments of organizations in the
fields of finance, securities, banking, insurance or
in finance, accounting, and investment
departments in other enterprises ;
• - Having a certificate of financial analysis
practice or a fund management practice
certificate;
• - Not being sanctioned for an administrative
violation in the field of securities and securities
markets within the latest 6 months up to the time
of submission of the dossier.
• If there is a Deputy General Director (Deputy
Director) in charge of operations, he/she must
satisfy the standards specified at Points a, b, and
d, Clause 5, Article 74 of the Law on Securities
2019 and possess a suitable securities practice
certificate. suitable with the charge profession.
• 4. Conditions on the structure of
shareholders, capital-contributing members
• - Have at least 02 founding shareholders, capital
contributing members are organizations.
• In case the securities company is organized in
the form of a one-member limited liability
company, the owner must be an insurance
enterprise or a commercial bank, or a foreign
organization that meets the provisions of Clause
2, Article 77. of the Securities Law 2019.
• 4. Conditions on the structure of
shareholders, capital-contributing members
• - The total capital contribution ratio of
organizations must be at least 65% of the charter
capital, of which organizations being insurance
enterprises and commercial banks own at least
30% of the charter capital.
• 5. Conditions on shareholders, capital-
contributing members
• - Shareholders, capital contributors are
individuals who are not entitled to establish
and manage enterprises in Vietnam in
accordance with the Law on Enterprises;
• - Shareholders, capital contributors who are
organizations must have legal status and are
operating legally; profitable business for 2
years immediately preceding the year of
application for the license; the most recent
annual financial statements must be audited
with full acceptance;
• 5. Conditions on shareholders, capital-
contributing members
• - Shareholders, capital contributors own
10% or more of the charter capital of a
securities company and their related
persons, capital contributors (if any) do not
own more than 5% of the charter capital.
rate of 01 other securities company;
• - Shareholders, capital contributors are
foreign investors must meet the conditions
specified in Article 77 of the Law on
Securities 2019.
4.2. Securities company's profession
• 4.2. Securities company's profession
• Brokerage VPS Securities has dislodged SSI
Securities Corporation to become the top
brokerage, with a 13.24 percent market share in
Q1.Data released recently by the HCM Stock
Exchange (HoSE) shows that VPS’s market share
has increased by 2.4 percentage points quarter-to-
quarter.
• 4.2. Securities company's profession
A full-service securities brokerage firm is a

company that executes securities trades for its
clients and also provides an array of
supporting financial services.
For each type of operation, securities company is
allowed to perform the following activities:
a/ Stockbroker:
=> Get entrusted to manage securities trading
accounts of individual investors; distributing or
acting as securities distribution agents; securities
trading account management; providing securities
owner list management services to other
businesses;
• For each type of operation, securities company is
a/ Stockbroker:
=> Providing online securities trading services;
providing or coordinating with credit institutions
to provide loan services to customers to buy
securities or provide securities lending services;
securities depository; securities clearing and
settlement; derivative stock market services, etc.
b/Securities dealing:
• Trading securities on securities proprietary

trading accounts and being entitled to invest,
contribute capital, issue and offer financial
products.
c/ Underwriting securities:
• - Providing consulting services on securities
offering documents, performing pre-sale
procedures; Securities depository, payment, and
transfer agent;
c/ Underwriting securities:
• - Consulting on corporate restructuring,
consolidation, merger, reorganization, purchase,
and sale; management consulting, business
strategy consulting; securities offering, listing
and registration consultancy; enterprise
equitization consulting.
d/ Securities investment consulting:
• Sign a contract to provide services to customers

as prescribed in Clause 32, Article 4 of the Law
on Securities 2019.
• 4.3. Listing Consulting
• Listing consulting services - providing helps
businesses plan and carry out the work to
do and what should do the previous period,
during and after listing to maximize the
benefits of listing and limit the risks that
may occur after listing.
• Consultancy on the possibility of
participating in the stock market;
• Advise on the selection of appropriate
listing;
• Consulting to complete the legal
requirements related to listing securities;
• Consultant to choose suitable, effective
listing time;
• Advise on necessary activities prior to
listing, ensuring the maximization of the
benefits gained when listing securities;
➔
• Advise on necessary activities prior to listing, ensuring the
maximization of the benefits gained when listing
securities;
• Advice on the preparation and protection of listing
applications;
• Starting price advice;
• Support the implementation of procedures to listed
securities.
• Example: US stock exchange?
1.
• Choose and hire an investment bank to handle

all the paperwork for the initial public
offering. While you might want to do it
yourself to avoid paying a commission, the
investment bank is experienced and will be
able to get more potential buyers. (Examples
of investment banks are JPMorgan Chase,
Morgan Stanley or Goldman Sachs.)
2.
• Meet with representatives of the investment

bank of your choice and discuss the terms
of the stock offering. Discuss the type of
guarantee the investment bank will provide.
A firm commitment, in which the bank
guarantees the sale of a certain percentage,
is one option.
3.
• Organize and develop a prospectus so the
investment bank can submit a registration to
the Securities and Exchange Commission
(SEC). Include management history, what
the money will be used for, legal issues,
insider holdings and anything else that will
make investing in your business a safe
decision for potential investors.
4.
• Court potential investors with your rough
prospectus. For example, a mutual fund
manager or a hedge fund manager is the
right type of client to court. That investment
could represent millions of dollars almost
immediately.
5.
• Determine, through discussions with the
bank, the price of the stock. Bank officials
have the most experience finding the right
price. They want to sell shares, as well,
because that represents a profit for them.
6.
• Track the performance of your stock on
release day. As more shares are bought, the
price will go up. As shares are sold, the
price will go down.
Vietnam
• HCMC: Listed Companies: Shares data was
reported at 516.000 Unit in Nov 2021.
• HCMC: This records an increase from the
previous number of 499.000 Unit for Oct 2021.
• => Listed Companies: Shares data is updated
monthly, averaging 281.000 Unit from Aug 2000
to Nov 2021
Vietnam
• The data reached an all-time high of 517.000 Unit
in Dec 2020 and a record low of 4.000 Unit in
Oct 2000.
• The data is categorized under Global Database’s
Vietnam – Table VN.Z003: Ho Chi Minh City
Stock Exchange (HOSE): Listed Company
Statistics and Market Capitalization.
• EX+:
• Do= $2, g1(n1,3)= 20%, g2(n4) = 5%, r=
15%, (n=3)
• ? Value = ?
• Vo = 2.4/1.15+ 2.88/1.152+ 3.46/1.153+
3.63/(0.15-0.05)(1.15)3
• = $30.4
• Buyers:
A vol 500- price ATO
B vol 400- price 80
C vol 700- price 78
D vol 800- price 76
E vol 1.000- price 75
• Sellers:
F vol 700- price ATO
I vol 900- price 80
H vol 1.000- price 78
J vol 1.300- price 76
G vol 600- price 75
Periodical matching method
Accumulated Buy Price Sell Accumulated
Buy Sell
500 500 ATO 4500
900 400 80 900 4500
1600 700 78 1000 3600
2400 800 76 1300 2600
3400 1000 75 600 1300
3400 ATO 700 700
Volume (Buy) Price Volume (Sell) Price
500 76 700 76
400 600
700 1100
800
outstanding Price Outstanding Price

volume (buy) volume (sell)
1000 75 200 76
1000 78
900 80
• now, the periodical matching is finished
let’s say a new trader comes in and enter a
limit ask price at 75 with a volume of 2000
shares. let’s determine the price and volume
of the transaction under continuous
matching method
Buy Price Sell
80 900
78 1000
76 200
1000 75 2000 (LO)
so now the new trader will be able to sell 1000 shares at the
price 75
Tenth Edition
by
MID-TERM TEST
Tenth Edition
by
LESSON 5 JOINT STOCK COMPANY

• 5.1. Definition of joint stock companies

• The modern corporation has its origins in the joint-
stock company. A joint-stock company is a business
owned by its investors, with each investor owning a
share based on the amount of stock purchased.
• 5.1. Definition of joint stock companies

Joint-stock companies are created in order to finance
endeavors that are too expensive for an individual or
even a government to fund. The owners of a joint-
stock company expect to share in its profits.
• 1.POSITIVE POINT OF JOINT STOCK
COMPANY?????
• 1. Larger Capital
• 2. Limited Liability
• 3. Stability of Existence
• 4. Economies of Scale
• 5. Scope for Expansion
• 6. Public Confidence
• 7. Transferability of Shares
• 8. Professional Management
• 9. Tax Benefits
• 10. Risk Diffused
• 11. Social Benefits
• 12. Greater Borrowing Capacity
• 13. Promotes Savings and Investment
• 14. Greater Accountability
• 15. Greater Adaptability
• 16. Synergy of Capital and Capability
• 17. Use of Latest Technology.
• ….
1. Larger Capital
• The huge capital required by modern

enterprises would not be possible under
other forms of organizations like sole
individual proprietorship and even in
partnership. The joint stock company by its
widespread appeal to investors of all classes
can raise adequate resources of capital
required by large-scale enterprise.
2. Limited Liability
• Liability of the shareholders of a company
is limited to the face value of the shares
they have purchased. It has a stimulating
effect on investment. The private property
of shareholder is not attachable to recover
the dues of the company.
3. Stability of Existence
• The organization of a company as a separate
legal entity gives it a character of permanence
or continuity. As an incorporated body, a
company enjoys perpetual existence.
4. Economies of Scale
• Since the company operates on a large scale,
it would result in the realization of economies
in purchases, management, distribution or
selling. These economies would provide
goods to the consumer at a cheaper price.
5. Scope for Expansion
• As there is no restriction to the maximum
number of members in a public company,
expansion of business is easy by issuing
new shares and debentures.
6. Public Confidence
• Formation and working of companies are well
regulated by the provisions of the Companies
Act. The provisions regarding compulsory
publication of some documents, accounts,
director’s report, etc., create confidence in
public. Their accounts are audited by a chartered
accountant and are to be published. This creates
confidence in the public about the functioning of
the company.
7. Transferability of Shares
• The shareholders of a public company are
entitled to transfer the shares held by them
to others. The shares of most joint stock
companies are listed on the stock exchange
and hence can be easily sold.
8. Professional Management
• The management of a company vests in the
directors duly elected by shareholders.
Normally, experienced persons are elected as
directors. Thus, the available skill is utilized for
the benefit of the company. The company
organisation, therefore, is like a bridge between
the skill and capital.
9. Tax Benefits
• Company pays lower tax on a higher income. This
is because of the reason that the company pays tax
on the flat rates. Similarly, company gets some tax
concessions if it establishes itself in a backward
area.
10. Risk Diffused
• The membership of a company is large. The
business risk is divided among several members
of the company. This encourages investment of
small investors.
• ... …
• 2/ NEGATIVE POINT OF JOINT STOCK
COMPANY?????
• The negative point of joint stock company are:-
• 1. Difficulty in Formation
• 2. Delay in Decision Making
• 3. Concentration of Economic Power
• 4. Lack of Personal Interest
• 5. More Government Restrictions
• 6. Incapable and Unscrupulous Management
The negative point of joint stock
company:
• 7. Undue Speculation in the Shares of the
Company
• 8. Impersonal Work Environment
• 9 Numerous Regulations
• 10. Conflict in Interests
• 11. Lack of Motivation and Personal Touch
• The negative point of joint stock company
are: …
• 12. Separation between Ownership and

Management
• 13. Fraudulent Promotion and Management
• 14. Adverse Impact of Large Scale
• 15. Lack of Continuity
• 5.2. Organizational structure and

management of joint stock companies
Question:
http://www.antlawyers.vn/library/distinguish-
a-limited-liability-company-and-a-joint-stock-
company-in-vietnam.html
-Article 110-171 Law No. 59/20120/QH13
(1/1/2021)
Directors of a Company:
• In a company form of organization, the

ownership is separated from management. The
shareholders who are the owner of the company
elect directors at the annual general meeting of
the company. The elected body called the board
of directors is the governing body of the
company.
The directors to Act as a Board:
• The director acts as a board. they may meet
together for the dispatch of business adjourn
and otherwise regulate the meeting as they
deem fit, the board has the power to
delegate certain authority to an individual
director or to a committee of directors.
Chairman of the Board;
• The director in the meeting elects the chairman
who holds office for a period determined by the
board. if in a meeting the chairman is not present
within 10 minutes after the appointed time of the
meeting , the directors can choose any of their
members to act as chairman of the meeting.
Quorum:
• The quorum for a meeting of directors of a

listed public company shall not be less than
one-third of their number or four whichever
is greater. The board of directors shall meet
at least twice in a year.
• ………………
Power of Directors:
• To issue share
• To issue debentures
• To borrow money otherwise than on
debentures
• To invest the funds of the company
• To make loans
Power of Directors:
• To authorized the directors of the company to
enter into any contact with the company for
making sale, purchase or supply of goods or
rendering services with the company.
• To approve yearly or half yearly or another
periodical account as are required to be
circulated to the members.
• To approve bonus to employees
• To incur capital expenditure exceeding
• The shareholders are the owners of a public
company.
• Due to the separation of ownership from
control.
=>>> All the shareholders do not take part in
its management. =>>>>> ????? WHY
• 1/They are greater in number and lay scattered in
various parts of the country
• 2/They have less at stake compared to the
promoters.
• 3/As most of them possess a few shares
individually, therefore they are interested in
receiving the dividend and are least concerned
with the management of the company.
• 4/The majority of the shareholders are ignorant of
the operation of the company.
• 5/As a greater number of them have the loose
association with the company, they sell the shares
in case they receive no dividend or less dividend.
• 6/Due to greater number of absentees of the
shareholders in the general meeting, the interested
shareholders who are mostly the relatives, friends
of the promoters, managers use their voting
shareholders who are mostly the relatives , friends
of the promoters, managers use their voting right
and elect the directors to carry on the internal
management of the company by rotation.
In VN:
• Regulations: Joint stock companies???
• 5.3. Funding sources of joint stock companies
• What is the source’s funding of a joint stock

company?

• What are Sources of Funding?
• Companies always seek sources of funding to
grow the business. Funding, also called
financing, represents an act of contributing
resources to finance a program, project, or a
need. Funding can be initiated for either short-
term or long-term purposes.

• What are Sources of Funding?
• 5.3. Funding sources of joint stock

companies
What are Sources of Funding?
The different sources of funding include:
• Retained earnings
• Debt capital
• Equity capital
1.Retained Earnings
• Businesses aim to maximize profits by selling a

product or rendering service for a price higher
than what it costs them to produce the goods. It
is the most primitive source of funding for any
company.
1. Retained Earnings
• After generating profits, a company decides

what to do with the earned capital and how to
allocate it efficiently. The retained earnings can
be distributed to shareholders as dividends, or
the company can reduce the number of shares
outstanding by initiating a stock repurchase
campaign.
1. Retained Earnings
• Alternatively, the company can invest the
money into a new project, say, building a new
factory, or partnering with other companies to
create a joint venture.
2. Debt Capital
• Companies obtain debt financing privately

through bank loans. They can also source new
funds by issuing debt to the public.
2. Debt Capital
• In debt financing, the issuer (borrower) issues

debt securities, such as corporate bonds or
promissory notes. Debt issues also
include debentures, leases, and mortgages.
2. Debt Capital
• Companies that initiate debt issues are borrowers
because they exchange securities for cash
needed to perform certain activities.
• The companies will be then repaying the debt
(principal and interest) according to the specified
debt repayment schedule and contracts
underlying the issued debt securities.
2. Debt Capital
• The drawback of borrowing money through debt

is that borrowers need to make interest
payments, as well as principal repayments, on
time. Failure to do so may lead the borrower to
default or bankruptcy.
3. Equity Capital
• Companies can raise funds from the public in
exchange for a proportionate ownership stake in
the company in the form of shares issued to
investors who become shareholders after
purchasing the shares.
3. Equity Capital
• Alternatively, private equity financing can be an
option, provided there are entities or individuals
in the company’s or directors’ network ready to
invest in a project or wherever the money is
needed for.
3. Equity Capital
• Compared to debt capital funding, equity

funding does not require making interest
payments to a borrower.
3. Equity Capital
• However, one disadvantage of equity capital

funding is sharing profits among all shareholders
in the long term. More importantly, shareholders
dilute a company’s ownership control as long as
it sells more shares.
4. Other Funding Sources
• Funding sources also include private equity,

venture capital, donations, grants, and subsidies
that do not have a direct requirement for return
on investment (ROI), except for private equity
and venture capital. They are also called
“crowdfunding” or “soft funding.”
4. Other Funding Sources
• Crowdfunding represents a process of raising

funds to fulfill a certain project or undertake a
venture by obtaining small amounts of money
from a large number of individuals. The
crowdfunding process usually takes
place online.
5.3. Funding sources of joint stock companies
=➔
The main sources of funding are retained earnings,
debt capital, and equity capital.
Companies use retained earnings from business
operations to expand or distribute dividends to
their shareholders.
5.3. Funding sources of joint stock companies
=➔>>>
Businesses raise funds by borrowing debt privately
from a bank or by going public (issuing debt
securities).
Companies obtain equity funding by exchanging
ownership rights for cash coming from equity
investors.
• 5.4. Profit distribution


????? an example of dividend payment in a
joint stock company????
A joint-stock company is a business owned by

its investors, with each investor owning a
share based on the amount of stock purchased.
... The owners of a joint-stock company
expect to share in its profits
• If a corporation’s board of directors decides to
distribute a portion or all of the company’s
profits, that distribution is a dividend that is
given based on equal amounts per share.
• Most corporations that operate as small

businesses issue common stock, which entitles
shareholders to profits based on each common
share that they own.
For example,
• if your company declares a dividend of
$100,000 and there are 20 shareholders,
each shareholder will receive $5,000 for
each common share that is owned.
• When will shareholders receive their profits?
How to share profits in a joint stock
company?
• =➔ Profit distribution among
shareholders in a joint stock company???
According to
• Clause 5, Article 4 Enterprise Law 2020
• Clause 3, Article 135 of the Enterprise Law
2020,
• 5.5. Split and merger shares

What Is a Stock Split?
• A stock split is when a company divides the
existing shares of its stock into multiple new shares
to boost the stock's liquidity. Although the number
of shares outstanding increases by a specific
multiple, the total dollar value of the shares
remains the same compared to pre-split amounts,
because the split does not add any real value.

The most common split ratios are 2-for-1 or 3-for-1,
which means that the stockholder will have two or
three shares, respectively, for every share held earlier.
Reverse stock splits are effectively the opposite
transaction, where a company divides, instead of
multiplies, the number of shares that stockholders
own, raising the market price accordingly.
A merger is an agreement that unites two existing

companies into one new company. There are several
types of mergers and also several reasons why
companies complete mergers.
Mergers and acquisitions are commonly done to

expand a company’s reach, expand into new
segments, or gain market share. All of these are done
to increase shareholder value. Often, during a merger,
companies have a no-shop clause to prevent
purchases or mergers by additional companies.

Mergers are a way for companies to expand
their reach, expand into new segments, or gain
market share.
A merger is the voluntary fusion of two companies on
broadly equal terms into one new legal entity.
The five major types of mergers are conglomerate,
congeneric, market extension, horizontal, and
vertical.
Tenth Edition
by
LESSON 6
INVESTMENT FUND AND FUND
MANAGEMENT COMPANY
LESSON 6: INVESTMENT FUND AND
FUND MANAGEMENT COMPANY
• 6.1. Investment fund overview

What is a Fund?
DEFINITION:
A fund is a pool of money dedicated to saving,
investing, or virtually any other purpose either
by an individual, a business, a government, or
any other type of entity.

Ex: Let’s say you get an unexpected gift or
payout of cash, like a surprise graduation - a
bonus. If you’re already set with an
emergency fund, you might want to invest this
new money into a mutual fund — a large pool
of stock, bond, or other securities — with the
hopes that your investment grows.
Ex: That mutual fund is a type of investment

fund. You should only invest in funds suitable
for your personal financial situation and
tolerance for risk
***Investment Fund
• (1) An investment fund shall be an undertaking,
the sole purpose which is the public gathering‘s
assets of natural persons, legal entities and
investment in marketable securities and other
liquid financial assets in accordance with the
principles of risk diversification.
• (2) An investment fund can be founded as a
mutual fund or constituted as an investment
company.
• Investment Fund
• (3) It is allowed to gather assets for the purpose
described only if public sales units of mutual
funds and public sales shares investment
companies.
• (4) With the exception of investment funds,
nobody else is allowed to gather assets through
public sales as an intermediate for gathering
assets, any other way contribute to gathering
assets pursuant to purpose.
• What are some different types of funds?

• What are the different types of funds?
Funds are of two main types: registered

investment companies and private funds.
• A/Registered investment companies can be
further divided into three categories: mutual
funds, closed-end funds and unit investment
trusts.
• A/Registered investment companies
1.1 Mutual funds (also known as open-end funds)
are investment companies that sell shares on a
continuous basis. Mutual fund shares are
purchased directly from the fund or from a broker
for the fund. The purchase price is equal to the
fund’s net asset value per share, plus any sales
charges or other upfront fees.
• 1.1 Mutual funds
• Investors liquidate their investments in a
mutual fund by selling their shares back to
the fund. The sale price is equal to the
fund’s net asset value per share, minus any
redemption or other fees.
• Mutual funds pursue a wide variety of
investment strategies. Stock funds, bond
funds, index funds, money market funds
and ETFs may all be organized as mutual
funds.
• Why invest in mutual funds?
• Professional investment management
- One of the main benefits of investing in
open funds is that the investor's funds will be
professionally managed by fund management
companies. These companies with a deep
understanding of the field of investment, working
regularly with the market, and extensive
relationships and sources of information can make
accurate, efficient and economical investment
decisions. Costs more than individual investors.
• Diversification
- Another important factor in investment is
asset allocation. This significantly contributes to
the success of the portfolio by minimizing the non-
systematic risk of each portfolio asset. While
individual investors are limited in financial
resources, it is difficult to do this, funds with great
financial potential can easily diversify their
portfolios with the optimal proportion for each.
asset type to minimize investment risk.
• In accordance with the financial capacity
of the investor
- Open-end funds are public funds, so
the minimum amount of capital required to
contribute to the fund is usually reasonable
and reasonable so that most small investors
wishing to invest in the fund can participate
• Liquidity
- In case of necessity, investors may
withdraw part or all of the money invested in
the open fund, the fund management company
is responsible for redeeming the fund
certificates with the transaction price equal to
the NAV value per fund unit.
• transparent
- The Fund is strictly supervised by the State
Securities Commission, Board of Representatives,
supervisory banks and reputable auditing
companies.
- Open-end investment assets must also be
frequently and continuously traded in the market,
which will contribute to the transparency and
clarity of the value of the Fund Unit.
• transparent
- Information regarding the net assets of
open funds is always publicly and regularly
disclosed on the fund management company's
website, or CCQ distribution agents.
• 1.2 Closed-end funds
• Unlike a mutual fund, which offers share
continuously, a closed-end fund sells a fixed
number of shares in an initial public offering.
• The shares then trade in the secondary market
at a price that may be greater or less than the
fund’s net asset value.
• As closed-end fund shares are generally not
redeemable, investors wishing to exit from
their investment must generally rely on the
secondary market to sell their shares.
• 1.2 Closed-end funds
• Closed-end funds may invest in a greater
amount of illiquid securities than mutual
funds.
=➔>>Closed-ended fund
• ADVANTAGES OF CLOSED-END FUNDS?

Advantages of closed-end investment funds?
• Increasing profits for investors
• Closed-end investment funds may provide
investors with optimal returns than open-ended
funds
• Investors can buy or sell closed-end fund during
the trading day
• Minimize investment costs due to the large size
of funds.
• Investors' capital is managed by the professional
and experienced investment professionals of a
fund management company.
• Compare closed-member funds and listed
closed-end funds?
Characteristics closed-member funds closed-end funds
Do not redeem investment Do not redeem investment

certificates directly from certificates directly from
Buy / sell CCQ
investors when they wish to investors when they wish to
resell resell
Widely released to the

Capital mobilization Released individually public. Listed on the Stock
Exchange
Up to 30 capital contributors, At least one hundred

Investors and include only members investors, excluding
who are legal entities professional stock investors
Characteristics closed-member funds closed-end funds
Because public funds are

mobilized from many
investors, their investment
Member funds carry out
activities must comply
relatively risky investment
with many strict
activities, so they can
restrictions of the law. The
bring about very high
fund management
potential profits but also
company that performs the
Risk level contain huge risks, which
management work must
often the management
also comply with a lot of
company will not It is
strict conditions in this
possible to use the Public
fund management activity.
Fund to invest for capital
Therefore, the profit may
safety of investors
be lower than the member
fund, and the risk is also
lower.
• 1.3 Unit investment trusts
• Unit investment trusts issue a fixed number of
securities (“units”) as part of a public offering.
Investors may redeem units upon request at their
approximate net asset value.
• 1.3 Unit investment trusts
• A UIT will terminate and dissolve on a fixed date,
which will be specified when the UIT is created. A
UIT does not actively trade its portfolio. Instead, it
will hold a more or less static portfolio until its
termination date. Upon termination, a UIT’s
portfolio is liquidated and the proceeds are paid to
investors.
• B/ Private funds
• Private funds differ from registered investment
companies in that they are offered only to a
limited number of financially sophisticated
investors rather than to the general public. As a
result, private funds avoid many of the ongoing
reporting and compliance obligations imposed on
registered investment companies. Common types
of private funds include hedge funds, private
equity funds and managed futures funds.
=➔
• Securities investment fund means a fund formed
from an investor's capital contribution with the
purpose of making a profit from investing in
securities or other forms of investment assets,
including real estate, in which the investor does
not have daily control over the fund's investment
decisions.
• 6.2. Investment fund activities

• 6.2.1 Mutual fund activities
• 6.2.2 Closed-ended fund activities

• 6.2.1 Mutual fund activities
Mutual fund =➔>>>>>
• The prime motive of mutual fund is to give
small investors an access to invest in the
stocks, bonds, shares and other securities.
Without it, it would be impossible for them to
invest in such financial securities with limited
funds.
• Furthermore, mutual funds are professionally
managed to mitigate (reduce) the probability
of risk, to a certain extent.
• When you buy a mutual fund, you’re pooling
your money along with other investors. You put
money into a mutual fund by buying units or
shares of the fund. As more people invest, the
fund issues new units or shares.
• The investments in a mutual fund are
managed by a portfolio manager. They
manage the fund on a day-to-day basis,
deciding when to buy and sell investments
according to the investment objectives of
the fund.
• Would you expect a mutual fund to invest ?
Why?
• Mutual funds offer many benefits. Some of those
benefits include the ability to invest with small
amounts of money, diversification, professional
management, low transaction costs, tax benefits,
and reduce administrative functions

• 6.2.2 Closed-ended fund activities
Closed-ended fund ==➔>>
• Closed-end funds (CEFs) are an attractive
option for income investors who want a
combination of a high amount of passive
income and diversification.
• How do Closed-End Funds work ????
How do Closed-End Funds work
•
Closed-end funds are funds that raise capital on
the stock market and then invest in other
businesses, debt, and even other publicly-traded
companies.
How do Closed-End Funds work
•
Closed-end funds are generally managed by
active managers who seek to deliver above
average returns for their investors.
• Closed-end funds differ from exchange –
traded funds and mutual funds in that they
do not allow new investments or
withdrawals at any time. Instead, closed-end
funds raise capital by selling shares on the
open market, and allow for redemption only
on the open market.
• ETFs and mutual funds are generally open-
ended funds in that their owners can redeem
their shares for their net asset value at any
time.
Investment fund activities
Operating closed funds
Some governed legal documents
• Circular 224/2012 / TT-BTC dated December 26,

2012 guiding the establishment and management
of closed funds and member funds, takes effect
from March 15, 2013, and replaces Decision No.
45/2007 / QD-BTC dated 5/6/2007 of the
Ministry of Finance promulgating the Regulation
on establishment and management of securities
investment funds.
• 6.3. Fund management company

Taking charge of all activities relating to the day-to-
day operation of investment funds. This includes
overseeing the investment management, marketing
and central administration of the fund, as well as
establishing a risk management and due diligence
that satisfies regulatory requirements and protects
investor interests.
Satisfying investor and regulatory demand for

substance, stability and due-diligence, through best-
in class systems, structure and people.
Providing guidance and ideas on how best to

meet your clients’ service expectations. Benefit
from local market insight and extensive experience.
* Operation mechanism of the open fund
• Fund management company: directly implements
open-ended fund management, setting
investment objectives, strategies, policies and
implementing investment according to the goals
approved by the General Meeting of Investors.
• SSC: is the direct management agency of the
Fund Management Company, which is
responsible for overseeing all activities of the
Company, along with the investment funds of the
company.
* Operation mechanism of the open fund
• Fund Representative Board: Selected by
General Meeting of Investors, regularly
supervising the Fund's operation.
• Custodian bank: supervising, depositing and
preserving assets of the fund and the fund
management company in order to protect
the lawful rights and interests of investors.
• Auditing company: checks and evaluates
the operation of the fund annually.
Some governed legal documents
• Circular 212/2012 / TT-BTC dated 5/12/2012

guiding the establishment, organization and
operation of the Fund Management Company.
?1/What are some comparative
advantages of investing in the following
a/ Unit investment trusts
b/ Open-end mutual funds.
c/ Individual stocks and bonds that you
choose for yourself.
• a/ Unit investment trusts.
• A unit investment trusts offer low costs and stable
portfolios. Since they do not change their
portfolio, the investor knows exactly what they
own. They are better suited to sophisticated
investors.
• b/ Open-end mutual funds.
• Open-end mutual funds offer higher levels of
service to investors. The investors do not have
any administrative burdens and their money is
actively managed. This is better suited for less
knowledgeable investors.
• c/Individual stocks and bonds that you choose for
yourself.
• Individual securities offer the most sophisticated
investors ultimate flexibility. They are able to
save money since they are only charged the
expenses they incur. All decisions are under the
control of the investor,
?2/ If you decide to participate in the mutual
fund, what should you do?
• Step 1: Investors, after studying documents
about the Open-ended Fund, if deciding to
participate in the Fund, open a trading account at
the Distributors appointed by the Fund
Management Company ( is a direct management
unit of the Open Fund).
• Step 2: After having an account, investors can
submit a registration form to buy a fund
certificate (or sell a fund certificate) at the
Distributor on the day of transaction of the fund
unit (specified in the fund's charter). The amount
of fund purchase will be transferred directly
from the Investor's account to the Fund's account
at the Supervisory Bank.
• Step 3: Distributors after opening accounts for
investors, can receive registration certificates to
buy or sell the fund certificates of investors and
transfer valid tickets to Company.
• Step 4: The company, after receiving the
certificate to buy from the investor, together with
confirmation that it has received enough money
to buy the investor from the Supervisory Bank,
will issue the number of corresponding to the
received amount and send confirmation.
Transactions to Distributors.
• Step 4 (cont): In case of receiving a request to
sell the fund certificates of the investor, the Fund
Management Company will revoke the
respective issued units and send a confirmation
to the Distributor, and at the same time send a
request to the Supervisory Bank to pay for the
money back. into the account of the investor.
• Step 5: Distributor sends confirmation of
transaction result and confirms ownership of
Fund Certificates to investors.
Tenth Edition
by
LESSON 7
SECURITIES REGISTRATION,
SECURITIES AND PAYMENT
SYSTEM
LESSON 7 SECURITIES REGISTRATION,
SECURITIES AND PAYMENT SYSTEM
• 7.1. Overview of securities registration,

depository and clearing system
Circular No. 119/2020/TT-BTC dated
December 31, 2020 of the Ministry of Finance
on regulations for registration, depository,
clearing and settlement of securities
a/ Securities registration
• Securities registration means a process in which
VSD manages and records information about
issuers, securities of issuers and securities owners
into VSD’s system.
• /Vietnam Securities Depository (VSD)/
• In accordance with Law on securities,
securities of public companies and securities
of other organizations which have been listed
and registered for trading on the trading
platforms must be centrally registered at VSD.
• Therefore, VSD is securities registration

organization for all public companies and
companies which have been listed and
registered for trading on the stock exchanges.
• What are securities registered at VSD?
• Securities registered at VSD comprise
- Listed/registered for trading shares;
- Fund certificates, covered warrants,
Government debt instruments, Government-
guaranteed bonds, municipal bonds and other
corporate bonds which have been listed on the
stock exchanges;
- Shares of public companies and securities
which must be registered at VSD as stipulated by
laws.
• All securities registered at VSD are in form of
book entry.
• When registering securities at VSD, issuers
shall provide VSD with information about the
issuers, securities to be registered and securities
owners for recording them into VSD’s system.
• This is a basis from that VSD realizes eligibility
for ownership of securities owner and accepts
securities to be centrally registered at VSD.
After registration at VSD, all information
changes related to registered securities shall
follow regulations on information management
of VSD.
• Issuers which have listed securities shall
register their securities directly with VSD or
through depository members which are
securities companies.
b/Securities depository
• Securities depository is the receipt of
consignment, safekeeping, transfer and
acknowledgement of securities ownership
of clients in the securities depository
account system managed by Vietnam
Securities Depository (VSD) in order to
guarantee rights and interests relating to
securities of shareholder.
• In accordance with Law on securities,
securities of public companies (including
securities of public companies listed on
Stock Exchanges and securities of unlisted
public companies) shall be centrally
deposited at VSD before being traded.
What is the principle of securities depository
at VSD?
Securities depository for clients at VSD is
performed according to the following principle:
• Clients deposit their securities at VSD’s

depository members who will redeposit their
clients’ securities at VSD.
• How is the securities depository account at
VSD managed?
Securities depository accounts at
VSD are managed as following:
• The total balance of clients’ securities depository
accounts opening at depository members always
match with the balance of depository members’
securities depository accounts open at VSD.
• The detailed balance of securities depository
account of each client at depository members
shall match with ownership figures of that client
at VSD.
• In case of detecting information errors of
depository members or their clients’
accounts, VSD shall immediately inform
depository members and those members are
responsible for adjusting appropriately.
• Securities deposited at VSD are clients’
assets, managed separately from VSD’s
assets, and VSD shall not be allowed to use
the clients’ securities for the sake of a third
party or VSD itself.
• At depository members, in order to ensure
interests of clients whose securities are
deposited, depository members have to open
each depository account for each client and
manage clients’ assets separately.
• Clients’ securities deposited at depository
members are clients’ assets and managed
separately from depository members’ assets.
• What services does VSD provide in terms
of securities depository?
• VSD provides the following securities
depository services for its clients:
• - Securities lodging
• - Securities withdrawal
• - Transfer of non-traded securities
• - Securities pledging and releasing
• Clients have to work with their depository
members, at which they open their accounts, to
get their securities consigned, withdrawn,
transferred and pledged.
• Depository members manage information on
securities ownership in book-entry depository
account system.
• Ownership transfer of centrally deposited
securities is done by book-entry instead of
transferring physical certificates.
c/Clearing and Settlement
• Clearing and settlement are final steps for
completing securities trading process. For the
purpose of clearing and settlement of securities
transactions, all data of trading results are sent to
Vietnam Securities Depository (VSD) by stock
exchanges at the close of trading sessions.
• Cash clearing is executed by VSD for each
member on the basis of netting between the
amount receivable and the amount payable
for transactions having the same trading
date on stock exchanges and having the
same settlement date, segregated by
domestic investor account, foreign investor
account and house account of members.
• How does VSD apply clearing and
settlement methods?
C1/ Clearing and settlement of market
• VSD applies clearing and settlement methods as
follows:
• - For transactions of corporate bonds: VSD carries
out settlement according to the result of
multilateral netting with T+1 settlement cycle.
• - For transactions of shares and fund certificates:
VSD carries out settlement according to the result
of multilateral netting with T+2 settlement cycle.
• - For transactions of Government bonds: VSD
carries out settlement via trade-by-trade method
with T+1 settlement cycle.
• What is the payment principle for securities
trading?
• Principles for settlement of securities transactions:
• - VSD makes securities settlement in the form of
book-entry transfer via the system of depository
accounts of selling and buying members and
simultaneously adjusts ownership information on
depository accounts of buying and selling
investors.
• The settlement bank (Bank for Investment and
Development of Vietnam) makes cash payment
via the system of cash accounts opened by
depository members at the settlement bank based
on the cash clearing result sent by VSD.
• - Settlement for securities transactions is made in
compliance with the following principle:
securities delivery at VSD and cash transfer at
the settlement bank shall be surely and
simultaneously carried out (DVP principle -
Delivery Versus Payment).
• Accordingly, settlement risks born by trading
participants will be mitigated as buyers and
sellers must have sufficient money to fulfil
settlement obligations.
C2/ Clearing and settlement of derivatives
transactions
• VSD applies clearing and settlement methods as
follows:
• - For Index futures: VSD shall make daily
settlement on T+1 and final settlement on the final
settlement date (the business day after the last
trading day)
• - For Government bond futures: VSD shall make
daily settlement on T+1 and final settlement with
physical delivery on the final settlement date (the
third business day after the last trading day)
Principle of derivatives settlement:
• - For Index futures: VSD shall define settlement
obligations of position loss and profit for each
account and clear by CM. Cash settlement is
made by the Settlement Bank (Vietnam Joint
Stock Commercial Bank for Industry and Trade)
• - For Government bond futures: VSD shall
define cash/securities settlement obligations for
each account and clear by CM. Cash and
securities settlement is made by the Settlement
Bank (Vietnam Joint Stock Commercial Bank
for Industry and Trade) and VSD respectively.
LESSON 7 SECURITIES REGISTRATION,
SECURITIES AND PAYMENT SYSTEM
• 7.2. Securities registration, depository and clearing

process
On December 31, 2020, the Ministry of Finance
issues the Circular No. 119/2020/TT-BTC on
regulations for registration, depository, clearing and
settlement of securities.
• https://www.tracuuphapluat.info/2019/12/lu
at-chung-khoan-tieng-anh-law-on-
securities.html
• Processes, procedures and application files
for registration are stipulated in details in
the Guideline on Securities Registration
promulgated with Decision no. 108/QĐ-
VSD dated 20/08/2021 by VSD's CEO .
• Processes and procedures of securities
depository are stipulated in the Guideline on
Securities Depository at VSD issued with
Decision no. 114/QĐ-VSD dated
23/08/2021
• Processes and procedures of securities
clearing and settlement are specified in the
Guideline on Securities Clearing and
Settlement issued with Decision no.
211/QĐ-VSD dated 18th December 2015
and Decision no. 06/QĐ-VSD dated 2nd
January 2020 by VSD' CEO.
• Processes of clearing and settlement are specified
in Decision no. 96/QĐ-VSD issued on 23rd
March 2017 on margining, clearing and
settlement of derivatives
• Decision no. 87/QĐ-VSD issued on 19th July

2018 on Revising the Guideline on margining,
clearing and settlement of derivatives issued
together with the Decision no.96/QD-VSD dated
23rd March 2017 by VSD's CEO
2.2 A number of specific contents on
financial management mechanisms
• The revenue of the Vietnam Stock Exchange
includes three sources: revenue from professional
activities (including revenue from member
management activities; revenue from other
professional activities as prescribed by law);
revenue from service provision (including revenue
from information provision services;
• revenue from technology infrastructure
services for the stock market; revenue from
other services as prescribed by law);
revenue and income from capital investment
activities in subsidiaries (including the
remaining net income after taxes after
setting up funds at subsidiaries, collecting
the difference between equity and charter of
subsidiaries; financial income and other
income as prescribed by law).
• Regarding Vietnam Securities Depository
and Clearing Corporation, besides the
revenue from professional activities (such
as: revenue from member management
activities; revenue from securities
registration activities; revenue from
securities depository activities; revenue
from securities transfer activities), revenue
from service provision activities (including
revenue from information provision
services; revenue from other services as
prescribed).
• Besides revenue from financial activities and
other incomes as prescribed by law on
management and use of state capital invested in
production and business in enterprises, Vietnam
Securities Depository and Clearing Corporation
is entitled to account revenue from financial
activities for the interest of deposits arising from
the payment of dividends, principal and interest
on government debt instruments and government
guarantee bonds, local government bonds, and
other securities and exercise the right to purchase
securities.
• The deduction for the professional operation
risk prevention fund is made quarterly. In
the fiscal year, if it is not used up, the
balance of the fund will be carried forward
to the following year for further use. Along
with that, the cost of transferring revenue
from the transaction of transferring
ownership of securities to a subsidiary of
the Vietnam Stock Exchange is not through
the securities trading system.
• Regarding performance evaluation and
enterprise classification, the Vietnam Stock
Exchange and Vietnam Securities
Depository and Clearing Corporation
comply with the law on performance
evaluation and enterprise classification of
State-owned enterprises (SOEs).
Tenth Edition
by
LESSON 8 INFORMATION SYSTEM

IN THE STOCK MARKET
LESSON 8: INFORMATION SYSTEM IN
THE STOCK MARKET
• 8.1. Introduction of the information system

on the stock market
Stock Market
• It is a place where shares of pubic listed
companies are traded. The primary market
is where companies float shares to the
general public in an initial public offering
(IPO) to raise capital.
• A stock exchange is a marketplace or the
infrastructure that facilitates equity trading.
On the other hand, a stock market is an
umbrella term representing all of the stocks
that trade in a particular region or country
• A stock exchange is where different financial
instruments are traded, including equities,
commodities, and bonds. Exchanges bring
corporations and governments, together with
investors. Exchanges help provide liquidity in
the market, meaning there are enough buyers
and sellers so that trades can be processed
efficiently without delays.
• Exchanges also ensure that trading occurs in
an orderly and fair manner so important
financial information can be transmitted to
investors and financial professionals.
• A stock exchange is a marketplace or the
infrastructure that facilitates equity trading.
On the other hand, a stock market is an
umbrella term representing all of the stocks
that trade in a particular region or country. A
stock market is often represented as an
index or grouping of various stocks such as
the S&P 500.
• The market data for a particular instrument
would include the identifier of the
instrument and where it was traded such as
the ticker symbol and exchange code plus
the latest bid and ask price and the time of
the last trade.
• It may also include other information such
as volume traded, bid, and offer sizes and
static data about the financial instrument
that may have come from a variety of
sources.
• There are a number of financial data
vendors that specialize in collecting,
cleaning, collating, and distributing market
data and this has become the most common
way that traders and investors get access to
market data.
• Delivery of price data from exchanges to
users, such as traders, is highly time-
sensitive and involves specialized
technologies designed to handle collection
and throughput of massive data streams are
used to distribute the information to traders
and investors.
• The speed that market data is distributed
can become critical when trading systems
are based on analyzing the data before
others are able to, such as in high-frequency
trading.
• Market price data is not only used in real-
time to make on-the-spot decisions about
buying or selling, but historical market data
can also be used to project pricing trends
and to calculate market risk on portfolios of
investments that may be held by an
individual or an institutional investor.
8.2. Information sources on the stock market
• The Stock market is closely monitored by
many different widely available sources.
Newspapers and business-themed
magazines frequently feature news,
statistics, and articles on the stock
exchange. Stocks are also often displayed
during television news programs, and are
available online through business news
websites.
• A typical equity market data message or
business object furnished from NYSE, TSX,
or NASDAQ might appear something like
this:
Ticker Symbol IBM
Bid 89.02
Ask 89.08
Bid size 300
Ask size 1000
Last sale 89.06
Last size 200
Quote time 14:32:45.152
Trade time 14.32.44.096
exchange NYSE
• The above example is an aggregation of
different sources of data, as quote data (bid,
ask, bid size, ask size) and trade data (last
sale, last size, volume) are often generated
over different data feeds.
Delivery of data
• Delivery of price data from exchanges to
users is highly time-sensitive. Specialized
software and hardware systems called ticker
plants are designed to handle collection and
throughput of massive data streams,
displaying prices for traders and feeding
computerized trading systems fast enough
to capture opportunities before markets
change. When stored, historical market data
is a type of time series data.
• Latency is the time lag in delivery of real-time
data, i.e. the lower the latency, the faster the
data transmission speed. Processing of large
amounts of data with minimal delay is low
latency. The delivery of data has increased in
speed dramatically since 2010, with "low"
latency delivery meaning delivery under 1
millisecond. The competition for low latency
data has intensified with the rise of
algorithmic and high frequency trading and
the need for competitive trade performance.
• Market data generally refers to either real-
time or delayed price quotations. The term
also includes static or reference data, that is,
any type of data related to securities that is
not changing in real-time.
• Reference data includes identifier codes
such as ISIN codes, the exchange a security
trades on, end-of-day pricing, name and
address of the issuing company, the terms of
the security (such as dividends or interest
rate and maturity on a bond), and the
outstanding corporate actions (such as
pending stock splits or proxy votes) related
to the security.
• While price data generally originates from
the exchanges, reference data generally
originates from the issuer. Before investors
and traders receive price or updated
reference data, financial data vendors may
reformat, organize, and attempt to correct
obvious outliers due to data feed or other
real-time collection based errors
• The complexity of managing market data
rose with the increase in the number of
issued securities, number of exchanges and
the globalization of capital markets. Beyond
the rising volume of data, the continuing
evolution of complex derivatives and
indices, along with new regulations
designed to contain risk and protect markets
and investors, created more operational
demands on market data management.
8.3. Information disclosure process of listed
companies, securities companies and the Stock
Exchange
• The Ministry of Finance has just issued
Circular 96/2020/TT-BTC guiding
information disclosure on the stock market.
With many additional regulations, Circular
96 is expected to create a legal corridor,
helping the stock market to develop healthy,
sustainable and transparent.
• Circular 96/2020 takes effect from January
1, 2021 and replaces Circular No. 115/2015
/ TT-BTC.
• Circular 96 provides quite comprehensive
regulations on the subjects that are obliged
to disclose information such as: Public
companies; organizations issuing corporate
bonds to the public; issuing organizations
conduct initial public offering of stocks;
organizations listing corporate bonds;
securities companies, securities investment
fund management companies;
…. branches of foreign securities companies
in Vietnam and branches of foreign fund
management companies in Vietnam;
representative offices of foreign securities
companies and fund management companies
in Vietnam; Public funds, public securities
investment companies...
• The information disclosure must be
complete, accurate and prompt in
accordance with the law. Content disclosed
of personal information includes: Citizen
card, ID card, Military ID card, valid
passport, contact address, permanent
residence address, phone number, fax
number, email, securities trading account
number,
• Securities depository account numbers,
bank account numbers, transaction codes of
foreign investors, foreign-invested
economic organizations owning more than
50% of the charter capital are only allowed
to perform if individuals that agreed.
• The organization's disclosure of information
must be made by its legal representative or
authorized person. The individual's
information disclosure is done by the
individual himself or authorized by another
organization or individual to perform.
• Subjects of information disclosure are
responsible for preserving and retaining
published information and reporting in
accordance with this Circular as follows:
Periodically disclosed information,
information about public company registration
must be kept in writing (if any) and electronic
data for at least 10 years. This information
must be kept and accessible on the website of
the subject of information disclosure for a
maximum of 5 years.
• Information disclosed on an extraordinary
basis, on request or in other activities must
be kept and accessible on the website of the
subject of disclosure for at least 5 years.
• Means of reporting and information disclosure
include: The organization's electronic
information page (website) is the subject of
information disclosure; The State Securities
Commission's information disclosure system;
Website of the Stock Exchange and other
means of disclosure in accordance with the
Rules of the Stock Exchange; Other mass
media as prescribed by law (printed
newspapers, electronic newspapers,…).
• Regarding extraordinary information
disclosure: A public company must disclose
extraordinary information within 24 hours
from the occurrence of one of the following
events: The company's accounts at banks,
foreign bank branches are blocked at the
request of competent agencies or when the
payment service is provided; The account is
allowed to resume operation after being
frozen in the cases specified at this point;
The Internet
Investments Online
www.bloomberg.com
www.stockmaster.com
www.asx.com.au
www.bolsamadrid.es
www.tse.com
www.nikko.co.jp:80/SEC/index_e.html
www.exchange.de/realtime/dax_d.html

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LECTURE PRESENTATION STOCK MARKET

Investment Analysis and

• Stock is ownership in a publicly traded

• 1.1. The process of formation and development

• 1.1. The process of formation and development

• 1.1. The process of formation and development

• 1.1. The process of formation and

So, what is the history of the modern stock

• 1.1. The process of formation and development

• 1.1. The process of formation and

Those forces lead to the formation of the

• 1.1. The process of formation and development

• 1.1. The process of formation and development

• 1.1. The process of formation and development

1.2 Classification of stock market

1.2 Classification of stock market

• 1.3. Subjects participating in the stock

Stocks are bought and sold on stock markets,

• 1.3. Subjects participating in the stock

• 1.3. Subjects participating in the stock

• 1.3. Subjects participating in the stock market

• 1.3. Subjects participating in the stock

Here are some key ones. Who are they?

1. Principals: This is a broker-dealer firm that

2.Agents: They’re in the middle. An agent helps

3. The stock exchange: The New York Stock

4. Market Makers: Market makers are like

• 1.4. The role of the stock market

Stocks are an important part of the global

• 1.4. The role of the stock market

• 1.4. The role of the stock market

An efficiently functioning stock market is

• 1.4. The role of the stock market

• 1.4. The role of the stock market

• 1.5. Introducing some stock markets in the world

What are some examples of stock markets?

• 1.5. Introducing some stock markets in the world

A variety of other prominent stock exchanges

• 1.5. Introducing some stock markets in the world

• 1.5. Introducing some stock markets in the world

Which exchanges are the world’s largest stock

#4 Shanghai Stock Exchange $4.92T

#5 Hong Kong Exchanges $4.48T

#8 London Stock Exchange $3.13T

#9 Saudi Stock Exchange $2.15T

#10 TMX Group $1.97T

• 1.5. Introducing some stock markets in the world

Which exchanges are the world’s largest stock

HOW MANY STOCK EXCHANGES IN

• 1.6. Overview of Vietnam stock market and Ho Chi

The Hanoi Stock Exchange (HNX) was established

• 1.6. Overview of Vietnam stock market and Ho Chi

Note that there is also a market for companies that are

• 1.6. Overview of Vietnam stock market and Ho

The Ho Chi Minh stock exchange is a major stock

• 1.6. Overview of Vietnam stock market and

WHAT IS THE VN INDEX?

• This list above gives you a bit of a sense about

• 2.1. The definition and characteristics of