The Ministry of Finance has issued Circular 229/2012/TT-BTC guiding establishment and management of Exchange-traded fund, the document will become effective from September 1, 2013.ETF share will have par value of VND10,000 each and its minimum trading unit (creation unit) is 100,000 shares, used for portfolio swap among ETFs and founding members, investors. For stock index that ETFs track, the index must consist of at least 10 components, the most heavily weighted stock shall not exceed 20 percent of the weight of the index.
For bond index, the index must consist of at least 5 components, the maximum weight of 1 component is 20 percent of index value except for government bonds, government-guaranteed bonds, municipal bonds, and T-bills. ETFs shall have at least 2 founding members, the minimum number of creation units successfully sold to the public for the first time shall be 10, ensuring chartered capital of the ETF no under VND50 billion. Delisting: ETF shall be delisted if its correlation versus tracking error exceeds the maximum level for 3 consecutive months. If the correlation versus tracking error reaches 80 percent or higher of the maximum errors allowed, ETF must report to The State Securities Commission (SSC), stock exchange within 24 hours and in the next 3 months, ETF must adjust their underlying portfolio to pull down errors to under 80 percent of the maximum level allowed. Founding members, market markers, must have Capital Adequacy Ratios of at least 220 percent in 12 months before the month of applying for ETF establishment. Market makers must quote bid and ask of ETF, are responsible to buy, sell EFT shares at the price quoted. ETFs cannot invest more than 15 percent of total floating shares of listed issuers, cannot invest more than 20 percent NAV into securities issued by the same organisation, and cannot invest over 30 percent NAV into companies which have cross ownership (except for government bonds or structured securities in the list of reference index.)Fund management company is responsible to calculate iNAV based on the last trade, iNAV is for reference, not for trading, iNAV is calculated every 15 seconds. ETFs shall be liquidated, closed shall be delisted if its NAV fell to under VND10 for 6 consecutive months.
Get in touch with us