Things the foreigner need to know before opening a stock account for in Vietnam

Things foreigners need to notice before opening a stock account in Vietnam

Instructions on how to open a stock market for foreign investors (opening indirect investment account)

If you can not communicate in Vietnamese, you may find it difficult to understand the content of the brokerage contracts and other services. It is also hard to ask the office staff (who give you prepared contracts) to explain the detail of terms because of their limited English and their limited working time.

The language barrier is one of the biggest issues to foreign investors.

You should completely understand all of the contract’s content before you sign. In general, when opening a stock account in Vietnam you may sign three contracts with the brokerage securities company. These contracts are the contract of opening a stock account, margin contract, and internet banking transfer. Contact us we will help you understand in detail about every contract’s content.

Below we recommend some details you must know before signing the contract:

1. Make clear all the fees that you may pay.

• Trading fee: the trading fee is the most costly fee that you should pay attention to. In the case you trade frequently, this fee will account for the largest proportion. Normally the trading fee is calculated by the percentage of total trading value in a day. Click here to find out some companies’ fees.
• Custodial fee: A brokerage or other financial institution charges for safekeeping services. In the Vietnam stock market, this fee is 0.4 VND/month/share insignificantly. For example, an investor holds one million VNM (about 132 billion VND) in 10 months. He would pay 4 million VND for the custodian (approximately 0.003% value of the investment).
• Income tax from selling Securities – 0.1% of the Sales Value.
• Cash Dividend Tax – 5% of the Cash Dividend Value actually received.

2. Margin lending contract

Circular No. 203 of the Ministry of Finance, which took effect on July 1, 2016, did not allow foreign investors to use margin on Vietnam’s stock market. However, there are still some supporting organizations providing foreign investors using margin services. We recommend that investors should not use these services to avoid financial and legal risks.

3. Internet banking and transferring money

According to Vietnam’s securities regulations, there should have many local banks and foreign banks, that are allowed to custody stocks for foreigners. But most large brokerage companies (HSC, SSI, and VCSC) collaborate with BIDV bank only to when opening the stock account for foreign investors. The reasons that we suppose are the small potential revenue and Vietnam’s strict currency management regulations of foreigners.

Due to strict regulations of indirect investment management, BIDV does not support foreigners to transfer money online. Normally, foreigners should present in a BIDV office to fulfill their transferring documents to execute the transferring procedures. However, in some cases that investors can have a representative in Vietnam, who can offer with BIDV to send the transferring money documents to the investor then the investor may execute the transferring order from outside Vietnam. In that case, the procedures may take a week to be accomplished.

                                                               Tony Bui