NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF BANKING AND FINANCE

CHAPTER 1
MONITORING AND SUPERVISION OF
THE SECURITIES MARKET

SECURITIES MARKET DEPARTMENT

SECURITIES MARKET DEPARTMENT

 LEARNING GOALS

•Understand the basic concepts of securities

market supervision, inspection, and regulation
•Master the monitoring models and contents of
market management activities.

SECURITIES MARKET DEPARTMENT

 CONTENT

The need to manage and monitor the securities market

Managing activities on the securities market

Monitoring activities on the securities market

Management and supervision activities on a number of

countries' securities markets

SECURITIES MARKET DEPARTMENT

 Readings

● Role of the government seminar – Review

key points on slides
● Securities Regulation – Chapter 1

SECURITIES MARKET DEPARTMENT

 Discussion

• What happens without regulation?

• Case study: Trinh Van Quyet and FLC
shares

SECURITIES MARKET DEPARTMENT

 Discussion
Examples of Market Manipulation
•Churning – when a trader places both buy and sell orders at the
same price. The intent is to churn up the trade volume, making
the stock look more interesting to other investors, and thereby
increase the price.
•Painting the Tape – when a group of traders creates activity or
rumors to drive up the price of a stock (also referred to as “Runs”
or “Ramping”).
•Wash trading – selling and re-purchasing the same security or
substantially the same security to generate activity and increase
the price.

SECURITIES MARKET DEPARTMENT

Examples of Market Manipulation
•Bear raiding – attempting to push down the price of a stock by
heavy selling or short selling.
•Cornering (the market) – purchasing enough of a particular
stock, commodity, or other assets to gain control of the supply
and be able to set the price for it.
•Insider Trading – when insiders with crucial confidential
information about a company take advantage of that knowledge
to make a profit or avoid losses by buying or selling their shares
of the stock.

SECURITIES MARKET DEPARTMENT

NEED FOR MONITORING AND SUPERVISION OF THE
SECURITIES MARKET

• To protect the interests of investors

• Ensuring efficiency and transparency in securities
transactions
• Ensure the harmonization of the interests of market
participants
• Management and supervision mean preventing and
controlling risks that lead to systemic risks of market
crashes.
• Management and supervision of the stock market are
indispensable in the context of economic integration

SECURITIES MARKET DEPARTMENT

 Concepts, goals and forms of monitoring

* Concept:
Stock market management can be understood as the
promulgation and use of legal documents, general regulations in
the field of securities, and other related areas to achieve the set
objectives for the stock market.
* Goals:
- Ensuring the honesty and transparency of the market
- Ensuring market efficiency
- Ensure fairness
* Management form:
- Management by law
- Self-governing

SECURITIES MARKET DEPARTMENT

 Regulators

 State management agencies on the stock

market
 Self-governing organizations
Stock Exchanges

Association of Securities Traders

SECURITIES MARKET DEPARTMENT

 Content Management

• Release management:
+ Subscription mode
+ Licensing mode.
• Manage transactions on the stock market
• Management of Securities Traders
• Management of international securities:
 First, manage the issuance of securities by domestic issuers to
foreign markets.
 Second, manage the issuance of securities by foreign issuers
on the domestic stock market.
 Third, manage securities transactions of foreign organizations
and individuals on domestic stock markets and vice versa.
 Fourth, manage foreign organizations on the stock market

SECURITIES MARKET DEPARTMENT

 Securities market supervision

Securities market supervision is the

monitoring and inspection of market
participants’ activities on the market to detect
and promptly handle violations and encourage
the timely promotion of good behaviors to
ensure market stability.

SECURITIES MARKET DEPARTMENT

 Monitoring content

 Exchange monitoring: stock monitoring and

market tracking.
- Stock tracking for the following purposes:
+ Continuously monitor stock prices and
trading volumes to detect unusual
transactions.
+ Collect information related to listed
companies and market prices.
+ Monitor ownership status of international
investors.
SECURITIES MARKET DEPARTMENT
 Monitoring content

• Market monitoring has the following purposes: +

Detect insider transactions and market
manipulation.
+ Disciplinary action against fraudulent
and illegal transactions in the market.
+ Report to the State management
agency the instability of the market to make
reasonable adjustments.

SECURITIES MARKET DEPARTMENT

 Monitoring content
 Supervision of members of the Stock Exchange
 Supervision of listed organizations:
• Supervision of brokerage companies, securities trading, and fund
management companies
• For brokerage business: the law requires companies to be responsible
for conducting transactions fairly; they must perform on time, set prices
in line with market prices, and provide all relevant information to
customers.
• For business operations: The Stock Exchange monitors securities
companies according to the following contents: providing timely and
accurate trading information, method of entering orders of legitimate
customers, and members of the company are not profitable. Use on
behalf of the company to conduct its transactions.
• For fund management companies: The Stock Exchange supervises the
organizational structure, method of fund formation, financial situation,
and activities in the market.

SECURITIES MARKET DEPARTMENT

 Methods of monitoring the stock market

• Stock Tracking

 Day Stock Tracking

 Track stocks by time interval (long-term

tracking)
• Inspect

SECURITIES MARKET DEPARTMENT

MANAGEMENT AND SUPERVISION STOCK MARKETS
OF OTHER COUNTRIES
 State management agencies
• The earliest securities regulator was the U.S. Securities Board
(SEC), established on June 6, 1934, after the market crash of 1929
• In the UK, although the Board of Securities and Investment (SIB)
was established relatively late (in 1986), it has a specific
management model, a very high self-management model; the
Government only manages and supervises very little
• In Korea, two parallel state management agencies exist in
securities, including the Korea Securities Administration (KSEC) and
the Securities Supervisory Commission (SSB).
• In China, the People's Committee (CSRC) was established in 1992
 Executive Authority

SECURITIES MARKET DEPARTMENT

 Legal system

• In the US, Japan, UK, Germany, South Korea, and

Thailand, countries with a long history of forming and
developing securities markets, the legal system is complete
and strict. The method of legal documents mainly includes
Laws, Statutes, and regulations promulgated by State
management agencies and self-governing organizations.
• In developing countries such as China and Indonesia, the
national legal system is not synchronized and complete.
Hence, banking documents still have many shortcomings
that must be supplemented and corrected. They exist
mainly as sub-law documents (decrees, decisions,
statutes).

SECURITIES MARKET DEPARTMENT

 Surveillance System

• In most countries, the supervisory system has the

most critical responsibility of supervising and checking
the enforcement of regulations in the securities sector.
• The main monitoring content is to check the financial
position and compliance with statutory economic
indicators. At the same time, consider unauthorized
transactions with prices and volumes exceeding the
norm, insider trading, or misuse of customer deposits.

SECURITIES MARKET DEPARTMENT

MANAGEMENT AND SUPERVISION OF VIETNAM STOCK
MARKET
• Vietnam Stock Market officially came into operation on
20/7/2000 with the opening of the Ho Chi Minh City Stock
Exchange. HCM. Previously, to prepare for the market,
SSC was established under Decree 75/CP dated
28/11/1996 by the Prime Minister.
• SSC is an agency directly under the Government tasked
with preparing legal conditions, goods, people, and
facilities for Vietnam's stock market. SSC is the highest
state management agency in the securities sector.
• Besides, the Ministry of Finance, the State Bank, and the
Ministry of Justice manage specific issues in the securities
sector.

SECURITIES MARKET DEPARTMENT