Facing risks when participating in online stock exchanges

illustration image. Source: Internet

Appropriate investment money

According to the State Securities Commission (SSC), stock exchanges on these bourses mainly include stock indices and contracts for difference (CFD) of shares on stock exchanges of major economies. Investment activities on online international stock exchanges are currently not recognized and protected by Vietnamese law. This is a form of investment with potential financial risks.

Regarding the status of investors participating in online stock exchanges in Vietnam, the State Securities Commission said that, in recent times, there has been a phenomenon of some organizations and individuals claiming to be international securities companies or representatives of the international securities trading floor, or from self-organized international stock exchanges (BE Exchange, DK-Trade, FTXtrade.com, LCM, Multibankfx, ...), inviting investors to open accounts, deposit money invests in electronic wallets, invest in various types of stock indices, international CFD on stock exchanges which do not organize and operated by the Vietnam Stock Exchange and its subsidiaries.

A popular way of calling for investment is through social networks and by phone or texting. Those guiding investors to open accounts, deposit money and perform transactions through websites and applications organized and operated by those subjects (MT4, MT5, Tradingview)

According to information from the investigation police agencies and petitions from investors, some people have interfered with the price of securities codes through the application operated by those subjects, resulting in losses of investors and then appropriate their investment money.

Investors in Vietnam participate in trading and investing in online stock exchanges in direct and indirect forms.

For the direct trading method, investors open an account directly on the website and conduct international securities buying or selling activities. Meanwhile, investors who indirectly invest in securities on foreign stock exchanges will send buy or sell orders through individuals or organizations claiming to be representatives of the trading floor in Vietnam and individuals/organizations. This organization will transfer money on behalf of investors, withdraw money and enter orders on the exchange and announce profit and loss, as well as request investors to transfer more money if the account suffers from a loss resulting in a shortage of margin.

Beware of high-profit offers

According to current regulations on securities and securities market, apart from the Vietnam Stock Exchange and its subsidiaries, no organization or individual is allowed to organize and operate the stock market. A securities company operating on the Vietnamese stock market must be licensed by the State Securities Commission and individuals conducting brokerage activities need to meet professional standards as well as be granted a practicing certificate by the State Securities Commission.

Types of securities permitted to be traded and listed on the Vietnamese stock market are regulated by the law on securities and must satisfy the conditions for listing and registration before being put into trading on the Stock Exchange.

Recognizing the risks of online stock exchanges, the State Securities Commission has advised investors in the mass media to be careful when investing in exchanges that are not operated by the Stock Exchange of Vietnam or its subsidiaries. When participating in the above-mentioned online stock exchanges, investors are fully responsible for their own decisions and are not protected by law.

Therefore, the State Securities Commission continues to recommend that investors, when participating in international securities investment on exchanges that are not organized and operated by the Vietnam Stock Exchange and its subsidiaries, to be very cautious, especially in offers of high interest rates, high profits, signs of non-transparency, be wary of receiving invitations to invest in international stock exchanges or international derivatives.

"When trading, the investors need to check information on exchanges (including licensing agencies, floor management, trading mechanisms, rights and obligations of parties) to have a legal basis to protect their rights when they are harmed in terms of assets", the SSC recommended.