Proprietary trading activities in TVSCC

Proprietary trading activities is one of the most important activities of a securities company. It has a major influent on the formation and development of the securities market in general and the securities company in particular. In Vietnam, the official stock market came into being with the establishment of the Securities Trading Center in Ho Chi Minh on July, 20th, 2000. The market has started operations for nearly 10 years. The securities companies in turn were also established to meet the needs of the market. So far there have been more than 60 operating securities companies to serve the market’s demand.

Table of Contents

TVSC Thien Viet Security Join Stock Company

WTO World Trade Organization

VND Viet Nam Dong

OTC Over-the-counter

Proprietary trading activities is one of the most important activities of a securities company It has a major influent on the formation and development

of the securities market in general and the securities company in particular

In Vietnam, the official stock market came into being with the establishment of the Securities Trading Center in Ho Chi Minh on July, 20th,

2000 The market has started operations for nearly 10 years The securities companies in turn were also established to meet the needs of the market So far there have been more than 60 operating securities companies to serve the market’s demand.

Thien Viet Securities Joint Stock Company (TVSC) was born with the initial purposes, which are brokerage center and securities business, the company has become one of the securities companies, that a proprietary trading activities took a very high part in revenue However, while Vietnam are entering the first step on the path of integration with the world economy and especially after Vietnam officially joined the World Trade Organization (WTO), the appearance of securities companies, foreign economic organizations in Vietnam market will create a great number of opportunities and challenges for the domestic securities companies There is no exception to TVSC Therefore, TVSC must continually improve its quality, expand and develop its activities in order to stay stable and competitive in the stock market.

Chapter I:

Introduction about Thien Viet Securities Join stock company 1.1. History, object and values

1.1.1. History

Thien Viet Securities Joint Stock Company (from here now known as TVSCC)

is a joint stock company, established on 28a December 2006, with an initial charter capital of VND 430 billion TVSC was granted a securities trade certificate by the State Securities Commission, specializing in: investment consultancy, financial advisory for business, underwriting, brokerage, proprietary trading and depositary trading

From August 24th 2007, according to Articles 67/UBCK-GP TVSC intent to increase charter capital from 43 billion VND to 86 billion VND in order to meet requirement of expanding service to corporate finance advisory and equitization advisory

From December 5th 2007 ,according to Articles 92/UBCK-GPĐCCTCK TVSC increased the capital from 86 billion VND to 430 billion VND TVSC strives

to become the first listed security corporate in security market Enhance capital mobilization though security market Expand business by establish real estate company Intend to set up security investment fund next year

Profile:

Vietnamese name:

CÔNG TY CỔ PHẦN CHỨNG KHOÁN THIÊN VIỆT.

International name:

Thienviet Securities Joint Stock Company (TVSC)

Headquater: 535 Kim Ma, Ngoc Khanh, Ba Dinh, Ha noi

Telephone: (84.4)22203228 – Fax: (84.4)222.3227

E-mail: info@TVSC.vn

Ho Chi Minh brand: Suit 9, Vitek Building, 63 Võ Văn Tần street, District 3,

Ho Chi Minh city

Telephone: (84.8)62992099 – Fax: (84.8)62992088 E-mail: infohcm@TVSC.vn

1.1.2. The objects of TVSC

The company’s target is to become the leading investment banks in Vietnam,

we strictly comply with the standards and international regulations, in addition meet the needs of customers is the motto of our leading

TVSC always research and find optimal solutions, the most effective for their customers In addition, they pioneered the development of new products and become a leading company in Vietnam is what they aim to

Economic activity in active development, they actively recruit talented people and always have excellent talent TVSC is always a choice of candidates in Vietnam

1.1.3. TVSC values:

The core values that TVSC have defined are Integrity, Commitment to Excellence, Teamwork, Creativity, and Building up Valuesby hard work.

Integrity is the most important character for our business TVSC is committed

to maintaining the highest standards of professional ethics in everything it does

The company strive to deliver excellent services that are above its client’s

expectations TVSC constantly studies current product and service offering to identify things that can be improved to serve its clients better At the same time, TVSC anticipates customers’ needs and respond with new products and services to meet these needs

TVSC stresses on teamwork inside company Each of the team members has

unique perspective Since their backgrounds and skill sets compliment each other, they produce better results by working together as a team

TVSC emphasizes on creativity and innovation in its work TVSC always

looks for better solutions for its customers and the company doesn’t accept “No” as

an answer to any problem

TVSC believe that values are built upby hard work So TVSC takes things

for granted The whole company work hard and work smart to accomplish its mission

As it grows, these values will serve as its guidance for conducting business Its values will also set the firm apart from others, define who TVSC is and what it aspires to be

1.2. Organizational structure

The below chart is to describe the organizational structure in TVSC:

The organizational structure in Ho Chi Minh brand is similar to the headquarter in Ha Noi.

a The functional departments:

- Brokerage Department: this department are the representative of the company

trading at the Stock Exchange; the intermediary buying and selling securities for the customers Brokerage Department is also in charge of supplying information on financial terms, securities for customers; managing and receiving orders Not only developing and improving brokerage services but also offering new products for brokerage activities are its functions as well

- Investment Banking Department (abbreviation: IB)

o Consulting equitization

o Advisory and underwriting stocks and bonds

o Consulting M&A activities

o Consulting strategy for partners and other companies

o Registration for public company

- Principal Investment (abbreviation: PI).

o Investment in not-listed and listed company

o Doing proprietary trading that includes research and market analysis on the market

to give recommendations and proposal for proprietary trading; building a network

of potential customers; implementation of proprietary trading activities according to proposals and process of proprietary trading activities This department also aims to find new products related to proprietary trading activities

b The supportive departments:

- IT departments is responsible for advising, proposing and developing

solutions in information technology of management, administration and business organization It is also in charge of management, coordination and operation of technology systems in TVSC and doing research, developing software that meet the requirement of the business operations in TVSC

- Finance department do the job of accounting transactions, accounting and

management of deposit accounts, securities deposited by customers; securities depository for clients and perform services for investors involved in the brokerage and securities custody

- Human Resources:

Public administration: is responsible for facilities, the work of archives, store

and seal management and coordinate with concerned departments held meetings, conference;

Staff organization and training: to arrange the division of labor among units

and departments in the company; plan staff training procedures for promoted officers

Department of managing labor and wages: to advise the Director of the

company in the recruitment, signing or cancel labor contracts, reward, discipline, wage

- Open accounts and transactions online at www.TVSC.vn

- Communicate directly via phone: 84-4-220313 in transactions: 535 Kim Ma, Ngoc Khanh, Ba Dinh District, Hanoi

• For individual customers:

The company provides services and the following account:

- Account transactions generally (for securities listed and unlisted)

- OTC accounts for customers who use the securities depository services and securities trading OTC

- Co-ownership account for the couple

- Account investment club for a group of individual investors

- Separately managed accounts for clients with large investment capacity TVSC also offers cheaper brokerage services for independent customers - who needs only transactions and investment advisory services to support customers who need advice on investments The consultants will work with customers to understand the purpose of investment and the level of acceptable risk as well as identifying areas of investment and withdrawal strategies, and then give the suitable strategy for private customers

With close cooperation with commercial banks and finance companies, TVSC can provide our customers the variety of financial solutions such as repo and pledge of shares and mortgage, loan applications before the sale of securities, loans insured 100% of the value of securities

• For client organizations:

The company supports customers in many professional organizations, including the discovery of investment opportunities, analyzing and evaluating investment opportunities, trading strategy, the implementation of huge trading budget and evaluation of new shares issuance and transaction with the best price

Investment Banking Services (Investment Banking): With a various

network of partners are organizations and individuals in the international and national; along with experts in the field of corporate finance and capital markets, TVSC provides investment banking services with international standards for corporate customers and individuals

Investment banking services of TVSC include:

+ Consulting equitization

+ Advisory and underwriting stocks and bonds, including plans for destruction of underwriting, issuing agents for customers; establishing and maintaining relationships with potential issuance securities company; analysising and, givng evaluation and implementation of proposed plans for the stock underwriting to ensure the safety and effectiveness under the plan approved

+ Consulting M&A

+ Consulting and finding strategic partners and transfer of shares

+ Register for public companies

Investment (Investment Principal): By its capital TVSC also make

investments in businesses With strong capital market, TVSC will contribute to the success of the businesses that invest TVSC Now, the company focuses on investments in unlisted enterprises (PE), listing, and bonds (we called this proprietary trading) In the equity portfolio for unlisted company (PE), company focuses on private business growth in key sectors with the management team and excellent reliability In the list of capital stock listed companies, TVSC towards investing in value stocks and realize profits while achieving the expected profit has been made previously The type of debt, government bonds, guaranteed government bonds, term deposits, and other financial instruments and the stock bridge for customers of the IB is the choices of the company

1.4.1.1 Ho Chi Minh securities trading center

There were only two kinds of stocks which are REE and SAM at the first session They have their posted value at 270 billion dong In July, 2008, there were totally

154 kinds of stocks; 4 fund certificates and hundreds of kinds of bonds which were listed at 66,014 billion dong, in which stocks gained 44,643 billion dong The total

market capitalization value of shares gained 170,217 billion dong, which accounted for 20% GDP.

Sources: http://market.hose.com.vn/Public/TechnicalAnalysis.aspx

1.4.1.2 Hanoi securities trading center

The secondary securities trading activity at Hanoi securities trading center (HASTC) has officially started since 14/7/2005 HASTC holds the trading session

of shares of business whose minimum charter capital is 5 billion dong; government bonds; bonds guaranteed by government; local government bonds; unlisted corporate bonds Transaction activities are hold according to agreement method (applied from 14/07/2005) and price transaction with simultaneous agreement (applied from 2/11/2005)

Source: http://market.hose.com.vn

1.4.2 Competitors

There are now more than 60 securities companies in Vietnam stock market They provide the similar services according to the regulations of SSC, including: brokerage service, self-entrepreneur service, securities issuing guarantee, securities investment consultation so there is a high competitions among those companies, especially in two fields which are brokerage service and business consultation The core elements which make this company different from others include: brand, service quality, value-added services and service fee

About business, the securities companies like Sacombank securities company, Bao Viet Securities Joint Stock company or Vietcombank Securities company have advantages over other

1.4.3 Customers

The participants who purchase securities now are individual investors or organizational investors like banks, securities companies, insurance companies and other financial institutions

1.4.3.1 Individual investors.

Individual investors are the main human factor participating the market They account for more than 70% of the total in the securities market Along with the strong development of the market, the number of securities accounts also rise rapidly.

1.4.3.2 Asset management companies and investment fund.

There are now about 34 asset management companies licensed to operate in Vietnam with the total estimated capital is 5,000 billion dong

1.4.3.3 Foreign investors.

Vietnam securities market does not only attract the domestic investors but the foreign investors as well This is expressed by their share-holding percentage This trend has been increased dramatically since 9/2005 when the foreign investors had the right to buy at last 49% of the listed stocks of a listed company Now the foreign investors hold 49% of the shares of some securities: AGF; BMP; BT6; DMC; GMD; IFS; MCV; REE; RIC; ST8; TDH; TYA; VFI

Out of more than foreign accounts, there have been famous investment funds like Dragon Capital, Vina Capital, PXP Asset Management, Indochina Capital So the foreign investments confirm that besides the short-term investment target, there are also long-term vision and their strategy when considering opportunity when investing in Vietnam securities market