6 Key Points from Circular 08/2026/TT-BTC on Pre-Funding Requirements for Foreign Institutional Investors

Quick Reference

• Circular 08/2026/TT-BTC modifies the timing of funding requirements for certain securities transactions in Vietnam
• Eligible foreign institutional investors may place buy orders before funds are credited, subject to settlement obligations
• The change aligns Vietnam’s securities market with international post-trade settlement practices
• The rule does not apply to individual investors and does not liberalize foreign exchange controls
• Settlement risk is managed through licensed securities companies and custodians
• The reform enhances market accessibility while preserving financial stability safeguards

Background History on Vietnam’s Pre-funding Model

Under the previous framework, investors were generally required to deposit 100% of purchase funds in a local account before placing a buy order. This approach differed from settlement mechanics used in most developed capital markets, where trades are typically executed first and settled within a standard cycle.

For foreign institutional investors operating across multiple jurisdictions, this created operational inefficiencies and constrained participation in the Vietnamese market.

What Circular 08/2026/TT-BTC Changes

The Ministry of Finance issued Circular 08/2026/TT-BTC in early 2026, introducing targeted changes to pre-funding requirements for certain securities transactions by foreign institutional investors.

The Circular took effect shortly after issuance, marking a step toward aligning Vietnam’s securities settlement framework with international post-trade practices, while maintaining existing foreign exchange controls.

Circular 08/2026/TT-BTC permits eligible foreign institutional investors to execute securities purchase orders before remitting funds, provided that payment is completed within the prescribed settlement cycle.

In international practice, this approach is commonly described as post-trade settlement, where:

• Execution and settlement occur at different stages; and
• Intermediaries manage settlement risk through credit assessment and liquidation mechanisms.

Vietnam’s reform adopts this widely recognized model while retaining regulatory oversight.

Who May Rely on the New Rule

Covered investors:

• Foreign institutional investors, including regulated funds and financial institutions
• Transactions executed through licensed Vietnamese securities companies, often coordinated with international brokers and custodians

Not covered:

• Foreign individual investors
• Vietnamese individual investors
• Retail structures or nominee arrangements designed to replicate institutional status

What Has not Changed

Circular 08/2026/TT-BTC does not:

• Remove the obligation to settle trades in full;
• Permit trading without lawful remittance of funds;
• Amend foreign exchange control regulations; or
• Allow individuals to access offshore trading channels for Vietnamese securities.

Funds must still be transferred and settled in compliance with existing law.

How This Change is Aligned to Internal Standard?

Internationally, post-trade settlement is recognized by global standard-setting bodies including IOSCO and the BIS, which Vietnam is member of,  as a core feature of modern securities markets.

Index providers and multilateral institutions assess pre-funding requirements when evaluating market accessibility for institutional investors.

By adjusting the timing of funding requirements for institutional trades, Vietnam aims to:

• Improve operational compatibility with global markets;
• Enhance institutional participation; and
• Support long-term capital market development objectives.

Practical implications

Companies, funds, and intermediaries should:

• Confirm investor eligibility under Circular 08/2026/TT-BTC;
• Review brokerage, custody, and settlement arrangements;
• Avoid assuming the rule extends to individuals or retail investors; and
• Seek clarification before implementing new trading workflows.

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