Ambiguous customer deposit balance at SSI securities

The "card" that brings profit to SSI over the years

SSI Securities was established on December 27, 1999, registered for business on April 5, 2000.

Initially, SSI had a charter capital of 6 billion VND. By April 2023, this unit was allowed by the Securities Commission to increase its charter capital to more than 15,000 billion VND.

SSI's main activities are securities brokerage, securities trading, securities underwriting, securities custody, financial and securities investment consulting, then securities margin trading and derivatives activities.

However, looking back at SSI's capital increase history and financial reports over the years shows that SSI's securities brokerage activities are sluggish, bringing in poor profits.

Meanwhile, margin lending activities are prominent, continuously bringing SSI profits of thousands of billions of dong.

According to the parent company's audited financial report for 2022, SSI's interest from lending and receivables reached more than VND 1,800 billion, while in the same period in 2021, this figure reached more than VND 1,570 billion. In 2020, SSI's interest from lending activities reached VND 525 billion.

It can be seen that profits from margin lending and customer advance sales loans have become a "lucrative cake" for SSI to exploit over the years.

As for SSI's revenue from brokerage and other activities over the years, it has been quite dull due to high operating costs.

In particular, the securities brokerage costs recorded in the parent company's financial report in 2022 reached VND 1,336 billion. In 2021, it was VND 1,494 billion, and in 2020, it was VND 625 billion.

Is SSI violating the Law on Credit Institutions?

In addition to increasing bank loans and charter capital for margin lending as Lao Dong previously reported, over the years, SSI's deposits have continuously increased rapidly.

Remember at the end of April 2023, a series of SSI Securities investors received a notice from a consultant about SSI's new product on term deposits, similar to deposit activities at banks.

According to the offer, this deposit product of SSI is called S-savings, optimizing idle cash flow; flexible term; linking stock purchasing power... At this time, the stock market is illiquid, while savings interest rates at banks are adjusted down. Therefore, many investors have been interested in this product of SSI.

SSI believes that the development of the S-Savings Product is aimed at maximizing the profit on the amount of money available in a regular trading account or margin account within a certain period.

According to the introduction, investors can get 4.5%/year interest rate for super short term of 1-2 weeks, and also 7-7.7%/year interest rate for term less than 6 months.

It is worth mentioning that Clause 2, Article 8 of the Law on Credit Institutions stipulates: "Individuals and organizations that are not credit institutions are strictly prohibited from conducting banking activities, except for margin transactions and securities purchase and resale transactions of securities companies".

The ambiguity in the introduction of the S-Savings product of SSI Securities Company raises questions about whether or not this unit actually mobilizes deposits?

In December 2023, the Securities Commission must issue an "ultimatum" requiring securities companies (SCs) not to carry out activities that make customers/investors understand that SCs have the function of receiving deposits and must settle all transactions that have arisen related to this activity, no later than June 30, 2024.

In case the securities company has had an activity that allows customers/investors to enjoy/support interest on the amount of money that has not yet generated transactions, it must immediately stop negotiating/signing new agreements and must settle all transactions that have arisen related to this activity, no later than June 30, 2024.

SSI's S-Savings deposit product is currently at the top 1 position when searching on Google. Screenshot.

SSI's S-Savings deposit product is easy to find on Google. However, the interest rate has changed compared to the time SSI sent it to investors in April 2023. Screenshot. — However, the interest rate has changed compared to the time SSI sent it to investors in April 2023. Screenshot.

The cumulative financial report for 2023 shows that customer deposits at SSI reached nearly VND 5,300 billion, of which investor deposits for securities transactions under the securities company management method were VND 4,643 billion (accounting for 88%).

In 2022, 2021, and 2020, customer deposits recorded at the end of the year reached VND 4,715 billion; VND 7,246 billion and VND 4,812 billion, respectively.

It is estimated that investors' deposits for securities transactions managed by securities companies account for 85-90% of total deposits.

Meanwhile, the customer money management business at securities companies according to Article 17 of Circular 121/2020/TT-BTC stipulates that securities companies must build a separate management system for customer money.

Specifically, customers open an account directly at a commercial bank selected by the securities company to manage securities trading money.

In addition, securities companies are still allowed to open specialized accounts at banks to manage customers' securities trading deposits.

This regulation aims to limit risks for investors, avoiding capital abuse or loss of liquidity.

Previously, in December 2022, the State Securities Commission decided to impose an administrative fine of VND 200 million in the field of securities and the securities market on SSI Securities Corporation.

The reason for the fine was because this company violated regulations on lending restrictions: lending money to customers through bond deposit and purchase contracts, and securities purchase contracts.

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