Changing ways: A street vendor selling brooms and brushes in Hanoi. The MoF is proposing new measures for upgrading the securities market including allowing clearing members like securities firms to handle transactions in primary and derivative markets. — AFP
HANOI: The Finance Ministry (MoF) is suggesting revisions and additions to specific sections of the 2019 Securities Law, with a focus on tightening market manipulation practices.
After inspection and transaction audits, the MoF said it was important to amend and supplement regulations on market manipulation in Decree 156 to align with current market realities.
Behaviours, which include dominating buy or sell volumes of securities at market open or close, to influence closing or opening prices for that security, placing buy and sell orders for the same securities on the same trading day or coordinating trades without actual transfers, are seen as market manipulation practices.
The ministry also noted the absence of strict regulations prohibiting insiders of public companies, public securities investment firms, public funds and their affiliates from withholding information on anticipated transactions.
This oversight complicates the handling and prevention of market infractions, it said.
As a result, it proposed a ban on such practices within the securities sector.
In addition, the MoF’s proposal introduced significant points concerning the responsibilities of relevant entities and individuals regarding documentation, reporting, professional securities investments and securities offerings.
The ministry’s proposed draft regulations for professional retail investors includes additional requirements, such as a minimum two-year tenure in securities investment, a minimum of 10 trades per quarter over the past four quarters, and a minimum annual income of one billion dong over the past two years.
Previously, the Securities Law of 2019 and Decree 65 raised the bar for professional investor qualifications.
However, meeting these standards does not guarantee the ability to assess bond risks, as the regulation currently focuses solely on capital requirements, necessitating individuals to maintain a portfolio value averaging at least two billion dong over 180 days, excluding borrowed funds.
Recently, the operation of the private placement bond market in Vietnam has not been in line with its inherent nature.
It is evident that numerous bond offerings are dispersed among thousands of retail investors, mainly comprising small-scale retail investors (either directly or indirectly holding bonds through investment collaboration agreements or repurchase contracts).
These investors typically exhibit low investment values, lack substantial experience and expertise, while struggling with risk assessment capabilities.
The MoF also proposed new measures for upgrading the securities market, including allowing clearing members like securities firms, commercial banks and foreign bank branches to handle transactions in both primary and derivative markets.
The ministry recommended further research and regulation adjustments to establish subsidiary companies under the Vietnam Securities Depository and Clearing Corporation for implementing the central counterparty mechanism, aiming for efficiency and international compliance.
These steps are crucial for addressing the pre-funding issue, a current bottleneck in the upgrading process. — Viet Nam News/ANN
