Individual professional investors can only buy individual corporate bonds with "3 yes"

The draft law amending seven laws submitted by the Government to the National Assembly this morning (October 29) no longer excludes individual professional securities investors from the private corporate bond market, but certain conditions must be met.

Individual professional investors can only buy individual corporate bonds with "3 yes"

The draft law amending seven laws submitted by the Government to the National Assembly this morning (October 29) no longer excludes individual professional securities investors from the private corporate bond market, but certain conditions must be met.

Deputy Prime Minister, Minister of Finance Ho Duc Phoc

Individuals may only purchase rated, collateralized or guaranteed bonds.

This morning, Deputy Prime Minister and Minister of Finance Ho Duc Phoc, authorized by the Prime Minister, presented to the National Assembly the Draft Law on amending and supplementing a number of articles of the Securities Law; Accounting Law; Independent Audit Law; State Budget Law; Law on Management and Use of Public Assets; Tax Administration Law; and Law on National Reserves.

Regarding the securities sector, the draft law that was previously put out for consultation had removed professional individual investors from the private bond market (except for bonds issued by credit institutions). However, according to the draft submitted by the Government to the National Assembly this morning, in addition to adding regulations on professional securities investors including foreign institutional and individual investors (to facilitate attracting foreign investment capital into the capital market), it also "opens the door" for professional individual investors to participate in buying and selling private bonds.

Accordingly, the draft regulation stipulates that professional securities investors are individuals as prescribed in Clause 1 of this Article who are allowed to participate in purchasing, trading, and transferring individual corporate bonds in the following cases: Enterprises issuing individual corporate bonds with credit ratings and secured assets; Enterprises issuing individual corporate bonds with credit ratings and payment guarantees from credit institutions.

According to the Government's report, private bonds are very risky. Although the laws of some countries in the world do not prohibit professional individual investors from participating in this market, in reality, trading, buying and selling, and investing in private bonds are usually only carried out between professional investment organizations such as securities companies, investment funds, and investment banks. Individual investors often do not directly participate in this market due to limitations in risk management and resources.

The regulation that individual professional investors are allowed to directly participate in purchasing, trading, and transferring individual corporate bonds in certain cases as above will help improve the quality of the market and create conditions for the market to develop healthily, sustainably, safely, and effectively.

For corporate bonds that do not meet the above conditions and have a higher level of risk, only professional institutional securities investors are allowed to participate in purchasing, trading, and transferring, creating conditions for the continued development of a safer, healthier, and more effective individual corporate bond market.

The above provisions do not limit the ability of enterprises to mobilize capital in the bond market. To give the market time to adjust and adapt to the new regulations, ensuring the rights and interests of current investors, the draft Law supplements the transitional provisions: for corporate bonds issued privately before January 1, 2026 and with outstanding debt, they will continue to comply with the provisions of the Securities Law until the issuing organization fully pays the principal and interest of the bonds.

In the review report, the Economic Committee agreed to add professional securities investors who are foreign organizations and individuals to facilitate and increase the attraction of foreign investors to participate in the Vietnamese stock market, promote the development of the stock market and expand the channel for indirect foreign investment capital into Vietnam.

Many opinions in the Economic Committee agree with the Government's proposal to regulate the subjects of investors who are allowed to participate in purchasing, trading, and transferring individual corporate bonds. However, the review agency recommends that the Government continue to review the conditions for issuing enterprises in accordance with the market situation, ensuring sustainable market development, and protecting individual investors when participating in the market.

In addition, there needs to be solutions to increase the participation of investment funds and institutional investors in the bond market in general and privately issued bonds in particular; and increase the responsibility of individual investors.

However, there are still some opinions supporting the plan previously submitted by the Government (only allowing professional securities investors who are organizations to participate in purchasing, trading, and transferring individual corporate bonds, individual investors only participate in purchasing, trading, and transferring individual corporate bonds issued by credit institutions. Individuals who want to invest in individual corporate bonds can invest through funds).

Increasing the restriction period for transferring individual securities from 1 year to 3 years will reduce market liquidity.

Regarding the conditions for private securities offerings by public companies, securities companies, and securities investment fund management companies, a draft law amending seven laws in the financial sector proposes increasing the transfer restriction period from a minimum of 1 year for professional securities investors to a minimum of 03 years, similar to strategic investors.

Regarding this content, the auditing agency recommends that the Government consider carefully, because the nature, purpose of holding and trading securities of strategic investors and professional securities investors are different.

The Draft Law has narrowed the scope of participants in the purchase, sale and transfer of individual securities. Increasing the transfer restriction period may lead to investor apprehension, impact market liquidity, reduce the attractiveness and interest of investors in individual securities offerings; and may also cause difficulties for investment activities and portfolio restructuring of professional investors.

Some opinions suggest that the transfer restriction period should be higher than the current Law but lower than the transfer restriction period for strategic investors. Some opinions suggest keeping the transfer restriction period for professional securities investors as the current Law.

In addition, the Economic Committee recommends that the Government continue to review and thoroughly evaluate the causes and solutions to further improve the policy on individual corporate bonds. At the same time, it is necessary to synchronously improve the regulations related to individual corporate bonds of public companies (regulated in the Securities Law) and non-public companies (regulated in the Enterprise Law) to promote the healthy and safe development of the corporate bond market, which is an important capital mobilization channel for businesses.

Source: https://baodautu.vn/nha-dau-tu-chuyen-nghiep-ca-nhan-chi-duoc-mua-trai-phieu-doanh-nghiep-rieng-le-3-co-d228563.html