In the first month of applying the new mechanism, foreign investors registering for pre-margin trading (NPF) conducted more than 19,000 transactions with a total value of about VND9,000 billion, accounting for 11% of the total value of securities purchases at these securities companies.
In the first month of applying Non-prefunding, more than 19,000 transactions were made by foreign organizations.
In the first month of applying the new mechanism, foreign investors registering for pre-margin trading (NPF) conducted more than 19,000 transactions with a total value of about VND9,000 billion, accounting for 11% of the total value of securities purchases at these securities companies.
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| Ms. Ta Thanh Binh - General Director of Vietnam Securities Depository and Clearing Corporation |
Nearly 330 foreign organizations registered to trade NPF in the first month
Sharing at the workshop "Overview of the capital market in 2024 and prospects for 2025" with the theme: "Sustainable development of Vietnam's capital market - Current situation and solutions" organized by the Vietnam Financial Consulting Association in collaboration with the Financial Investment Magazine - VietnamFinance on the morning of December 6, Ms. Ta Thanh Binh - General Director of Vietnam Securities Depository and Clearing Corporation (VSDC) updated the situation of transactions and payments for stock purchases that do not require sufficient funds when placing orders (NPF transactions) at these units (if any) after nearly a month of implementing Circular 68 , with one of the most important contents being the removal of the mandatory margin requirement ( non-prefunding ). for foreign institutional investors .
Specifically, according to the information VSDC received feedback from 4 securities companies (MayBank MSVN), SSI, HSC, Vietcap and 5 custodian banks (HSBC, Standard Chartered, Deustche Bank, Citi Bank and BIDV) , by the end of November 29, 2024, there were a total of 327 foreign institutional investor (FII) accounts registered to trade NPF at 4 securities companies. In November 2024, these FIA conducted more than 19,000 transactions with a total value of about VND 9,000 billion, accounting for an average proportion of about 4.7% of the number of purchase transactions; 11% of the total value of securities purchase transactions (stocks, fund certificates, CW) at these securities companies.
According to Ms. Binh, VSDC and related parties have performed quite well, not allowing foreign organizations to lack money, leading to the need to transfer payment obligations and affecting the payment activities of the market. The provision of services, risk management of NPF transactions by securities companies, brokerage houses as well as the use of NPF transaction mechanisms by foreign organizations are basically carried out in a cautious and safe manner.
“ Investors are also very cautious, completing money transfers on T+1 or even in the afternoon of the transaction day,” said a VSDC representative. Rare cases VSDC found that in November 2024, HSBC confirmed twice that foreign investors were unable to pay on T+1. VSDC has worked closely with HSBC and the two securities companies where foreign investors placed orders to clarify information about foreign investors' accounts and transactions that were unable to pay (stock codes, missing amounts, order numbers, etc.) to be ready to transfer payment obligations for these transactions to the securities companies for offset and payment if foreign investors do not have enough money in their accounts within the prescribed time limit. However, by T+2, foreign investors had enough money to pay, so these transactions were paid by VSDC according to normal procedures.
FTSE Russell could make a big move in September 2025
According to Ms. Binh, in a recent working session with representatives of FTSE Russell, this market rating unit confirmed that Vietnam has met 7/9 criteria for upgrading. The remaining two criteria include removing the requirement for foreign investors to deposit funds before trading (prefunding) and handling failed transactions (failed trade management).
Regarding the non-prefunding solution, FTSE representatives see that Vietnam has taken practical steps in policy institutions and implementation. They will wait for the market to operate for a while longer to evaluate at the March review and may have clear moves in September 2025. “This is also the desire and great goal of the management agency and members in the market,” Ms. Binh also emphasized.
With the final criterion for upgrading being failed trade management, according to Ms. Ta Thanh Binh, the solution is to apply the central clearing mechanism (CPP). Regarding this issue, the new regulations in the Securities Law in the Law amending 7 laws in the financial and budgetary fields have laid an important foundation for implementing CCP, which allows VSDC to establish a subsidiary to separate risks.
Besides FTSE, Vietnam is also pursuing the goal of upgrading its market according to MSCI standards. Regarding MSCI Global's criteria, by June 2024, Vietnam's stock market has met 10/18 criteria, but there are still some criteria that need to be improved such as foreign ownership limit, remaining foreign ownership level and the level of liberalization of the foreign exchange market that has not been met...
According to the General Director of VSDC, in the third and fourth quarters of 2024, this agency has actively participated in giving opinions, proposing supplements and amendments to the Securities Law and Decree 155 to prepare for the establishment of a subsidiary company to perform the function of a central clearing partner (CCP) for the underlying securities market. This is a necessary step for the overall market settlement risk management and continues to move towards upgrading criteria for the Vietnamese stock market in the future. In addition, the regulation on English information disclosure and its synchronous application according to the roadmap will gradually improve the transparency criteria. VSDC and the stock exchanges will also apply this regulation from 2025. The workload to be implemented from the beginning of next year to meet the criteria will not be simple.
“Many organizations have given their expected figures on foreign capital inflows into the Vietnamese stock market. We believe that the upgrade will create a positive effect. Institutional reforms, changes in administrative procedures, etc. will also create positive moves,” said Ms. Binh, emphasizing that foreign capital will usually flow in before the upgrade decision is announced.
However, besides the advantages, this also raises the issue of pressure on the system with large transaction volume, value, and faster transaction frequency. In case of upgrading to emerging market status, Vietnam's stock market is expected to receive a large investment capital flow into the emerging market block. This capital flow can bring large transaction volume, with transaction frequency that can be more frequent and continuous, which can cause no small pressure on the transaction system and the clearing and settlement system. Besides, there are issues related to foreign currency conversion, whether it is capable of meeting such a large transaction volume or not.
The pressure to maintain the upgrade when the new rating criteria have been met will also be a challenge for the parties involved. “According to the exchange from FTSE Russel, the rating conditions can be completely changed when necessary, when there is demand from large customers. Thus, the progress towards rating, being rated and then maintaining the rating will depend a lot on the annual assessment of international organizations. In case the conditions change rapidly and more, we need to be ready to propose changes to more appropriate legal regulations, and promptly make systematic adjustments and supplements when necessary,” the VSDC General Director affirmed.
“These are the real challenges that we need to face and come up with scenarios to solve. From the perspective of the management agency, we will create a solid foundation for the goal of upgrading the stock market to be favorable. Upgrading is just a matter of time, it will definitely be achieved,” Ms. Ta Thi Thanh Binh emphasized.
Source: https://baodautu.vn/thang-dau-app-dung-non-prefunding-hon-19000-giao-dich-duoc-to-chuc-ngoai-thuc-hien-d231826.html
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