Removing bottlenecks, aiming to upgrade the stock market by 2025

Deputy Minister of Finance Nguyen Duc Chi emphasized that upgrading the stock market will affirm its position, increase liquidity, and quality of investment capital flows according to regional and international standards. This is also a condition and a boost to help improve the country's credit rating.

Workshop "Creating motivation to upgrade the stock market" organized by Lao Dong Newspaper in collaboration with the Ministry of Finance and the State Securities Commission on July 2. Photo: Phan Anh

Great opportunity to step up to a new height Speaking at the workshop "Creating motivation to upgrade the stock market" organized by Lao Dong Newspaper in collaboration with the Ministry of Finance and the State Securities Commission on July 2, Member of the Presidium of the Vietnam General Confederation of Labor, Editor-in-Chief of Lao Dong Newspaper Nguyen Ngoc Hien said that the stock market development strategy until 2030 aims to upgrade Vietnam from a frontier market to an emerging market by 2025 according to the classification standards of international organizations. The market upgrade has always been of interest and closely directed by the Government and the Prime Minister. When successfully upgraded, it will contribute to enhancing the reputation and image of enterprises in the international market, attracting foreign investment capital and increasing liquidity for the enterprise's shares. According to Mr. Vu Chi Dung - Director of the Department of International Cooperation, State Securities Commission, upgrading the stock market will be an important signal to the international community, showing that Vietnam is on the way to developing into a market economy in its true nature. From there, the perspective of international investors on the investment and business environment in Vietnam will also have a more positive change. At the same time, this will be an indirect boost for the goal of gradually raising the national credit rating. This will be a clear signal, showing that Vietnam has made further strides in the path of international economic integration. Affirming the position and enhancing the image not only of the Vietnamese stock market but also of the entire economy towards the international community. Recent estimates from the World Bank show that if Vietnam is upgraded to the group of emerging stock markets, it will be able to attract about 25 billion USD of new investment capital from international investors by 2030. Given the above prospects, listed enterprises are expected to benefit greatly. Ms. Tran Khanh Hien - Director of Research, MB Securities Company - pointed out the great benefits, including increasing the quantity and quality of professional investors, increasing professionalism and sustainability in investment activities; increasing the chances of success in capital raising activities, IPO, finding strategic partners, etc.

Overview of the Workshop. Photo: Phan Anh

Removing pre-transaction margin problems The biggest problem for FTSE Russell to decide to upgrade Vietnam's stock market from frontier to emerging is related to clearing activities, payment counterparty transfers and handling of failed transactions. The solution to these requirements is to apply the central counterparty (CCP) model. However, implementing the CCP model is expected to take more time because many related regulations will have to be adjusted, including regulations governing the operation of custodian banks. Therefore, in the short term, the Ministry of Finance and the State Securities Commission have proposed a solution in which securities companies will provide payment support for foreign institutional investors (Non-Prefunding Solution). From the perspective of a member securities company, Mr. Nguyen Khac Hai - Director of Law and Compliance Control, SSI Securities Company proposed a number of solutions to improve the capacity of securities companies to provide services to foreign investors in the market. Firstly, securities companies need to supplement capital resources. Secondly, the risk management system of securities companies must be upgraded to limit payment risks and operational risks, especially when implementing NPS solutions or in the longer term when intraday trading or short selling products are operated. Thirdly, develop a synchronous system of operations and provide products and services to foreign investors. Finally, securities companies will have to upgrade the system to connect online with foreign investors to improve order execution capacity. Associate Professor, Dr. Tran Viet Dung - Banking Academy - emphasized the need to strengthen compliance monitoring and improve assessment capacity. Consider applying the ASEAN corporate governance scorecard and strengthen international information exchange, ensuring the progress of applying IFRS standards on schedule. At the same time, strengthen sanctions for violations of information disclosure obligations, actively improve corporate governance mechanisms at listed enterprises. Also at the workshop, Mr. Bui Hoang Hai - Vice Chairman of the State Securities Commission - updated the progress of amending the Circular related to regulations on transactions and activities of securities companies. Accordingly, the first draft of this Circular was completed by the Ministry of Finance on the Ministry of Finance's website in March 2024. The Commission has held meetings with relevant agencies and market participants through discussion meetings to propose solutions. Mr. Hai said: "We believe that the proposed solutions will be feasible and have now completed 90%. The Committee has the final draft of this Circular and submitted it to the Ministry of Finance. After the Ministry of Finance has concluded, it will soon post it on the website. With the Circular requiring investors to have money on the T+1 trading day, the new draft has been revised to require investors to have money in their accounts around 9:00 - 9:30 on the T+2 day. This point basically meets the criteria according to international standards. The Committee has discussed with major investors and international units, and the initial information is known that the proposed solutions are basically feasible". Concluding the workshop, Deputy Minister of Finance Nguyen Duc Chi highly appreciated the significance of the program in the goal of upgrading the stock market. To achieve this goal, the Ministry of Finance is ready to take a pioneering role in implementing this process. The State Securities Commission, listed enterprises, media units... all must go together, aiming to upgrade the stock market as soon as possible.

According to Deputy Minister Nguyen Duc Chi, this workshop is of great importance to the Ministry of Finance and the State Securities Commission, to jointly raise issues, discuss problems and propose solutions towards the goal of upgrading the Vietnamese stock market.

Experience from Korea to develop Vietnam's stock market

Mr. Dinh Minh Tri - Head of Retail Client Analysis, Mirae Asset Securities Company (Vietnam). Photo: MAS

The Korean stock market has made significant progress after being upgraded to an emerging, developed market. For MSCI, this organization upgraded Korea to an emerging market in 1992. FTSE upgraded Korea from an emerging market to a developed market in 2009. Mr. Dinh Minh Tri - Head of Analysis Department of Retail Clients, Mirae Asset Securities Company (Vietnam) made a number of recommendations to the Vietnamese stock market during the upgrading process. These include improving transparency and information disclosure, enhancing market access for foreign investors, developing information technology systems, developing diverse financial products, improving access to the foreign exchange market, and flexible monitoring and adjustment policies. In addition, Mr. Tri believes that Vietnam can perfect its stock trading system when looking at Korea, most of the major securities companies in Korea have deployed artificial intelligence (AI) systems and chatbots to improve customer service and support automated trading. Many companies have used automated trading systems to optimize trading orders and manage risks. This system uses AI to analyze market data and execute automated transactions based on predetermined algorithms. At the same time, it ensures that financial information is published in English and is easily accessible to foreign investors. This will help attract more international investment capital and enhance the reputation of the market. Source: https://laodong.vn/kinh-doanh/thao-go-diem-nghen-huong-toi-nang-hang-thi-truong-chung-khoan-vao-nam-2025-1360938.ldo