The Ministry of Finance (MoF) has removed the pre-funding requirement for foreign investors before placing orders. This significant change marks a major milestone in the process of upgrading Việt Nam’s stock market from a frontier market to an emerging one.

The change was stated in Circular 68/2024/TT-BTC, which was issued on September 18 and will be effective from November 2.

Under the new Circular, investors are mandated to have sufficient funds available when placing buy orders for securities, with exceptions made for two scenarios: when the foreign investor is an organisational entity or a foreign-incorporated entity participating in investments within the Vietnamese stock market.

The securities firm will assess the payment risk of foreign institutional investors to determine the necessary funds when placing stock purchase orders based on agreements between the firm and the investor or their authorised representative.

If a foreign institutional investor fails to provide adequate funds for a stock purchase transaction, the payment shortfall obligation will be shifted to the securities firm where the order was placed through their proprietary account, except when the custodian bank holding the foreign investor's securities depository account is liable for the payment.

Circular 68 also revises regulations concerning language requirements for market information disclosure. Accordingly, listed organisations and large-scale public companies must publish information regularly in both Vietnamese and English starting from January 1, 2025.

They are obligated to disclose exceptional information, respond to information requests and provide details on other activities simultaneously in both Vietnamese and English from January 1, 2026.

Public companies not meeting the aforementioned criteria are required to publish information regularly in both Vietnamese and English starting from January 1, 2027, while disclosing exceptional information, respond to information requests and provide details on other activities simultaneously in both Vietnamese and English from January 1, 2028.

In its latest report, SSI Securities Corporation said that Circular 68 marks a significant step towards aligning the Vietnamese stock market with the criteria for an upgrade to an emerging market by FTSE Russell. 

The analysis team of SSI believes the projection that Việt Nam could ascend to this new market tier during the evaluation period in September 2025.

Anticipating an upgrade to an emerging market, preliminary estimates by SSI suggest that capital inflows from exchange-traded funds (ETFs) could potentially reach US$1.7 billion, without factoring in capital inflows from active funds. — VNS