Pre-trading margin requirement is a bottleneck in the process of upgrading the Vietnamese stock market.

This information was shared by the leaders of the Asian Securities and Financial Markets Association (ASIFMA) during a meeting with the delegation of the State Securities Commission (SSC) of Viet Nam within the framework of the 48th annual meeting of the International Organisation of Securities Commissions (IOSCO).

Chairman of the State Securities Commission Vu Thi Chan Phuong informed the meeting about the development, achieved results and potential and investment opportunities of the macro-economy in general and Viet Nam’s stock market in particular.

She also updated information about practical changes in the Vietnamese stock market recently and discussed with ASIFMA about the green and sustainable development orientation of Viet Nam’s capital market in the future.

Alice Law, general director of ASIFMA, said that the current members of the ASIFMA include institutional investors, securities service providers, market rating agencies, global custodial banks, securities depository and clearing institutions, law firms and securities brokerage firms doing business in Asia. ASIFMA closely follows information and provides a lot of support to its members when participating in regional markets.

ASIFMA’s members were very interested in the Vietnamese stock market, as well as forecasting the high growth potential of service activities and foreign indirect investment in Viet Nam in the near future. In order to unlock and promote this potential, upgrading the stock market from marginal to emerging is a priority for Viet Nam, Alice Law said.

According to Alice Law, ASIFMA members are currently investing and providing securities services in Viet Nam. A number of bottlenecks have been proposed to the State Securities Commission to solve in terms of policy implementation, such as increasing access to information in English for foreign investors; publicise and update foreign investors’ ownership ratio; increasing the number of listed companies; strengthening inspection in the market to ensure transparency in information disclosure; the procedure for opening a trading account; and strengthening dialogue with investors.

However, one bottleneck that foreign depository banks hope for a radical solution is the requirement of pre-transaction margin and securities blockade.

ASIFMA member depository banks believe there should be a separate mechanism for guaranteeing payment for securities transactions or granting short-term credit lines to foreign investors who conduct securities transactions, said Alice Law.

She wishes to act as a bridge between the securities regulator and investment institutions, providing securities services so that they can frankly discuss and recommend solutions to help the Vietnamese stock market be upgraded.

Also at the meeting, the two sides agreed to coordinate with the World Bank to organise a seminar on solutions to upgrade Viet Nam’s stock market in August 2023 in Hong Kong on the occasion that the State Securities Commission is about to visit rating agencies FTSE Russel and MSCI. — VNS