State Securities Commission meets companies to table market status upgrade

The State Securities Commission (SSC) is meeting with major securities firms on Friday to discuss measures to remove barriers for foreign investors participating in the Vietnamese stock market, aiming to get the market status upgraded by FTSE Russell from “frontier” to “secondary emerging”.

The participating brokers included SSI Securities, Ho Chi Minh City Securities, Vietcombank Securities, BIDV Securities, and Vietcap Securities.

FTSE Russell, a global index provider, in March kept Vietnam on its watch list for possible reclassification to a secondary emerging market.

Vietnam has yet to meet the “Settlement Cycle (DvP)” criterion, which is currently rated as “Restricted” due to the market practice of conducting a pre-trading checks to ensure the availability of funds prior to trade execution, it said in its statement.

Since, by default, the market does not experience failed trades, the “settlement – costs associated with failed trades” criterion is unrated, it added.

FTSE Russell also said its working with the SSC on the proposal for a new settlement model.

For Vietnam to achieve market status upgrade by 2025, FTSE recommended that the settlement model be confirmed and widely communicated, including finalization of the required roles and responsibilities within the settlement model, and a roadmap with key milestones, setting out the path towards implementation.

“FTSE Russell continues to encourage meetings between the local Vietnamese entities and the international investment community, to assist in better understanding the current difficulties encountered when accessing the Vietnamese equity market,” it stated.

In another development, in May, the Ministry of Finance and the SSC had collected feedback from market members and foreign investors on draft amendments to a number of important related circulars.

According to BIDV Securities (BSC), if the draft is approved, it will solve most of the remaining problems in upgrading the market status. For example, relating to the issue of pre-funding, authorities have basically increased the authority and responsibility of securities companies in making decisions on foreign investors’ pre-funding of less than 100%.

"In the short term, if this draft is approved and the pilot implementation receives good feedback from foreign investors, it will help the stock market get positive assessments from FTSE Russell in September," the broker noted.