Firms guard their secrets

Local securities firms want to remain playing with their cards close to their chests

The Ministry of Finance (MoF) is seeking public opinions for its draft circular on amended accounting regulations applicable to securities firms, with all brokerages set to be forced to make public their investment portfolios in regular financial reports.

Accordingly their investment portfolios will be detailed into equity, bonds and fund certificates. All investments in affiliates, joint ventures and private equity must be detailed. “If there are no changes, this circular will be issued immediately for 2010 financial year,” the MoF said.

There are now 105 securities firms with total chartered capital of VND30,000 billion ($1.6 billion) and almost all these firms engage in proprietary trading activities, according to the State Securities Commission (SSC), the country’s stock market watchdog.

Market analysts said that with this huge capital and strong proprietary trading, there would be unfair trading game between investors if the securities firms’ trading activities were not made public. The reason was that securities firms know their portfolios, while still recommend investors to trade.

Le Minh Tuan, a manager with EGAM Fund Management Company, said that securities firms usually have better and accurate information than investors, especially retail investors. These securities firms might not share information with others if it affects their portfolios.

“Therefore, securities firms’ proprietary trading activities should be made public to ensure equality between investors,” said Tuan.

Securities firms reacted strongly that they needed to keep their business secrets in hand by not revealing each stock they own.

Investors said that securities firms might not inform each stock it traded, but its total trading values on a daily basis should be revealed. This will not affect their trading secrets, but form a good reference for the market.

“Proprietary trading should also be separated from securities firms operations,” an investor said, adding that it was unfair between investors if securities firms’ portfolios were not revealed.

Luu Nguyen Chi Nhan, deputy general director with Saigon-Hanoi Fund Management Company, added that the announcement of securities firms’ trading activities should be carefully considered. Some investors and rivals might make influences on stock prices if they know it.

“Securities firms should only inform total earnings or losses from their proprietary trading in quarterly or early financial reports,” said Nhan.

Pham Trung Minh, head of Vietnam Securities Depository’s (VSD) Registration Department, said the VSD knew the exact portfolios of each securities firm but it did not have rights to inform them, except for the Ho Chi Minh Stock Exchange (HoSE) and Hanoi Stock Exchange (HNX).

Currently, HoSE and HNX announce daily trading activities of foreign investors but not securities firms’ as no regulations stated it must be announced.