Exchanges to share manipulation supervision

The body (SSC) , the country’s stock market watchdog, is planning to give more power to stock exchanges and Vietnam Securities Depository Centre (VSD) in supervising market operation, especially securities companies’ operation, aiming to quickly detect extraordinary trading cases.  

“This decentralisation will be regulated in the amended Securities Law, which will be effective in mid 2011,” Nguyen Doan Hung, SSC deputy chairman said, adding that exchanges and VSD would be the first one detecting extraordinary trading cases.

Market observers said several suspected share price manipulation cases were related to securities firms, but the SSC had not detected them. Securities firms could know or detect which transactions are belonging to share manipulation or not. Therefore, securities firms can directly or cooperate with a third party to implement share price manipulations.

Hung said the exchanges’ technology systems would be upgraded as well as build a sound supervision mechanism to quickly detect any extraordinary trading cases.

“Exchanges will be empowered with more power to give immediate management actions which will help [them] to be more active in preventing and fighting share price manipulation,” said Hung.

Nguyen Hoang Hai, Vietnam Association of Financial Investors (VAFI), added that in order to prevent or fight share price manipulation well, besides allowing new products such as shorter trading time to T+2, daily trading, stricter punishments to violators were welcomed.

“Additionally, market regulators should detail securities firms’ responsibilities in cooperating with relevant authorities in preventing and fighting against share price manipulations. These responsibilities have double benefits which prevent securities firms directly manipulate while preventing them to cooperate with another party for manipulations,” said Hai.

Hai also said the SSC would strictly punish securities firms if it found share price manipulations by withdrawing licences of related persons.

“If punishments are not strictly enough, investors’ confidence will be eroded,” said Hai.