SSC gives shot in arm to ailing exchanges

The securities watchdog wants to stimulate demand with high-quality share issuances

The comission’s chairman Vu Bang said new trading tools, improving  brokerages’ operation systems and enhancing information by public companies would help boost investors’ confidence.

The new trading tools, including margin trading,  the ability to open multiple trading accounts in different brokerages and permission to buy and sell the same stock in one session, are seen by regulators as urgent. The draft regulations on margin trading will be sent to market participants one more time for suggestions.

Pham Hong Son, head of the State Securities Commission’s (SSC) Fund Management Division, confirmed the regulation “would be definitely” completed by August 1 - the date the circular activated the new tools.

The regulators said they were advising local brokerage firms on how to operate the tools, warning that violations could see  a business suspended for a year.

Brokerage firms will have their financial abilities classified by the market watchdog to knee-cap weak operators.

“Brokerage firms’ financial safety is the top priority at the moment,” said Bang. “Weak firms will be required to raise funds and cut operations. We [the SSC] also encourage mergers and acquisitions among those ones to enhance their health.”

Bang indicated that the SSC  had approached 20 firms out of 40 to “draw the overall picture of brokerages’ operations.”

In addition, information disclosure by companies that issue shares will be subject to more stringent checks. “The SSC will give much more attention on transparency of the prospectus,” said Bang.

For their part, regulators hope to stimulate stock investors’ demand by promoting high-quality share issuances, such as those of prominent state-owned enterprises to attract foreign investors.

However, Bang said that those outlined measures were just “temporarily improve the market’s sentiment” given the market was falling on the back of ongoing macroeconomic uncertainties.

“Only when the macroeconomic situation becomes more stable, can the securities market rally,” he said.

Bang specifically referred to the State Bank’s decision to lessen credit for non-production sectors, including real estate and securities, to curb inflation. He said the market watchdog is proposing the government reconsider that “viewpoint on the non-production sector,” saying that Vietnamese securities market remained largely an important capital channel for enterprises’ operations.

The benchmark VN-Index of Ho Chi Minh Stock Exchange has lost nearly 20 per cent since the year’s beginning, with matching volumes hitting a two-year record low on July 20.

“While the Vietnamese real estate sector was overvalued, the securities sector is undervalued and needs to be given a boost,” said Bang.