This is the affirmation of the Chairwoman of the State Securities Commission Vu Thi Chan Phuong at the Conference to meet institutional investors and partners with the theme "Unlocking the potential of the Vietnamese stock market - towards emerging market status", on August 29, 2023, in Hong Kong (China).

The conference was jointly organized by the Asian Securities and Financial Markets Association (ASIFMA) with the support of the World Bank Group (WB) to discuss solutions towards upgrading the Vietnamese stock market from a frontier market to an emerging market.

According to Ms. Vu Thi Chan Phuong, upgrading the stock market is one of the major goals that the Vietnamese Government is aiming for. This goal has been included in the Project “Restructuring the stock market and insurance market to 2020 and orientation to 2025”; at the same time, it has also been included in the draft “Strategy for stock market development to 2030”. Accordingly, Vietnam aims to upgrade the stock market from a frontier market to an emerging market before 2025.

In recent times, the management agency has been making efforts and showing great determination to promote and shorten the roadmap for upgrading the Vietnamese stock market.

Accordingly, in terms of legal framework, the Securities Law 2019, Investment Law 2020, Enterprise Law 2020 and guiding documents have gradually met the criteria for upgrading the market such as: facilitating investment capital flows; access to information in English; registering and opening accounts for investors; strengthening discipline, strictly handling violations to make the market more transparent...

Ms. Vu Thi Chan Phuong speaking at the Conference

In addition to the development in scale and liquidity, the Vietnamese stock market is becoming more transparent and healthy as many violations are strictly handled. Currently, many enterprises have been proactive in disclosing information in English, of which, in the VN30 group alone, 100% of enterprises disclose information in English.

In addition, many new issues supporting the upgrade have also been more clearly regulated in Decree 155/2020/ND-CP and Circular 96/2020/TT-BTC. In the coming time, the SSC will continue to propose amendments to relevant legal documents to ensure the stock market is more transparent, public, and sustainable, supporting the upgrade process.

Along with that, the management agency also regularly exchanges with MSCI and FTSE Russell to update practical information to these organizations, as well as to help the management agencies clearly understand the requirements and criteria from the organizations, thereby having solutions to amend and improve.

The Ministry of Finance and the State Securities Commission have been actively coordinating with ministries, branches, organizations and market members to find solutions to resolve and remove groups of problems.

According to the general assessment of major international rating agencies and financial institutions, Vietnam has made many improvements and achieved many important criteria. However, there are currently two key groups of issues that need to be focused on improving and having measures to resolve in order to facilitate foreign investors to participate in the stock market in the coming time, which are: Prefunding requirements; and foreign ownership limits. Both of these issues require practical coordination from relevant agencies and ministries to resolve, such as the State Bank and the Ministry of Planning and Investment.

At this conference, these continue to be two issues of particular interest to foreign investors. According to investors, in order to be upgraded, Vietnam needs to implement the central clearing partner (CCP) model as stipulated in Decree 155/2020/ND-CP, in which the depository bank must be a clearing member; and fully disclose the maximum foreign ownership ratio of conditional business lines, limit access and only limit foreign ownership to really necessary industries.

Regarding the issue of prefunding, when permitted by the State Bank, the solution to deploy a CCP system in which the depository bank must be a clearing member (in addition to clearing members being securities companies) is the optimal solution to handle the issue of pre-transaction margin requirements. If the issue of prefunding is not resolved, the story of upgrading the Vietnamese stock market will be very difficult to achieve the goal.

The leader of the State Securities Commission added that while waiting for the CCP, the management agency is currently studying immediate technical solutions to minimize foreign investors' concerns regarding pre-transaction margin. In the long term, the CCP must be implemented, but this requires permission from the State Bank.