VTV.vn – Circular 68 reflects the strong determination of financial market regulators to upgrade Vietnam’s stock market from frontier to emerging market status by 2025.
The State Securities Commission has officially announced Circular 68, issued by the Ministry of Finance, allowing foreign institutional investors to place buy orders for shares without prefunding from November 2, 2024. This change promises to bring a new face to the Vietnamese stock market, though there are still concerns in the bond market about the balance between investor protection and tightening regulations.
Previously, when foreign investors wanted to buy shares in Vietnam, they had to follow the prefunding mechanism, where they had to deposit money upfront and wait T+2 for the shares to arrive in their accounts. This differs from the “payment against delivery” principle in many international markets, causing confusion for foreign investors.
Circular 68 allows foreign institutional investors to place buy orders for shares without having sufficient funds upfront. Instead, securities companies will support prefunding and assess the payment risk of these investors to determine the required margin based on mutual agreements. When the shares are delivered, the investors will fulfill their payment obligations with the securities company.
Mr. Nguyen Quang Bao, Deputy General Director of Vietcap Securities JSC, stated: “Once the Circular is implemented, foreign investors will find it much easier to participate in the Vietnamese stock market.”
Mr. Nguyen Khac Hai, Head of Legal and Compliance at SSI Securities Corporation, shared: “The Circular allows investors not to have full funds at the time of purchase, and securities companies can support from 0% to 100% based on risk assessment and trading limits.”
Tightening Conditions for Individual Investors in the Corporate Bond Market
In the latest draft, the Ministry of Finance introduced stricter regulations for individual professional investors, requiring them to have a minimum securities portfolio of VND 2 billion, a minimum annual income of VND 1 billion in the past two years, and at least two years of investment experience. Many long-time investors believe these conditions are too stringent to meet.
Despite the tougher requirements, individual investors will still be excluded from participating in private corporate bond issuances, which has raised concerns that this could limit their role, as they currently hold nearly 27% of the corporate bonds on the market.
Guiding Capital Flow to Secondary Market or Institutional Funds
Experts believe that filtering investors in private bond transactions aligns with international standards, given that not many individual investors can accurately assess the principal and interest repayment risks of corporate issuers.
Statistics from the Vietnam Bond Market Association show that the total corporate bond issuance in the first eight months of 2024 is only 30% of the level in 2020 and 2021.
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