A series of violations of regulations by securities brokerages has many investors wondering out loud why the State Securities Commission has only required these firms to correct violating practices without imposing any sanctions or penalties.
The commission has yet to mete out any punishment in any of these cases, only requiring securities companies to change their behaviour.
For example, the Vietcombank in-house brokerage, Vietcombank Securities, was found guilty of six infractions but only requested to amend order procedures and stop direct trading by certain investors.
Asia Commercial Bank subsidiary ACB Securities was told to stop allowing investors from using stock collateral between the time shares are bought to the termination date.
Le Thanh, an investor on the bourse and client of Vietcombank Securities, said that he felt angry when placing stock buy or sell orders, knowing the broker would place larger institutional orders in the queue ahead of him.
The brokerage firm needed to be aware of its capacity to supply services, Thanh said. If the firm could not satisfy investor demands, he wondered, why was it still opening new accounts?.
Hoang Duc Long, director of the State Securities Commission’s Investigative Department, could not offer a reasonable explanation for the commission’s laxity in handling brokerage violations.
Thanh reckoned that the commission should strictly penalise Vietcombank Securities for its violations to ensure a fair market environment and maintain investor confidence in the nation’s stock market.
However, a newly-issued decree providing regulations guiding implementation of the Securities Law does not specify punishment levels for specific illegal practices.
A financial expert said that it was undeniable that securities firms were making mistakes but, to some extent, these were a natural aspect of the evolution of the stock market. The blame also lied in part with the administrative systems of the authorities.
For instance, the software used by the HCM City Securities Trading Centre has not been updated in seven years and matches orders in three phases, creating bottlenecks during active trading.
In light of the problems, the Prime Minister recently requested the Ministry of Finance, in co-ordination with other ministries and sectors, to formulate a proposal in the first quarter of this year for the establishment of an authorised body independent of the Securities Commission and the State Bank of Viet Nam to supervise activities on the stock and monetary markets.
One of the main functions of the body would be to supervise trading activities on stock exchanges and activities of securities firms such as brokerage and consulting, as well as ensure compliance with securities deposit procedures and payment procedures.
Nguyen Hoang Hai, general secretary of the Viet Nam Association of Financial Investors, said that it was suitable and necessary to establish an indepenent supervisory body. Countries like Singapore, Japan, and South Korea also have such organisations.
The State Securities Commission has not fulfilled its function as a market regulator, and recent investigations of unlawful practices on the market were conducted were due to the pressure of public opinion rather than at the initiative of the commission.
Nguyen Van Dung, deputy director of the Ha Noi Securities Trading Centre, also agreed with the need to establish a powerful, functional organisation to monitor the market, to keep a close watch on market performance and capital circulation on the market.
Source: VNS
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