SSC taking actions to control market

The State Securities Commission (SSC) is moving ahead with the measures aiming to control the overly hot stock market.
In March 2007, SSC will send its experts abroad to learn how to control capital flows in the stock market.

The commission is now hurrying to consult relevant authorities and complete the final draft regulations on securities companies, fund management companies and investment fund management. SSC’s Chairman Vu Bang once told the press: “We have to control the capital inflow and outflow in the stock market to have suitable policies”.

In the coming time, representative offices of foreign securities trading institutions will have to make re-registration at SSC. The new investment funds, which are going to enter Vietnam, apart from getting trading codes and opening accounts at defined banks, would have to register their investment plans, stating the moments of investment, the sums of capital to be injected or withdrawn. The investment funds will also have to make a more detailed report about their staffs, in which the names of the management board must be listed.

The requirements, if applied, would not be too complicated for foreign investors, while they will help the Ministry of Finance (MoF) and the State Bank of Vietnam control the capital inflow into the stock market more effectively.

The process of changing the HCM City Securities Trading Centre (HSTC) into the state owned limited company has been kicked off. It is estimated that in March 2007, HSTC will begin operating as a unit independent from SSC.

“MoF has agreed to this and has decided to set up the committee in charge of turning the trading centre into the stock exchange,” Mr Bang said.

In the long term, HSTC will have to operate as a joint stock company, however, it will experience a period of operating as a limited company. The shift into joint stock company proves to be impossible right at the moment, as it would take time for appraise the assets.

Regarding the Hanoi Securities Trading Centre (HASTC), Mr Bang said that a legal framework allowing securities companies to trade OTC (unlisted) shares will be set up. However, the companies will have to report the trading results to HASTC. This is considered the first step in the process of standardising the OTC (over the counter) market.

Mr Bang also said that SSC will set stricter requirements on information exposure of public companies. The companies, that plan to issues more shares, will have to have their financial reports audited and publicise the reports.

Now commercial banks only have to seek the permissions from the State Bank of Vietnam to issue shares. However, the Securities Law stipulates that banks must get the approval from SSC as well. In addition, the banks that issue shares must show the plans on using capital and audited reports.

The stock market watchdog will pay special attention to the securities company controlling. SSC has urged the companies to compile the procedures on risk management.

The top priority task for SSC now is not to create ‘commodities’ for the market any more, but to keep tight control over the hot market.

Source: VNN