Vietnam to keep watch over foreign capital on stock market

Nguyen Doan Hung, Deputy Chairman of the State Securities Commission (SSC), talks more about the project on setting up the market monitoring committee which SSC has submitted to the Government.

Under the project, the market monitoring committee will cooperate closely with securities trading centres to form a constant supervising system which can inspect activities on the stock market.


What is the most important task of the market monitoring committee?

It, as a watchdog, keeps watch over the market’s performance, gives analysis and thus ensures the stability of the market. You should differentiate between ‘inspection’ and ‘monitoring’. The monitoring work will be carried out by functional divisions. For example, the Division for Business Management will supervise securities companies and fund management companies, while the Division for Securities Issuance Management will supervise public companies. If signs of law violations are found, the cases will be transferred to inspectors for further investigation and resolution. Inspectors will decide how heavily to punish violators.

I can say that Vietnam is still weak in monitoring and analysing transactions on the market. In other countries, there exists a good monitoring system that allows for the reconstruction of all transactions in the past to find signs of insider trading or illegal activities. That explains why we are striving to set up the monitoring committee, as well as build a modern information base in order to heighten the effectiveness of the committee’s monitoring system.


How would you explain the fact that SSC did not do anything even when a lot of share items continuously increased to the ceiling price levels in five consecutive trading sessions?

A good monitoring system will automatically interrupt and halt transactions when it discovers any items that have prices increasing continuously in five consecutive trading sessions. Such a system is being installed in Vietnam, and it is expected that by 2008 we will have a fully worked out system. Our current system is facing some problems in information technology.


As you may know, some experts have criticised SSC for failing to control the foreign capital flow into Vietnam’s stock market. What would you say about that?

Currently, the work of forex management is being carried out by the State Bank of Vietnam, which is responsible for controlling the inflow and outflow of foreign direct and portfolio investment. The central bank has set specific regulations to take control over the foreign capital flow.

For example, foreign investors must open specific accounts, which must be registered at the central bank, to serve their transactions in Vietnam.

In fact, SSC is also very interested in foreign investment funds, which have injected big amounts of money in Vietnam’s stocks. According to the Securities Law and the regulation on the market monitoring committee to be promulgated, SSC will also keep watch over the foreign capital flow.

Under the draft regulation, foreign investment funds will have to register at the committee and provide information about the sources of fund’s capital, origin and investment plans in Vietnam.

Source: VNE