State management authorities are trying to speed up the compilation of legal documents, based on which, the OTC market will be put under management, expected for early 2008.
State Securities Commission (SSC) plans to put the OTC market under management in early 2008. However, experts fear that the short time left (four months) until early next year will not be enough time as a lot of things still need to be done.
It is necessary to build up a software system for the Hanoi Securities Trading Centre (HASTC) and software for the Securities Depository Centre in charge of managing the transaction registrations by public companies. Moreover, it will also be necessary to install software at securities companies and the system connecting securities companies and HASTC, serving the transfer of information about securities transactions and offset payment among securities companies, the depository centre and HASTC.
In the immediate time, several big companies out of the registered public companies will be selected to be put under the pilot transaction scheme. These might be big companies operating in the fields of banking, insurance and other financial institutions which have good governance systems.
The application of the transaction scheme for other public companies will be applied on a large scale in June 2008 or at the end of 2008, according to Nguyen Son, Deputy Head of the Market Development Division under SSC.
Mr Son said that SSC was considering applying the reference price scheme and trading band for the shares of unlisted public companies. The most feasible scheme and the plan which has been most suggested is the application of the trading band of +/- 20% (the ceiling transaction price must not be 20% higher than the reference price and the minimum price must not be 20% lower than the reference price).
However, problems still exist. Experts still argue about whether or not to draw up the reference price of the first trading session. Moreover, it remains unclear which basis state management authorities will use to draw up the list of fees public companies have to pay to the securities trading centre, securities depository centre and brokerage commission.
According to Mr Son, there are two factors that can decide if the project on putting the OTC market under management can be successful: technology and awareness of enterprises.
According to Mr Son, once the OTC market is put under control, the market regulator will have to manage a big number of companies, much bigger than the number of listing companies now. Will the technologies and facilities at trading centres and securities companies be able to cover such a big number of securities companies?
Mr Son has acknowledged that technology remains the biggest problem and that it needs to be fixed in 3-6 months.
“The core issue is the capacity of transaction systems. The number of public companies may reach several thousand if all the companies register. These include the ones which have very big market capitalisation volume.
“If we don’t make heavy investment in technologies, the project on putting the OTC under management will fail,” Mr Son said.
Source: VNE
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