Prime Minister approves securities market restructuring plan

Under the new plan, numbered 242/QĐ-TTg, the Government wants to ensure comprehensive restructuring of the securities market so that it becomes the medium- and long-term capital-raising instrument for the Vietnamese economy and businesses.

Several milestones have been set in the document such as the value of the stock market is projected to reach 100% and 120% of Vietnam’s total gross domestic product (GDP) in 2020 and 2025, and the number of listed companies in 2020 rising 20% from 2017.

The Government also plans to launch new securities products such as covered warrants, government bond futures and new index-underlying futures.

There are eight solutions proposed in the document to shake up the domestic securities market, including the perfection of the legal framework; restructuring of goods and services supply; restructuring of securities companies, market and investors; improvement of market management; and upgrading the market status based on global standards.

Under the new project, brokerage firms are required to reform their operational models, improve their financial health, make stronger efforts in corporate and risk management, and improve corporate transparency and performance.

Brokerage firms, which have capital adequacy ratio (CAR) of more than 180%, capital of more than VND1 trillion and no cumulative losses, will receive support from market regulators to expand their business, lead in introducing new products and services to the market, become the founding members of the bond and derivative markets, and restructure poorly-performing securities firms.

On the other hand, companies with below 180% CAR will be watched by the market regulator and are disallowed to directly manage investors’ trading money.