Amendment of Securities Law: Golden opportunity to remove problems for investors

	Amendment of Securities Law: Define more clearly some regulations on public offering
	Amendment of Securities Law: Towards a sustainable and transparent market
	Amending the Securities Law in order to develop the market in depth

Synchronised with relevant Laws

According to a report of the Ministry of Finance, the size of the stock market as of March 18 exceeded 81% of GDP, up 14% compared to the end of 2018. This was a good growth rate, surpassing the target of 80% of GDP set by the Government. In this context, according to Dominic Scriven, CEO of Dragon Capital Investment Fund, the development and submission of the Securities Law (amended) from the Government was a golden opportunity to simultaneously achieve three objectives: Handling inadequacies between the Securities Law and other laws; handling discrimination with other markets such as Thailand, Malaysia and Indonesia when Vietnam was only considered a marginal market and handling a number of risk and efficiency issues in securities trading.Synchronised with relevant Laws

Nguyen Thanh Ky, General Secretary of the Securities Business Association, stated that the draft of the Law Securities (amended) gave some regulations to get closer to international practices such as listed IPOsthe free float ratio (the ratio of freely traded shares compared to the volume of shares circulating in the market) in public offerings and the concept of a professional securities investor in private placement.

“These are very important regulations to help Vietnam’s stock market become more familiar with foreign investors and create a more convenient premise in developing new products that developed on global stock markets”, said Ky.

Notably, according to the General Secretary of the Securities Business Association, the draft Law has more uniform rules with the amended laws in 2014 and 2015 such as the Enterprise Law, Civil Code and Investment Law. In particular, the new provisions of the Enterprise Law on legal representatives, seals, cross-ownership and issues of commercial legal entities, as well as other rights to property such as tenure rightsin the Civil Code have also been studied and regulated appropriately.

Evaluating the draft of the Securities Law (amended), Tran Anh Quan, Deputy General Director of KPMG Co., Ltd said that the draft contents have improved significantly.

“The draft has produced many important and necessary additional and revised contents such as regulations on derivative securities, amendments to regulations on securities offering, operation model of the securities transaction bureau, request to list securities immediately after IPO according to international practices", said Quan.

Open regulations for securities companies and fund management companies

Commenting on the draft Law, SSI Securities Joint Stock Company said the draft should clarify some concepts and terms including: Definition of strategic investors, offering, indirect ownership; joint venture and affiliated companies. SSI also believed it is necessary to narrow down the subjects considered "relevant persons", which will exclude daughters-in-law, sons-in-law, brothers-in-law, and sisters-in-law.

For offering securities to the public and offering separately, according to SSI, it is necessary to clarify regulations on offering conditions and cases without a the need to register for offering securities; supplement documents in the offering dossier to match the offering conditions and abolish some conditions related to the offering of securities companies, fund management companies.

Regarding foreign ownership ratio in the Vietnamese stock market and the legal status of economic organisations with foreign investors holding 51% or more of charter capital, according to SSI, it is necessary to modify some contents to be more suitable, and propose excluding the cases where the listed company must implement investment procedures, meeting the conditions for foreign investors and contributing capital to buy securities, as well as contributed capital of economic organisations.

For securities companies and fund management companies, SSI thought there should be open regulations to facilitate securities companies and fund management companies so they will have autonomy in providing their products and services for customers, distinguishing business operations licensed by the State Securities Commission and services provided. At the same time, securities companies and fund management companies need to promulgate professional ethics rules applicable to securities practitioners and securities companies and set up a mechanism for inspection and supervision. supplement the provisions on securities companies' responsibilities in the blockade and release of pledged securities and deal with pledged assets as agreed by the account holders with banks or third parties.

According to Vietnam Investment Fund Management Joint Stock Company (VFM), the derivatives market is receiving strong attention from investors. According to VFM, securities and derivatives are two interrelated financial assets and the participants in these two trading markets are almost the same. Regional countries and territories such as Singapore and Hong Kong (China) have enacted Securities Law and Futures Contracts to manage stock market and derivative activities. In Vietnam, the State Securities Commission is still the main agency overseeing the derivatives market. Therefore, VFM proposed amending the name "Securities Law" to "Securities and Derivatives Law", and to add regulations related to derivatives.