Effective inspection and supervision - a key factor for a transparent stock market

VCN - Since 2019, Securities Law officially took effect, the average annual number of penalty decisions has more than doubled compared to the period 2015-2020. This shows that the strictness of the law is being enforced effectively.
Stock market supervision units coordinate with the Stock Exchange and related units to strengthen transaction supervision and compliance monitoring on the stock market. Photo: ST
Stock market supervision units coordinate with the Stock Exchange and related units to strengthen transaction supervision and compliance monitoring on the stock market. Photo: ST

Strengthen supervision and strict penalties

According to the Securities Law 2019, the supervision system is built towards a three-level supervision model. Specifically: securities companies are first-line supervisors; The Stock Exchange (GDCK) and Vietnam Securities Depository and Clearing Corporation (VSDC) are second-line supervisors; The State Securities Commission (SSC) is the third-line supervisor. The Securities Law 2019 also allows supervisory entities such as the State Securities Commission and the Stock Exchange to promptly handle and prevent risks and violations that affect the stable and safe operation of the market.

Market monitoring is reflected in two main tasks: transaction monitoring and compliance monitoring, which are conducted regularly. In particular, regarding transaction monitoring activities, the stock market monitoring unit coordinates with stock exchanges and related units to monitor and analyze developments in trading sessions with strong fluctuations and organize inspection of codes that have signs of unusual transactions, violations of securities trading regulations, etc.

In addition, the State Securities Commission also directed inspectors to apply strong sanctions, including measures to force refunds to investors, making an important contribution to limiting violations of unregistered and unreported offerings and issuance from businesses. If in the period 2015-2020, there were an average of more than 170 sanctioning decisions each year, then from January 1, 2021 - the time the Securities Law officially takes effect and increases the authority of the State Securities Commission in inspection, sanctioning, the average number of penalty decisions in the 3 years 2021-2023 more than doubled. This reality shows that the proactiveness in management, supervision and inspection activities has become increasingly effective, close to the reality of the stock market and ensures all activities take place openly and fairly.

Continue to improve the effectiveness of inspection and supervision

In recent times, detecting and processing transactions on the stock market has faced many technical and legal difficulties. The monitoring system to detect fraud is not timely, cannot accurately evaluate the effectiveness of monitoring criteria, and is unable to predict new fraud methods; The legal system, anti-fraud policy and whistleblowing policy are not established or are not effective; Sanctions are not enough to deter, subjects have many ways to avoid penalties or choose penalties for lighter crimes, etc.

However, through inspection and supervision activities, inspectors have promptly detected and handled many violations, in particular, have transferred to authorities to handle a number of manipulation cases.

In the coming time, in order to strengthen line-based supervision and effective inspection and testing, it is first necessary to ensure the implementation of legal policies, in addition, it is necessary to continue to improve the supervision system and regulations on supervision activities to meet the supervision requirements of a market that is growing strongly in both breadth and depth.

In addition, it is necessary to continue to strengthen supervision of information disclosure as well as rectify and enhance the quality of inspection work. Closely coordinate with authorities in investigating, verifying, and handling cases showing signs of crime and law violations on the stock market; Coordinate with regulatory agencies in monitoring legal compliance of market members. Inspection, testing and handling of violations helps management agencies evaluate the compliance with the law of organizations and individuals participating in the market, legal inadequacies, and on that basis consider corrections and improve legal regulations.

An important solution is to soon build a common database system for the entire stock market, connect and share information, build management and monitoring applications and have data exchange connections not only in within the sector but also with other authorities such as tax, banking inspection and supervision, and the Police.

Currently, the Government has assigned the Ministry of Finance to direct the State Securities Commission, the Stock Exchange and VSDC to connect the national population database, electronic identification and authentication system, and carry out review, authentication and cleaning information data about securities trading participants. On November 24, 2023, the State Securities Commission signed a Plan to coordinate with the Police Department for Administrative Management of Social Order (C06) to implement the Project to develop application of population data, electronic identification and authentication serving national digital transformation in the period 2023-2025, with a vision to 2030. In the coming time, we will continue to coordinate closely with C06 and relevant units to organize and deploy tasks of cleaning data about investors and holders of securities practice certificate.

In 2023 (from the beginning of the year to November 2023), the State Securities Commission has coordinated with functional units under the State Securities Commission, the Vietnam Stock Exchange, subsidiaries and other competent agencies to analyze, inspect and handle after the trade of 94 stock codes; Established 12 teams to inspect unusual transactions for 12 stock codes; 1 working group with investors related to transactions.

By Prof. Nguyễn Thanh Huyền/Phuong Linh

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