Looking back at 10 years of UPCoM market development

	Hanoi Stock Exchange eyes profit of 13.2 million USD in 2019
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	HNX amended the regulation on securities listing

On June 24, 2009, the stock market of unlisted public companies (UPCoM) was officially operated on HNX. Photo: HNX

The first period is still difficult

On June 24, 2009, together with the transformation of operating model from the Hanoi Securities Trading Center to the Hanoi Stock Exchange (HNX), the stock market of public companies had not been posted (UPCoM) to officially operate on HNX.

According to HNX, there are a variety of risks in the context of the market of free-trading stocks, causing unsafe transactions and liquidity for investors, the Government and management agencies have been determined to come out. UPCoM was born with the aim of narrowing the free market, expanding the market of organized and managed transactions, bringing together stocks of unlisted companies to a unified management clue, creating open, transparent, safe and convenient securities trading opportunities for investors.

With such initial goals, UPCoM's operation model is a trading floor of public companies' shares, providing information about the price and the actual trading volume of unlisted shares for the investors. Therefore, public companies need to have a member securities company committed to supporting the company to carry out the transaction registration procedures and support the organization of registration of information disclosure transactions according to regulations.

However, in the period from 2009 to 2012, due to the small market size of UPCoM, stocks on UPCoM were traded under the agreement method, so liquidity was sluggish, as aresult; securities companies were not very interested. In taking the pledge to support, the public companies have difficulty in registering to trade on UPCoM market.

Facing this fact, the Ministry of Finance has reviewed and Circular 95/2010/TT-BTC has removed the regulation that enterprises must have a member to commit to support when registering to trade on UPCoM to simplify the operation for enterprises participating in UPCoM.

After that, a series of policies were issued to create conditions for UPCoM to develop such as: Decree No. 108/2013/ND-CP on handling administrative violations in the field of securities and securities market; Decision No. 51/2014/QD-TTg of the Prime Minister stipulating that equitized SOEs must register for listing and register for trading on the stock market; Decree 60/2015/ND-CP also requires enterprises that are public companies to register for trading on UPCoM for the purpose of protecting investors.

Market size reached VND 330 trillion

It can be seen that the support from the policy through these legal documents has created a push to help UPCoM market prosper. If in the first 6 years of operation, UPCoM had a modest growth with 169 enterprises registering for transactions, a transaction value of about VND15 billion/session as of September 15, 2014, the following period. Therefore, within 4 years to the time of June 15, 2019, the number of registered businesses increased 5 times to 833 enterprises, the value of transactions increased 18 times to over VND250 billion/session for 5early months in 2019; Market size increased from VND24 trillion to VND330 trillion.

State-owned enterprises rushed to UPCoM, auctioning enterprises quickly went up to UPCoM to create a strong wave of businesses from 2014 to the present.

As a result, goods on UPCoM are also richer and more diversified with better quality goods, including large-scale companies such as Vietnam Air Port Corporation (ACV) of market capitalization VND 180,695 billion, Vietnam Engine and Agricultural Machinery Corporation (VEA) capitalized at VND 75,210 billion, Binh Son Refinery and Petrochemical JSC (BSR) VND 40,306 billion, Vietnam Pharmaceutical Corporation (DVN) VND 3,483 billion VND, Vietnam Rubber Industry Group (GVR) VND 1,328 billion.

After 10 years of establishment and development, UPCoM has affirmed its role as a safe and effective stock trading channel for investors and effective capital mobilization channel for businesses. With a rapidly growing market size and stock quality, the UPCoM market is increasingly attracting both domestic and foreign investors and has become a market of great interest from countries in the region, exchange operating and management experience such as: Singapore, Thailand, and Laos.

According to HNX, up to now, it can be said that UPCoM has managed but seen lack of market. Therefore, the goal in the near future is to consolidate and supplement the market for UPCoM, perfect and bring this market segment into a piece of the stock market, one of the most important tasks is to strengthen public supervising and improving the transparency of UPCoM market.

In particular, supervision on this market has been increasingly promoted and reached a high level of supervision as for the listed market. On that basis, the Hanoi Stock Exchange is proposing to the Securities Commission to consider applying the margin for stocks of large-scale public companies on UPCoM to meet conditions such as listed stocks and will petition to extend the trading price band in this market. In addition, the Department will continue to promote support programs, promoting transparency for companies on UPCoM.