Running private placement bond exchange: A big step forward in corporate bond market transparency

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In the first trading session of the private placement bond exchange, 4 bond codes were traded with a total of 39 orders. Photo: ST

Good signal for the market

The private bond trading system officially debuted with its first trading session on July 19, 2023. To achieve this important milestone, the Ministry of Finance assigned the State Securities Commission (SSC), the Stock Exchange (SEC), and the Vietnam Securities Depository Center (VSD) to develop mechanisms and policies, regulations, prepare technological infrastructure, build a bond trading system and payment system in accordance with the provisions of Decree No. 65/2022/ND-CP.

Currently, a legal system including regulations on registration, depository, transaction payment, and organization of the bond market in the domestic market has been issued and disseminated to market members. In particular, the regulation of bond trading is to manage, monitor and ensure that bond issuers must operate transparently, thereby contributing to the transparency of the economy, ensuring and promoting the autonomy of the bond issuers, reducing the burden for the banking system in using short-term capital for long-term loans.

As expected, more than 1,600 bonds will be listed on the Hanoi Stock Exchange (HNX. Within 3 months from the date of the official launching of the system, bonds issued under Decree 65/2022/ND-CP and Decree No. 153/2020/ND-CP and the outstanding bond must be registered, deposited, and registered for the transaction. At the time of opening, 19 bond codes were approved for trading registration and put into trading from the first session. And in the first trading session of the private placement bond exchange, four bond codes were traded with a total of 39 orders. The total trading volume of the whole market reached 5,052,249 bonds with a total value of VND1,781.34 billion.

Appreciating this event, Mr. Phan Quoc Huynh, Standing Vice Chairman of the Vietnam Association of Securities Business (VASB) said that, the corporate bond market has had many problems in mobilizing and using capital, which have been solved. To facilitate enterprises in raising capital through bond issuance, with the great determination of the Government and the Ministry of Finance, of the State Securities Commission, the private placement bond market was officially launched. This is a good signal for the market to promote the development of the private placement bond market and create conditions for investors to participate in this market. This is also a new product for the Vietnamese stock market.

Strengthen management and supervision

According to the assessment, in a short time, the legal framework, regulations, and processes of the system have been completed. Technical systems of VSD, HNX, and payment banks have also been built, tested successfully with members, and are ready to be put into use. In addition, the transaction processing mechanisms in coordination with partners, payment banks, and the Stock Exchange in various situations have also been taken into account by VSD, ensuring smooth transaction payment mechanisms and avoiding disruption, affecting the interests of investors.

“The launching of the private placement bond trading system is expected to raise transparency, improve market liquidity, and help regulators, market members, and the investors get more information about the market from primary to secondary level, and improve the self-responsibility of investors in bond trading activities, strengthen the effectiveness of management and supervision by state agencies in respect of compliance with laws and regulations on private bond trading”, said Ms. Vu Thi Chan Phuong, SSC’s Chairwoman.

Nguyen Quang Thuan, chairman of FiinGroup said transparency is important to regain trust and take self-responsibility of investors in buying bonds. The development and launching of the private placement bond trading system on the HNX on July 19 is a big step for the bond market, contributing to making the market more transparent and solving problems related to information transparency, especially bonds owned by individual investors, said Thuan.

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Previously, at a conference to disseminate regulations on registration, depository, transaction payment, and organization of the private placement corporate bond trading market in the domestic market held on July 2023, Mr. Pham Hong Son, SCC’s Vice Chairman said that this is a new system with a very unique feature of Vietnam, built in the context of the corporate bond market undergoing many great fluctuations. To run the market effectively, Mr. Pham Hong Son noted important issues, including the roles and responsibilities of securities companies in strictly complying with the law, especially the identification of professional investor status, responsibilities of investors in capturing information about bond issuers before investing, strengthening the supervision of the Stock Exchange on bond trading activities; supervision of the Stock Exchange for the private placement corporate bond trading and the responsibility of the Stock Exchange and VSD in dissemination.