With the final criterion for upgrading being failed trade management<\/em> <\/strong>, according to Ms. Ta Thanh Binh, the solution is to apply the central clearing mechanism (CCP). Regarding this issue, the new regulations in the Securities Law that have just been passed have paved the way for the securities industry to continue implementing upgrading solutions according to MSCI standards (which are more difficult to meet than FTSE Russell standards).<\/p>\n\n\n\n\u201cWithin the scope of VSDC\u2019s functions and tasks, with the orientation of ensuring the stability of institutional frameworks, one of the strategic tasks that VSDC needs to carry out is to establish a subsidiary with the function of central clearing partner (CCP) for the underlying securities market. With the CCP mechanism, VSDC will hedge payment risks for the underlying securities market according to the provisions of Circular 119\/2020\/TT-BTC with many layers of safe financial buffers,\u201d said Ms. Binh.<\/p>\n\n\n\n
The VSDC General Director also added that in the third and fourth quarters of 2024, the agency has actively participated in providing comments, proposing supplements and amendments to the Securities Law and Decree 155 to prepare for the establishment of a subsidiary company to perform the function of a central clearing partner (CCP) for the underlying securities market. This is a necessary step for the overall market settlement risk management and continues to move towards upgrading criteria for the Vietnamese stock market in the future. In addition, the regulation on information disclosure in English and its synchronous application according to the roadmap will gradually improve transparency criteria.<\/p>\n\n\n\n
Besides FTSE, Vietnam is also pursuing the goal of upgrading its market according to MSCI standards. Regarding MSCI Global’s criteria, by June 2024, Vietnam’s stock market had met 10\/18 criteria. “There are some criteria that need to be improved, such as the foreign ownership limit level, the remaining foreign ownership level (Foreign Room Level) and the level of liberalization of the foreign exchange market that has not been met… The amount of work that needs to be implemented is not simple,” said Ms. Binh.<\/p>\n\n\n\n
\ufeffStock market will receive large capital flows after upgrading<\/strong><\/p>\n\n\n\nMs. Ta Thanh Binh affirmed that with institutional reforms, the market will welcome large capital flows. However, this also poses the problem of pressure on the system with large transaction volume and value, and faster transaction frequency. In case of upgrading to emerging market status, the Vietnamese stock market is expected to welcome a large investment flow into the emerging market block.<\/p>\n\n\n\n
This capital flow can bring about a large volume of transactions, with a frequency of transactions that can be more frequent and continuous, which can cause considerable pressure on the trading system and the clearing and settlement system. In addition, there are issues related to whether foreign currency conversion is capable of meeting such a large volume of transactions.<\/p>\n\n\n\n
However, the pressure to maintain the upgrade when the new rating criteria have been met will also be a challenge for the parties involved. \u201cAccording to the exchange from FTSE Russel, the rating conditions can be completely changed when necessary, when there is demand from large customers. Thus, the progress towards rating, being rated and then maintaining the rating will depend a lot on the annual assessment of international organizations. In case the conditions change rapidly and more, we need to be ready to propose changes to more appropriate legal regulations, and promptly make systematic adjustments and supplements when necessary,\u201d the VSDC General Director affirmed.<\/p>\n\n\n\n
Ha Anh\/Market Pulse<\/p>\n","protected":false},"excerpt":{"rendered":"
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