PM approves securities market restructuring plan

12:21 | 17/03/2019 Finance - Banking

Prime Minister Nguyen Xuan Phuc has approved a new plan that focuses on restructuring the securities market until 2025.

Illustrative image - Source: tinnhanhchungkhoan.vn

Under the new plan, numbered 242/QD-TTg, the Government wants to ensure comprehensive restructuring of the securities market so that it becomes the medium- and long-term capital-raising instrument for the Vietnamese economy and businesses.

Several milestones have been set in the document such as the value of the stock market is projected to reach 100 percent and 120 percent of Vietnam’s total gross domestic product (GDP) in 2020 and 2025, and the number of listed companies in 2020 rising 20 percent from 2017.

The Government also plans to launch new securities products such as covered warrants, government bond futures and new index-underlying futures.

Under the new project, brokerage firms are required to reform their operational models, improve their financial health, make stronger efforts in corporate and risk management, and improve corporate transparency and performance.

Any unofficial capital sources for securities firms will be monitored closely and the firms violating the market rules on margin lending will be fined more strictly.

Brokerage firms, which have capital adequacy ratio (CAR) of more than 180 percent, capital of more than 1 trillion VND and no cumulative losses, will receive support from market regulators to expand their business, lead in introducing new products and services to the market, become the founding members of the bond and derivative markets, and restructure poorly-performing securities firms.

On the other hand, companies with below 180 percent CAR will be watched by the market regulator and are disallowed to directly manage investors’ trading money.

They are also restrained from making new investments, trading shares and paying dividends. In addition, those firms are banned from trading highly risky transactions on the market.

Theo VNA