Depository Will Ease Securities Deals
HA NOI — The State Securities Commission announced yesterday that it will soon open the Viet Nam Securities Depository (VSD) as part of the Government’s efforts to boost the country’s ailing stock market by facilitating transactions for investors, particularly those from abroad.
By using the depository services, overseas Vietnamese and foreign investors can place orders and purchase stocks, according to the State Securities Commission (SSC).
The VSD will have its headquarters in Ha Noi and a branch in HCM City, and will handle the registration, deposit, clearing and settlement of traded securities as well as other supporting securities trading services.
Both foreign and domestic investors will enjoy the same service fee, said a SSC official. He added that the fee is designed to encourage further involvement by foreign investors into the nation’s stock markets.
The State-funded centre will operate under the umbrella of the Finance Ministry’s SSC, but will have its own legal personality, seal, and bank account in the first stage of development.
As of 2008, the depository will be restructured into either a joint stock or limited liability company in line with international rules.
One of the primary functions of depository is to minimize the movement of physical securities in the market through dematerialization of securities, which is the process of converting securities held in physical form into holdings in book entry form.
Viet Nam recently marked the fifth birthday of its stock market. Despite a positive impact on the country’s capital market, the stock market has developed at a slow pace in terms of the number of listed companies and investors.
The SSC plans to carry out a series of solutions to boost the market, including creating an improved legal framework; the restructure of the financial system, including public finance, which will focus on the issuance of government debt instruments; streamlining corporate finance; focusing on transforming State-owned Enterprises and foreign-invested enterprises into major share holding companies; and reorganizing intermediate financial regulators towards the removal of subsidies and the creation of favorable conditions for entities to implement their roles as intermediates between those who have and those who need capital.
It will also improve transparency within the business environment, is expected to perfect mechanisms for management of the stock market, provide training and aid dissemination and awareness of the stock market.
Viet Nam News, August 4, 2005
