The State Securities Commission and securities companies should build a proper legal framework, a list of stocks eligible for short sale transactions and a standardised clearing systems to avoid systemic risks. (Photo: tinnhanhchungkhoan.vn) Hanoi (VNS/VNA) - The State Securities Commission’s draft circular toreplace an older one on the guidelines for securities trading is in line withmodern trends, perfecting financial products and their diversities, adjustingtrading time to suit the needs of domestic and foreign investors, said anexpert.
“Both individual and institutional investors are looking forward to theapproval and issuance of this circular,” according to Phan Dung Khanh, directorof investment consultancy department at Maybank Kim Eng Securities Co Ltd.
“This is definitely positive news for Vietnam’s stock market as the move isexpected to propel the local stock market to emerging market (EM) status,” Khanhtold the Vietnam News Agency.
Under the draft circular, investors are allowed to perform short saletransactions, which, according to Khanh, is a good step helping investorsdiversify their short trading strategies.
The draft said short sale transactions with collateral (secured short sales)were transactions for borrowed securities in the securities borrowing andlending (SBL) system of the Vietnam Securities Depository. The seller is thenobliged to buy back the securities to repay the loan. The short sale will beexecuted based on the securities loan transaction contract on the securitiesloan and lending system at the Vietnam Securities Depository.
A secured short sale transaction must include collateral, borrowing/lendinginterest rate, loan term, extension, collateral disposal when the investor doesnot make payment of securities, settling method when a dispute arises,potential risks and losses, and the costs.
Khanh said the State Securities Commission and securities companies shouldbuild a proper legal framework, a list of stocks eligible for short saletransactions and a standardised clearing system to avoid systemic risks.
They should also effectively upgrade infrastructure systems, prepare privatecontracts with customers and improve the instruction of new productinformation, he said.
Under the draft, a person aged from 15 years old to under 18 years old, who hasnot lost or limited their civil act capacity, is entitled to open a securitiesaccount provided that the consent of the legal representative is obtained.
Commenting on this regulation, Khanh said that the popularisation of securitiesand knowledge for investors, including those aged 15 and over, is necessary.
“People from 15 years old are able to access securities investment channel andcan have correct assessment on this attractive investment channel and capitalmobilisation. We can apply the regulation to the underlying stock market orsome kind of high quality bonds,” he said.
“However, some complex or advanced financial products such as futures contractsor option contracts may not be applicable to young investors,” he said.
According to lawyer Nguyen Thanh Ha, Chairman of SBLAW Law Firm, the stockmarket is a potentially risky investment channel that requires knowledge andexperience, thus its may be difficult for individuals aged 15 years to 18 toproperly participate in transactions by themselves.
“Besides, most securities companies currently stipulate the minimum age foropening a securities account is 18 years old,” Ha said./.
VNA
