Goals for developing the nation's stock market were announced during a Mar. 2 conference held by the State Securities Commission in Hanoi.

The conference coincided with Prime Minister Nguyen Tan Dung's move the same day to order the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Vietnam to closely coordinate on long-term measures to secure the development of the market.

One of the highlights of his request was the need to develop new products such as global depository certificates, as well as the need to establish a derivatives market.

Dung also urged the finance ministry to complete its scheme for the bond market by the second quarter of this year.

"The volume of Government bonds should be increased, rather than the types of bonds, in order to raise more funds for the economic and social needs of the State," he wrote .

Dung also told the Ministry of Planning and Investment to assess the process of converting foreign-invested enterprises into joint stock companies.

The Government has signed three significant documents on the development of the stock market in the past two days.

"This proves that the Government and relevant ministries have been consistently concerned about the short- and long-term development of the market," said Minister of Finance Vuong Dinh Hue.

The process of restructuring the stock market this year will have four focuses, namely products, the structure of investors, securities companies, and the system of stock exchanges and the Vietnam Securities Depository Centre, Hue said.

While investors expected the nation's two stock exchanges to be merged this year, State Securities Commission chairman Vu Bang said a plan to govern the merger will be submitted to the Government in the third quarter.

"Execution of the plan would then probably take place about six months later," Bang said, predicting that both exchanges would continue to operate but ultimately under the management of a single stock exchange agency.

"Stocks will shift to trading in HCM City , while the Hanoi branch will mainly focus on developing specialised products such as derivatives and unlisted shares," he said.

Starting next month, Minister Hue said, brokerages will be divided into three groups, categorised as "normal", "under control" and "under special control".

The first group will include those with a ratio of usable capital to total risks of over 150 percent and accumulated losses of less than 30 percent of charter capital. Companies "under control" will include those with a usable capital ratio under 120 percent and accumulated losses in excess of 50 percent of charter capital. These firms will be required to diminish brokerage operations or be dissolved if unable to resolve their difficulties.

"The number of securities firms will definitely be reduced," Hue said. "However, it will take time to determine how many will be cut."

Bang said market regulators are paying strict attention to the market's investor structure.

"We should pay attention to enhancing the quality of institutional investors along with reviewing tax policies for both individual and organisational investors in a manner that encourages long-term investment and investment funds," he said.

Institutional investors currently account for only 4 percent of total trading accounts and are mainly insurers and investment funds, he said, while open funds, securities development companies and voluntary pension funds have not yet developed.

In terms of new products on the market, in addition to derivatives and new kinds of certificates, the commission's fund management division has suggested insurance services such as export credit insurance, agriculture insurance and life insurance linked with investment./.