Perfecting the securities market monitoring framework in the new period

The effectiveness of monitoring needs to be improved.

Nearly five years after the implementation of Circular No. 95/2020/TT-BTC dated November 16, 2020, guiding the supervision of securities transactions on the stock market, and over three years after the application of Circular No. 06/2022/TT-BTC guiding the compliance supervision work of the State Securities Commission on securities activities of the Vietnam Stock Exchange and its subsidiaries, the Vietnam Securities Depository and Clearing Corporation (VSDC) has shown that transaction supervision and compliance supervision on the stock market have become systematic and are uniformly organized from the central level to the market operating units.

This regulatory system contributes to perfecting the legal framework, enhancing the capacity to detect, prevent, and handle violations, thereby ensuring a fair, transparent, and safe market operation and better protecting the rights of investors.

Circular No. 95/2020/TT-BTC and Circular No. 06/2022/TT-BTC contribute to perfecting the legal framework and enhancing the capacity to detect, prevent, and handle violations. (Illustrative image.)

The three-tiered supervisory model involving the State Securities Commission, the Vietnam Stock Exchange and its subsidiaries, the Vietnam Securities Depository and Clearing Corporation, and trading members has proven effective.

Clearly defining functions and responsibilities helps to enhance coordination and promptly address signs of violations. Through compliance inspections, the State Securities Commission also requires market operators to review their operational procedures, ensuring consistency and compliance with the law.

However, significant changes in the legal landscape and new regulatory requirements necessitate amendments to the two Circulars. Law No. 56/2024/QH15 has adjusted the role of the State Securities Commission in approving the operational regulations of the Vietnam Stock Exchange and VSDC; and added a legal basis for establishing a subsidiary to implement the central counterparty clearing mechanism (CCP). This necessitates a comprehensive review of all regulations related to transaction supervision and compliance monitoring.

Practical implementation has also shown that regulatory authorities need to strengthen the responsibility of the stock exchange in requesting information on suspicious transactions; expand the sharing of insider shareholder and related party data with trading members; and add an early warning mechanism at the member and stock exchange levels to enhance risk prevention capabilities.

The Vietnamese stock market is entering a new phase after being upgraded by FTSE Russell to the secondary emerging market group. This presents both opportunities and pressures for regulatory authorities to continue improving the legal framework and strengthening supervision to bolster investor confidence, especially that of foreign investors.

Furthermore, the transition to electronic reporting as required by administrative procedure reform in the 2024-2025 period also necessitates the full institutionalization of new regulations, ensuring transparency and reducing the compliance burden for businesses.

Clarifying the concept of "suspicious transactions"

The Ministry of Finance is currently drafting a Circular amending Circulars 95 and 06, which retains the scope of regulation while updating the subjects of application according to the new law. "Subsidiaries of the Vietnam Securities Depository and Clearing Corporation" are added to the group of entities subject to supervision; while the Stock Exchange and VSDC are no longer subject to direct transaction supervision, as they only play a role in operating market infrastructure.

Regarding Circular 95, the draft amends several important contents to better suit practical realities. Specifically: a series of terms in Article 3 are adjusted, the concept of "suspicious transactions" is clarified, the phrase "violating transactions" is removed, and inter-market supervision is included in the glossary. A new article (Article 3a) stipulates the principle of organizing supervision according to a three-tier model, clearly defining responsibilities and coordination mechanisms between the State Securities Commission, the Vietnam Stock Exchange, VSDC and its subsidiaries, and trading members.

The draft adds responsibilities for the State Securities Commission in handling violations and providing guidance on data formatting; strengthens the early warning role in Articles 4, 7, and 23; and clarifies the rights and obligations of the Vietnam Stock Exchange in inter-market supervision. Some reports have been switched to being submitted entirely electronically.

The draft also updates a number of phrases, forms, and appendices to conform with current law, such as replacing "potential for legal violations" with "signs of legal violations," adjusting the names of VSDC and its subsidiaries, replacing "anomalies" with "suspicions," replacing "approval" with "acceptance," and removing appendices on monitoring thresholds for the ratio of collateral utilization.

Regarding Circular 06, the draft focuses on clarifying the authority of the State Securities Commission in approving operational regulations, adjusting the reporting obligations of VSDC's subsidiary, and supplementing regulations related to monitoring foreign ownership ratios. Regulations on securities registration, clearing, and settlement are also amended to ensure consistency with current legislation.

These amendments aim to increase transparency, enhance risk warning and prevention capabilities, and create a suitable legal framework for the new phase of development of the Vietnamese stock market.

Source: https://baodautu.vn/hoan-thien-khung-giam-sat-thi-truong-chung-khoan-trong-giai-doan-moi-d449280.html