The key is the KRX system

The KRX system is the necessary infrastructure to implement the Central Clearing Counterparty (CCP) model, thereby improving the DvP-Settlement Cycle criterion.

Currently, Vietnam is classified as a frontier market by two international organizations, MSCI and FTSE Russell, and is included in the frontier market index. To date, the Vietnamese stock market accounts for the largest proportion in the frontier market index basket (about 30% of total assets under management).

In the September 2024 assessment, Vietnam's stock market met 7/9 criteria needed to be upgraded from a frontier market to an emerging market according to FTSE Russell's assessment.

The level of response of the Vietnamese market on FTSE's assessment criteria for emerging markets

In the September 2024 assessment, with MSCI criteria, Vietnam has improved 1 criterion compared to 2023 but there are still 8 more criteria to upgrade including: foreign ownership limit, foreign room, equal rights of foreign investors, freedom in the foreign exchange market; investor registration and account establishment, market regulations, information flow and finally clearing.

An Binh Securities Company (ABS) believes that the Vietnamese market could be upgraded by FTSE as early as the September 2025 review period. "The key point is that the KRX trading system must be operational, making money to deploy the central clearing counterparty model CCP, which is a necessary condition for the market to be upgraded," ABS said.

The system has been in the works for several years and is expected to shorten settlement times, provide new features and enable new products and services. The KRX system is the infrastructure needed to implement the Central Clearing Counterparty (CCP) model, thereby improving the DvP criteria. However, to date, the KRX trading system has been repeatedly delayed due to its incompleteness.

This system has missed its deadline many times. The most recent time was at the end of April 2024, when the Ho Chi Minh City Stock Exchange (HoSE) sent a notice to securities companies that the KRX system was preparing to operate from the beginning of May 2024 and requested securities companies to check transactions on their systems with the new KRX system. However, immediately after that, the State Securities Commission sent a notice to the Exchanges and the Vietnam Securities Depository and Clearing Corporation (VSDC) about not approving the application of KRX on May 2, 2024 according to HoSE's proposal, on the grounds that this application did not comply with legal regulations.

The early implementation of the new information technology system is also one of the key tasks of the securities industry in 2025, directed by the leaders of the Ministry of Finance and the Vietnam Securities Commission.

In its analysis, ABS estimates that the Vietnamese stock market could immediately attract an additional $1.4 billion for passive investment funds such as ETFs (which are investing in emerging markets), and Vietnam’s upgrade would automatically allocate a portion of its capital to this market. For active investment funds, improved market performance would make the Vietnamese stock market more attractive.

Source: https://baodautu.vn/nang-hang-thi-truong-chung-khoan-mau-chot-la-he-thong-krx-d239183.html