State Securities Commission and the upgrading of Vietnam's stock market to secondary emerging

On the morning of October 8, the State Securities Commission (SSC) officially announced that at 3:00 a.m. ( Hanoi time) the same day, the market rating organization FTSE Russell announced that the Vietnamese stock market had met all official criteria and was upgraded from a frontier market to a secondary emerging market.

According to the State Securities Commission, this event is an important milestone marking the strong development of the Vietnamese stock market, recognizing the comprehensive reform efforts in recent times of the entire securities industry in accordance with the Party and State's policies to develop a transparent, modern, and effective stock market according to the highest international standards.

The results were achieved thanks to the strong direction of the Government, the Prime Minister, the Ministry of Finance ; the close coordination of the State Bank and relevant ministries and branches; the support of the Stock Exchanges, the Vietnam Securities Depository and Clearing Corporation (VSDC), market members, news agencies and the press; as well as the valuable support from the World Bank, FTSE experts and global investment institutions.

- Ảnh 1. — The Government , Ministry of Finance, State Securities Commission... have directed and resolutely implemented many activities to upgrade the stock market.

The upgrading of Vietnam's stock market to secondary emerging market status marks the beginning of a new development phase, requiring deeper and broader reforms to achieve long-term goals in the future.

As the state management agency for securities and the securities market, the State Securities Commission will continue to closely coordinate with FTSE Russell to ensure the official transition process follows the roadmap.

"The State Securities Commission commits to continue implementing comprehensive solutions to create maximum conditions for domestic and foreign investors to access the market; at the same time, perfect the legal framework, modernize and digitize the infrastructure, aiming to develop the Vietnamese stock market to be increasingly transparent and effective, promoting deeper integration into the global financial market" - the State Securities Commission committed.

According to the report, Vietnam is classified as a Frontier market and has been on the Watch List since September 2018 for consideration of upgrading to a Secondary Emerging market.

When being put on the watch list, Vietnam did not meet two criteria: "Delivery cycle (DvP)" and "Method - Cost of processing failed transactions", both of which were rated as "Restricted".

By November 2024, the Vietnam Securities Market Authority had implemented a Non-Prefunding trading model, allowing domestic securities companies to secure the necessary capital to support foreign institutional investors in executing securities purchase orders. This has officially eliminated the pre-margin requirement for foreign institutional investors. In addition, a formal process for handling failed transactions has also been established.

The FTSE Russell Index Governing Board (IGB) recognises the achievements of the Vietnamese market regulator in developing its market, and confirms that Vietnam now meets all the criteria to be classified as a Secondary Emerging market under the FTSE Equity Country Classification Framework.

The IGB Board has carefully considered feedback from FTSE Russell's Advisory Committees regarding restrictions on the role of global brokers in trading activities in Vietnam.

While using a global securities firm as the sole counterparty is not a mandatory condition for upgrading to Secondary Emerging Market status, IGB recognizes that index investors need to be able to “mirror the index” under the second principle of the Statement of Principles.

Given the importance of the above issue to index investors, IGB determined that addressing the role of global securities firms in trading activities was necessary for the upgrade process to be implemented, the report said.

FTSE Russell recognizes the current efforts of the Vietnamese securities market regulator in building a model that allows foreign institutional investors to trade through partners who are global securities companies.

This effort is expected to bring the Vietnamese market closer to international standards, minimize counterparty risks and increase investor confidence through establishing relationships with reputable intermediary organizations.

Source: https://nld.com.vn/ubcknn-noi-gi-ve-ket-qua-nang-hang-thi-truong-chung-khoan-viet-nam-196251008070345854.htm