Securities draft law remains confusing: report

Some items are unclear while others are unreasonable and no longer fit the Vietnamese market’s conditions, the Government said in a report submitted to the National Assembly’s Economic Committee yesterday.

Those issues may befuddle investors, market members and regulators, the Government said, adding that policymakers must adjust the law so it matches international standards and agreements to which Viet Nam is committed.

According to the report, the amendment of the law involves different agencies like the State Securities Commission (SSC) – who would be in charge of inspecting, examining and dealing with violations – and local stock exchanges – who would be authorised to close and open the markets under particular conditions.

Some drawbacks in current legal documents are related to luring foreign capital as the Law on Securities does not regulate the presence of foreign investors on the Vietnamese market regarding their ownership, investment procedures and requirements.

Deputy minister of finance Huynh Quang Hai told a meeting discussing the Law on Securities that the draft aims to make the securities market more open to foreign investors and opening the market must be carried out step by step, assuring local authorities and companies have advantages in negotiating with foreign institutional investors.

In addition, foreign investors trading on the Vietnamese market must strictly follow domestic regulations on their ownership, investment requirements and conditions, yet the draft law does not mention specific levels for foreign ownership.

The lack of specific solutions for those issues is a challenge for policymakers as the Government is now responsible for setting up the regulations for 39 items in the draft law, which is too many, according to Vu Hong Thanh, chairman of the NA’s Economic Committee.

The draft law aims to keep eight items in the existing Law on Securities, remove 30 items, adjust 98 items and add extra content for 29 items.

Fines are lifted by 1.5 times

The maximum fines of VND3 billion (US$128,750) for institutional investors and VND1.5 billion for individual investors are considered strong enough to deter investors from breaking the law, according to deputy minister Hai.

The current levels regulated by the Law on Securities are VND2 billion for institutional investors and VND1 billion for individual investors.

The draft law also empowers the SSC to ask organisations, companies and individuals to provide information for investigators and market regulators when the SSC and other agencies carry out inspections.

Financial institutions and commercial banks in Viet Nam must submit trading data of investors and traders suspected of violating the law, and the SSC is authorised to ask telecommunication firms to provide contacts, addresses and call histories of suspected investors and traders.

The meeting was organised by the National Assembly’s Economic Committee to assess the draft amended Law on Securities.