Securities law to be modernized

An update on the Law on Securities this year focuses on nine targets, in the hope of giving a boost to the development of the securities market as well as the broader financial sector, according to the State Securities Commission (SSC).

Since early last year, market insiders have sought more amendments to meet demand for a more sophisticated securities market. The SSC is tasked this year with building the revised Law on Securities, which should be submitted for the National Assembly’s review in October.

According to Ms. Vu Thi Chan Phuong, SSC’s Vice Chairwoman, the update on the securities law at the current time is necessary given that a number of laws (on investment, inspection, the civil code, and the handling of administrative violations) were revised and promulgated and which are related to the implementation of the Law on Securities, such as ownership by foreign investors, corporate governance, inspection authority, and administrative sanctions.

The amendment of the securities law will demonstrate the policies and guidelines of the government in restructuring financial markets and State-owned enterprises, creating a favorable investment environment for all investors and enhancing transparency, Ms. Phuong said.

The updated law is expected to focus on nine targets. First, it will standardize the conditions, dossiers, and procedures for offering and listing each type of securities, and improve the quality of public companies by adjusting their criteria, thereby enhancing the quality of goods on the stock market.

Second, it clearly defines the organizational structure, operation, functions, tasks, and obligations of stock exchanges, and specifies the areas of the stock market, bond market, and derivatives market.

Third, it identifies the organizational structure and operation of Vietnam Securities Depository, supplements regulations on clearing and settlement in order to expand professional activities, and strengthens risk management regulation as well as payment support mechanisms.

Fourth, the ownership ratio of foreign investors in public companies on the securities market will be clearly defined. Fifth, the law will ease the way for foreign investors to participate in Vietnam’s securities market.

Sixth, regulations on corporate governance of public companies, securities companies and fund management companies will be standardized to improve the quality of enterprises.

Seventh, the law will review the conditions for granting the establishment and operational licenses to securities companies and fund management companies in line with the Law on Enterprises, and define the role and responsibilities of securities companies in ensuring their clients comply with the law.

Eighth, it enforces the information disclosure obligations, to enhance the clarity and transparency of the stock market.

Ninth, the revised law will define certain powers of the SSC to enable it to inspect, supervise, monitor, and enforce regulations on the market.

The 2006 Law on Securities, amended for the first time in 2010, was introduced in the context of a small-scale securities market. The law created a legal corridor to enable the stock market to grow over the past eleven years but its shortcomings have also been gradually exposed. These are requirements for information disclosure, market manipulation, investigative and supervisory authority of the market watchdog, as well as foreign ownership-related regulations.