Fixing Securities Law: "Motivation" helps upgrade Vietnam stock market

	Amendment of Securities Law: Golden opportunity to remove problems for investors
	Amendment of Securities Law: Define more clearly some regulations on public offering
	Amendment of Securities Law: Towards a sustainable and transparent market

Mr. Nguyen Thanh Ky, Secretary General of Securities Trading Association

The revised Law on Securities was published by the drafting agency for a period of time and received a lot of feedback from experts, investors as well as securities companies. What do you think about this Law?

The draft Law on Securities has been carefully prepared by the Ministry of Finance and the State Securities Commission. Compared to the current Securities Law, this revised Law has a broader scope of adjustment, including market activities, market subjects and state management activities on securities and stock market.

The content of the draft, if implemented, will overcome the limitations and shortcomings of the Securities Law after more than 10 years of implementation, ensuring consistency and synchronisation with the relevant legal system. Thereby, it will continue to improve institutions, stabilise the legal environment and ensure the sustainable and safe development of the stock market. At the same time, it also contributes to improving the effectiveness of state management on the securities market, protecting the legitimate rights and interests of investors, approaching international standards.

Moreover, the revision of the Law also aims to meet the requirements of practicality and international integration, contributing to the upgrading of the market and ensuring the stock market is an important medium and long-term capital mobilisation channel for the Vietnamese economy.

The draft Law on Securities (revised) has many fundamental changes from the policy mechanism to the management of authorities. What are the highlights of this draft?

The most evident change is the increase in the authority of the State Securities Commission. In fact, violations in the field of securities in particular and finance in general are increasingly complex and sophisticated and have great influence on the operation of the stock market, requiring specialised agencies with enough competence to apply preventive measures, sanctions and sanctioning levels must be consistent with the nature and extent of violations, ensuring the law's deterrence and being suitable to the market size. Therefore raising the maximum fine for administrative sanctions is necessary. This will create transparency and honesty of the market. At the same time, the market monitoring of authorities will be more sensitive.

Also, the separation of operating licenses with the business registration certificate of securities companies is one of the highlights of the draft. This helps the State Securities Commission enforce sanctions such as suspending operations, depriving the right to use licenses and revoking licenses to avoid the situation that cannot be handled completely when market members violate due to entanglements of procedures related to dissolution and bankruptcy of enterprises, helping purify market participants.

The draft has added several new regulations aimed at improving the transparency of the stock market. It is the provision of an approved auditing organisation to audit a unit that benefits the public. This new regulation is expected to bring more quality information in the financial statements of public and listed companies, helping investors have clear and transparent information before deciding investment.

Moreover, the revised Law on Securities Law provides a number of regulations to get closer to international practices such as listing IPO, free float rate (ratio of free-float shares ceding compared to the volume of shares currently circulating on the market) in public offering, the concept of professional securities investors in private placement. These are very important regulations to help the market see Vietnamese securities are more familiar with foreign investors and create a more convenient premise in developing new products developed on stock markets around the world.

In particular, the draft has more uniform regulations with related Laws which were amended in 2014 and 2015 such as Enterprise Law, Civil Code, and Investment Law. The new provisions of the Enterprise Law on legal representatives, seals, cross-ownership and issues of commercial legal entities, other rights to property as tenure , ensuring the implementation of civil and inheritance obligations in the Civil Code have also been studied and regulated appropriately.

On April 16, the National Assembly Standing Committee gave comments on the draft Securities Law and proposed the drafting agency to continue reviewing and completing the draft. What suggestions do you have to help improve this Law?

The first is the issue of increasing the authority of the State Securities Commission. This draft does not highlight this issue although this is a very noteworthy thing to position the State Securities Commission in line with international practices.

The second issue is professional ethics. Because securities trading is a rather special occupation compared to other business lines, it is necessary to have a separate clause regulating the role of securities companies and investors. At the same time, there must be specific regulations to have close supervision in business activities of this particular industry. According to the current draft, compliance with the Code of Professional Ethics has not been mentioned in the management of practitioners. As an international practice, practitioners will have to commit to the Code of Professional Ethics and to supervise compliance during their practice.

In addition, the drafting agency should study further issues such as offering securities to the public, private placement of public companies, Securities investor protection fund and ownership ratio of foreign investors.