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HNX launches new trading platform for privately issued corporate bonds
The Hanoi Stock Exchange (HNX) launched a dedicated trading platform for privately issued corporate bonds on July 19, a strategic move that is set to list over 1,600 individual corporate bond tickers for trading.
Speaking at the launch, Finance Minister Ho Duc Phoc underscored the significance of the new system, expressing optimism that it would enhance market liquidity.
Vu Thi Chan Phuong, chairwoman of the State Securities Commission (SSC), acknowledged that the rapid growth of the private corporate bond market had exposed some limitations. She noted that some businesses had issued bonds for inappropriate purposes, leading to legal violations and subsequent penalties.
Difficulties in business operations had compelled companies to extend bond maturities, affecting the issuance of private bonds and causing instability in the financial market.
The introduction of the bond trading system is anticipated to provide regulators, market participants, and the investing public with more information.
In this new system, investors are expected to assume greater responsibility for their trading activities, while state agencies can strengthen their oversight of compliance with regulations on private corporate bond transactions.
During the inaugural trading session on July 19, four distinct bond securities were transacted in a total of 39 individual orders. The cumulative trading volume across the market exceeded five million bonds, amounting to an aggregate value of over $74 million (with 95 per cent being settled instantly, and the remaining 5 per cent due at the end of the trading day).
According to the HNX, at the commencement of trading, 19 separate bond issuances from three different companies were approved for immediate trading. These included 15 bond codes from Vietcombank, with maturity terms ranging from seven to ten years, three from VINFAST Production and Trading Co., Ltd, and one from an undisclosed industrial development and transport investment corporation.
Market observers believe that the operation of the private corporate bond trading platform will contribute to thawing the market, unlocking capital flows, and attracting more investors to participate.
The stock market's scale has been continuously expanding, its quality improving, and its structure being perfected through the formation of market segments including stocks, bonds, and derivative securities.
Specifically, for corporate bonds, the market has seen robust development from 2017 to 2022. As of the end of last year, the outstanding balance of corporate bonds reached VND1.2 quadrillion ($50 billion), equivalent to 12.66 per cent of GDP.
However, the rapid growth of the private corporate bond market has also revealed some limitations. Some businesses have issued bonds for inappropriate reasons, thus violating the law. These cases have been dealt with by the appropriate agencies.
The business situation is challenging, so many firms have had to extend their debt and prolong bond terms, thereby affecting issuing operations. This has caused instability and had a detrimental effect on public perception.
Phuong from the SSC believes that the birth of the private corporate bond trading system will help regulatory agencies, market members, and the investing public gain a clearer understanding of the private corporate bond market. At the same time, she feels it will enhance the accountability of investors in bond trading activities.
The stock exchanges, the Vietnam Securities Depository Center, and the payment bank (Vietcombank) are responsible for ensuring the private market operates continuously, stably, and safely from the time of registration and deposit through to transaction and payment.
Additionally, the HNX has announced that its newly inaugurated platform for privately issued corporate bonds will operate from Monday to Friday each week, excluding public holidays. The trading hours will mirror those of the stock market, with a morning session from 9-11.30am and an afternoon session from 1-2.45pm.
Investors are required to open accounts with securities companies to be eligible to trade.
The platform is specifically designed for professional securities investors, and the securities firms are tasked with the responsibility of verifying their status to ensure they meet the regulatory requirements for trading.
They must verify the validity and legality of each transaction order in accordance with regulations, and ensure the accuracy and completeness of transaction information on the system.
The HNX has stated that the operation of the private corporate bond trading system will enhance transparency, reduce risks for investors, and boost the market's liquidity. The exchange also anticipates that the new platform will foster the sustainable development of the primary market for private corporate bonds.
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