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UPCom, when?
On November 20, 2008, the Ministry of Finance ratified the regulations on the organisation and transaction management of unlisted securities at the Hanoi Securities Trading Centre (HASTC). On November 25, HASTC began the training course on the organisation and operations of the unlisted public companies (UPCom). UPCom is expected to become operational in the first quarter of 2009.
The news about the appearance of UpCom market has been applauded by securities companies, which want to have more places to do business in the difficult times, and by investors, who want to have an address where they can safely transact the thousands of shares of public companies they are holding.
Nguyen Vu Quang Trung, Deputy Director of HASTC, also said that the OTC market was ‘stuffy’ and a solution was needed to improve the market’s liquidity.
“Everything is ready for the market to operate,” Trung said.
However, Nguyen Thi Hoang Lan, Deputy Director of HASTC, said that investors still have to wait as the centre is still waiting for the Ministry of Finance to amend Decision No 238 dated September 29, 2005 by the Prime Minister on foreign ownership ratio in local companies. Lan said that even though everything is ready, UPCom will still not be put into operation on schedule if the revised decision is not promulgated.
Therefore, Lan said, when UPCom will be opened is still up in the air.
Statistics show that there are some 4,000 public companies, while only 400 companies have listed on the bourse. As such, 3,600 other companies still have shares being transacted on the OTC market, or ‘grey market’, which are not controlled by any specific regulations.
Lan said that a lot of foreign experts have warned that if too many public companies are allowed to have shares transacted on the ‘grey market’, this will badly affect the bourses in general. UPCom needs to be operational in order to help keep control over the above companies.
The general director of a securities company said that in principle, UPCom will provide another market with more flexible regulations than the official bourses. However, it is quite different from the OTC market, which now does not have any regulations or standards.
The director said that with such a viewpoint, the transaction mechanism set for UPCom proves to be too strict. The regulations on the daily trading band, modes of transactions and payment method show that it is in no way different from a second listing market.
He went on to say that the management agencies might be cautious with the UPCom in the first phase of operation. However, the overly strict regulations will keep investors away from making transactions, and keep public companies away from bringing shares to transact on the market. If companies can meet the requirements set for the UpCom market, they would be better off listing on the official bourses.
Nguyen Hong Quan, Acting General Director of An Binh Securities Company, also said that the expectations of public companies and investors on payment shortening and the right to open more than one transaction account could not be satisfied.
Meanwhile, a representative of HASTC insists that the broad opening of the market would cause difficulties for the management agency.
DTCK
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