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Hanoi works to get the kinks out of UPCoM
The development of the Unlisted Public Company Market, or UPCoM, is a necessary step to further development of the nation’s over-the-counter (OTC) market, but there’s still much to be done before UPCoM is rollled out, says Hanoi Securities Trading Centre deputy director Nguyen Thi Hoang Lan.
Of the nearly 4,000 public companies in Viet Nam, only around 400 have shares listed on the stock exchange, Lan said. This means that about 3,600 public firms were trading on the still largely unregulated OTC market.
"UPCoM is part of the plan to develop a mordern OTC market," said Lan. "This is what many investors are awaiting the most, more than anything else.... They will be able to receive more transparent information about companies, with public trading prices which will not fluctuate erratically like they do now."
UPCoM had earlier been expected to begin operating in the first quarter of this year, admitted Lan, but a specific time was yet to be determined.
A director of a securities company said on condition of anonymity that, in principle, the establishment of UPCoM was intended to create a more diversified market, with rules more open than the stock exchange’s, making it more convenient for investors to conduct transactions.
From that point of view, he said, the current mechanism stipulated for transactions on UPCoM was too strict, with rules on trading bands, transaction methods and terms of payment that looked no difference from the stock exchange’s.
"Regulations that are too strict will not attract investors," the director said. "Public firms will not be interested in joining this market because, with the regulations stipulated, they could absolutely make just a little more effort and be listed on the stock exchange."
The acting general director of An Binh Securities, Nguyen Hong Quan, agreed that some trading conditions for UPCoM were hardly meeting the expectations of investors or firms. Investor expectations included shortened payment periods and being able to buy and sell the same securities in a single trading day, he said.
"From the standpoint of a market organiser, UPCoM is an intermediary step for HASTC to expand the OTC market," Lan said. "Once the market operates more smoothly, more open conditions will be given to companies and investors." — VNS
Weighed down with rules?
Some major regulations for UPCoM, as stipulated in Ministry of Finance
Decision No 108/2008/QD-BTC issued on November 20, 2008:
– Securities to be registered for trading include shares and convertible bonds.
– The HASTC will hold transactions Monday through Friday, except public holidays as stipulated in the Labour Code.
– The HASTC will apply the put-through trading method for securities transactions on UPCoM.
– Investors are entitled to open a single account for securities trading at a securities company. In case investors have already had accounts for trading on the stock exchange, they can use these accounts for trading on UPCoM.
– Investors are not allowed to buy and sell the same securities in a single trading day.
– Foreign investor holding ratios are subject to the Government decision.
– The minimum trading volume for a transaction is 10 shares or 10 bonds.
– Share transactions are subject to a daily trading band of 10 per cent, adjustable by the State Securities Commission depending on market conditions. Bond transactions would not be subject to trading bands.
– The HASTC will calculate and announce reference prices daily.
– The HASTC, securities firms and organisations which register for trading on UPCoM must disclose information in accordance with Circular No 38/2007/TT-BTC.
VietNamNet/VNS
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