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Finance ministry decision irks securities firms
A decision by the Finance Ministry asking securities companies to shut down offices established to transmit orders from outside their headquarters has been met with widespread disagreement.
The closure has to happen within a year after the decision by the Ministry of Finance (MOF) takes effect, which is 45 days after it was issued on December 26, 2008.
In Vietnam, securities companies establish the “order transmission agencies” in many areas outside their headquarters to tap local investment. These offices are not authorized to conduct any transaction, collect money or hand out dividends.
“After inspecting the operation of these order transmitting offices of many securities firms, we found dozens receiving money for securities transactions or allowing investors to withdraw money from their trading accounts, which violates the Finance Ministry’s decision,” said Bui Thi Thanh Huong, senior official of the State Securities Commission (SSC).
“Those brokerages were warned soon after but they didn’t take it seriously. Hence the decision was taken last year to protect investors. Also, they have one year to comply with it.”
SSC studies also showed that the operation of these offices was mostly ineffectual, Huong said.
But Chairman Nguyen Thanh Ky of the Vietnam Association of Securities Business said asking securities firms to close these offices broke the Law on Business, which does not limit businesses from expanding their operation.
“Ineffectual broker offices should be closed but shutting down those that are faring well isn’t a wise idea. And who will compensate costs that securities firms have incurred for setting up these offices, the facilities and the human resources?” Ky remarked.
An official of the Vietinbank Securities Corp., who wished to remain anonymous, also disagreed with MOF’s decision.
“These [order-transmitting] offices play a very important part in securities companies’ operations. They are securities firms’ satellites in rural areas,” he said.
“A big agency can make billions of dong a year. Additionally, developing a network of broker offices is the quickest and most effective way to capture market share. Thus, many securities firms have spent a lot of money over many years to set up their networks.
But now, with this decision, those networks will have to be shut down, causing losses in jobs, profits and stock trading chances for investors in areas where online trading is impossible.”
However, there are other securities companies backing the decision.
“The online trading service which is getting more popular day by day is killing off the offices anyway,” said Nguyen Chi Thanh, chairman of National Securities Co.
“The market’s recent nosedive has particularly hit their operations hard. Some offices were receiving just one order a day. Some were warned for violating the regulations forbidding them to receive securities transaction money from their clients.”
Tan Viet Securities Incorporation General Director Nguyen Van Dung also said most securities firms were switching to online trading, which offers transactions via the Internet and phone, so such offices were redundant.
“Tan Viet has opened 16 offices but we are now shutting down some of them which are making losses.”
Dung also said these offices were allowed to receive transaction orders only, not to provide consultancy services. “Therefore securities companies should focus on setting up trading offices,” he said.
Dau Tu Chung Khoan, thanhnien
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