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UpCom on the up
The unlisted public companies market (UpCom) will officially open in Hanoi on June 24. It is seen as a major step in creating an equal, transparent and less risky playing field for stock market investors, said the State Securities Committee.
A more formalized market for over-the-counter (OTC) shares, the new market will help strengthen management over stock transactions of unlisted public companies, improve the publicity of those companies’ operations and gradually narrow the OTC market and reduce risks for investors, the committee said.
The transaction fee on UpCom is also lower than stock exchanges for listed companies, at 0.02 percent.
“It will help to enhance transparency and protect the interests of investors,” said Nguyen Thi Hoang Lan, vice general director of the Hanoi Securities Trading Center, where UpCom trading will take place.
“The OTC market has operated without oversight and contained a lot of risks,” Ms Lan said.
“There were many cases in which investors were cheated and we were not able to protect their interests,” she added.
More than 20 companies around the country have registered to join UpCom and ten of them have been accepted, Ms Lan said.
They include Rong Viet Securities, Phong Phu Pharmaceutical, HIPT Group, Da Nang Medical Equipment and Pharmaceuticals, Cafico Vietnam, Trang An Securities, Cho Lon Securities, Truong Phu, Asia-Pacific Securities, and SME Securities.
Preparations are complete and they are waiting for the Finance Ministry to issue modified regulations for the organization and management of trading of unlisted public companies’ shares, Ms Lan said.
“Since stocks of unlisted public companies have low liquidity, when those companies join UpCom, their stocks will be better known by the public and then they will find it easier to mobilize capital,” the general director of VICS Securities Co., Nguyen Phuc Long, said.
”In practice, shares of some unlisted public companies have become more attractive and been sought as soon as they registered to trade on UpCom. Among them are Trang An Securities, Saigon Commercial Joint Stock Bank, Vinh Cuu Stone, and Cafico,” he added.
To join the market, investors must register at a stock company that is a member of UpCom and must carry out a securities deposit check at the Center for Securities Depository.
Investors can themselves seek potential stock buyers or sellers, but they can entrust this via stock brokerages and pay them a fee.
Some securities experts said UpCom would boost the liquidity of unlisted public companies’ shares, but investors need time to get accustomed to the new market.
A number of OTC firms hesitated to join UpCom due to strict rules on information disclosure and a tighter daily trading band, Ms. Lan admitted.
However, once UpCom runs smoothly, conditions would be made more attractive, including a trading band wider than the initial plus-or-minus ten percent and a change in rules to enable securities firms to carry out both buy and sell orders for a particular share on the same trading day, she said.
Minh Tam
Dau Tu Tai Chinh
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