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HNX ready for ETF trading
Efforts are being ramped up for the upcoming launch of Vietnam’s first exchange traded funds in the third quarter of this year.
Hanoi Stock Exchange Deputy chairwoman Nguyen Thi Hoang Lan said HNX’s infrastructure to support exchange traded fund (ETF) transactions was ready. Lan also said one fund management company has sent an application to the State Securities Commission (SSC) to register for ETF transactions on the HNX tracking HNX30 index.
“The first ETF will be listed on HNX late in the third quarter or early in the fourth quarter of this year after receiving SSC approval,” Lan said.
Apart from preparing the technical infrastructure, HNX has compiled regulations on the organisation and management of ETF certificate transactions which are awaiting SSC approval before being enacted.
Under these regulations, after being listed on HNX these ETF certificates would not need to apply for additional listing for new issuances or procurements. New issuance or procurement volumes will be automatically updated by HNX and the Vietnam Securities Depository (VSD) based on respective actual issuance or procurement results.
ETF certificates, when debuting on the Hanoi exchange, will be obliged to satisfy three criteria. They will need SSC listing approval, having completed registry procedures for depositing at the VSD, and have at least two broker-dealers (or authorised participants-APs), including at least one AP directly involved in transactions. Five days after the fund management companies submit listing records, HNX will issue approval for ETF certificate listing.
Fund management companies will have 10 days to complete all relevant work before putting ETF certificates into transactions on HNX.
ETF development not only matches the Vietnam stock market development strategy for the 2011-2020 period, but is also regarded as one of the effective vehicles to restructure items and the stock market’s investor base.
Therefore, in addition to existing indexes, HNX would make further strides in developing new indices to enable fund management companies to select and diversify ETF products in the future, Lan noted.
Worldwide, propagation plays a crucial role in ETF deployment, especially when the product is first launched.
Therefore, apart from hosting a recent workshop to present ETFs, HNX will work with the SSC to provide in-depth training programmes on ETFs to raise public awareness.
The new model is expected to offset the weaknesses of both open-end and closed-end funds in mobilising capital.
ETFs were experiencing a trial period, said Lan. In the first quarter, HNX had experimented with an ETF transaction system with 80 securities companies and had reported stable results.
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