Solutions to implement the Stock Market Development Strategy until 2030 in Vietnam

On December 29, 2023, the Prime Minister of Vietnam issued Decision 1726/QD-TTg approving the Stock Market Development Strategy until 2030.

The Prime Minister set the goal of developing a stable, safe, healthy, effective, sustainable, and integrated stock market; improving risk resistance; having a reasonable structure among market components; becoming an important medium and long-term capital mobilization channel, mainly for the economy; maintaining growth in scale, focusing on improving quality; developing green financial tools and sustainable finance; promoting digital transformation in the securities sector; building a market management and monitoring system associated with the application of modern information technology; Strengthen international connectivity and integration and gradually narrow the development gap between Vietnam's stock market and the stock markets of developed countries.

Solutions to implement the Stock Market Development Strategy until 2030 in Vietnam (Internet image)

To achieve the above goal, the Prime Minister of Vietnam has proposed many solutions, as follows:

Complete the legal framework related to securities

- Review and summarize the implementation of the Securities Law 2019 and propose amendments and supplements to the Securities Law 2019 and guiding documents for the Securities Law 2019 in the period 2022-2025.

- Research, propose, and develop legal documents to promptly overcome shortcomings in practical stock market operations, meet new development requirements, and ensure the comprehensiveness of the legal framework for managing activities on the stock market in accordance with the domestic situation and international practices.

Some specific research and proposals include: the organizational and operational model of the Vietnam Securities Depository and Clearing Corporation is associated with expanding the scope of providing post-transaction products and services to the stock market; regulations to develop fund management companies with higher conditions and standards; and, at the same time, research and propose support mechanisms for securities investment funds to ensure uniformity and uniformity of the legal system; regulations on investors participating in private corporate bond transactions.

- Improve legal regulations on supervision, inspection, and handling of violations in the securities sector to protect the legal rights of investors, monitor and limit risks in the market, enhance deterrence, and ensure market order, safety, and transparency.

Strengthen capacity for management, supervision, inspection, examination, and handling of violations

- Strengthen the functions, tasks, powers, and organizational structure of specialized supervision and inspection agencies in the field of securities, ensuring sufficient law enforcement capacity.

- Build a monitoring system connecting the State Securities Commission, the Stock Exchange, the Vietnam Securities Depository and Clearing Corporation, and market members.

- Apply risk-based monitoring methods, build a system of early warning indicators, ensure effective, comprehensive, modern monitoring, and approach international practices.

- Strengthen the implementation of inspection, examination, and handling of violations in a comprehensive but focused manner, focusing on cases that have a major impact on the stock market; strengthen joint supervision between components of the stock market. Strengthen the management and strict supervision of the activities of securities companies and fund management companies.

- Strengthen the management and supervision capacity of management agencies to ensure the stock market operates stably, orderly, safely, and transparently, aiming to apply a smart management and monitoring system based on the application of digital technology in storage, statistics, data analysis, forecasting, and stock market monitoring activities.

- Develop a coordination mechanism between the Ministry of Finance and relevant ministries and branches to propagate and supervise the enforcement of legal regulations and inter-sectoral supervision to promptly detect and handle violations. .

- Continue to invest in and upgrade modern information technology systems, ensuring the security and safety of information technology systems and databases to better serve market management and supervision.

Increase supply of goods to the market and improve supply quality

- Diversified product base on the market:

+ Develop the stock market: Encourage all types of businesses to conduct initial public offerings (IPOs) associated with listing and registering for trading on the stock market; Attract large-scale enterprises with a good financial situation and corporate governance to list on the stock market; Actively support the completion of equitization and state capital divestment plans in accordance with the law on equitization.

+ Developing the Government bond market: issuing diverse terms of Government bonds, Government-guaranteed bonds, and local government bonds to meet the capital mobilization goals of the issuing agency and in accordance with the needs of investors. Research the possibility of issuing new bond products to diversify products in the market.

+ Developing the corporate bond market: Focus on promoting the public offering of corporate bonds associated with listing; Encourage businesses to issue a variety of bond types suitable to their capital mobilization needs; Developing corporate bond products for the purpose of implementing projects and investment projects in the form of public-private partnerships (PPP) to promote capital mobilization for infrastructure development; Operate the secondary market for individual corporate bonds for professional securities investors to increase liquidity and transparency in the market.

+ Develop the green bond market: Encourage the issuance of green government bonds, green local government bonds, and green corporate bonds to create more capital mobilization channels for the budget, for businesses, and to attract investors towards sustainable economic development goals.

+ Develop derivative securities products and new products: Continue to deploy futures contract products based on stock indexes and Government bond futures contracts; Gradually deploy stock index option contracts, futures contract products, and option contracts based on single stocks or groups of stocks; improve the quality of current indexes; amend the index rule set in accordance with international practices; and develop additional base indices to serve as base assets for the derivatives market. Aiming to develop a variety of derivative products based on many different underlying assets.

+ Research and deploy a variety of covered warrant products, structured products, depository certificates, securities investment fund certificates, and green financial tools suitable to the level of development of the stock market.

- Improve transparency and quality of goods:

+ Arrange and classify listed stocks and stocks registered for trading on the Vietnam Stock Exchange based on scale and quality; at the same time, improve listing conditions and conditions for maintaining listings for stocks.

+ Appraise and closely monitor the issuance of securities; Strengthen inspection, examination, and supervision of the use of capital for the right purpose according to the licensed issuance plan according to the law; Inspect and supervise the disclosure of information by enterprises mobilizing capital on the stock market; strictly handle violations. Inspect and promptly handle businesses that do not comply with legal regulations on listing/transaction registration.

+ Strengthen inspection of compliance with financial reporting information disclosure; Inspect and supervise the provision of audit services by auditing firms and auditors to improve the quality of financial reports and accounting-auditing services; Strictly handle violations by auditing firms and auditors when auditing listed enterprises and public companies.

+ Approach international practices and be consistent with Vietnam's conditions regarding accounting and auditing standards. Applying international accounting standards (IAS) and international financial reporting standards (IFRS) contributes to improving transparency and increasing the efficiency of providing information to investors.

+ Improve the quality of information disclosure by public companies on the basis of promoting propaganda and dissemination of information disclosure regulations; Encourage subjects to disclose information in English; Organize inspections to rectify and remind businesses, members, major shareholders, insiders, and related persons to fulfill reporting and information disclosure obligations fully and promptly; modernize the information disclosure system of the State Securities Commission to support businesses and market members in fully disclosing information according to regulations.

+ Coordinate with domestic and foreign units to promote training and propaganda programs on corporate governance, and annual corporate governance rating evaluation programs for listed companies; Enhance the role and responsibility of Stock Exchanges in supervising the implementation of regulations on information disclosure and corporate governance.

+ Improve the quality of annual reports of public companies, aiming for sustainable development based on applying environmental, social, and corporate governance standards (ESG standards) according to international practices.

+ Strengthen the role and responsibility of credit rating agencies in the corporate bond market; move forward to require businesses issuing bonds to have credit ratings; and form habits and practices of using credit rating results when issuing and investing in corporate bonds.

+ Research on organizations providing bond pricing services; organizations providing pricing services on green bonds and sustainable bonds; standardize regulations on the responsibilities of organizations representing bond owners and collateral management organizations to increase professionalism in the corporate bond market.

Solutions to develop and diversify the investor base, improve the quality of investment demand, and promote sustainable investment demand

- Diversify the domestic investor base:

+ Develop domestic institutional investors, focusing on developing various types of securities investment funds; Research and develop legal documents for money market funds, complex ETF certificates (leverage/inverse ETF), fund of funds, etc., in accordance with the level of development of the stock market, aiming at a reasonable structure between individual investors and institutional investors, between domestic investors and foreign investors, and promoting the stock market to develop in a sustainable direction.

+ Diversify distribution channels of fund certificates; encourage the participation of investors in the stock market through various types of investment funds, especially voluntary supplementary pension funds, to promote the development of voluntary retirement programs in Vietnam.

+ Research solutions to encourage insurance businesses to invest in the primary and secondary markets of Government bonds and expand investment in corporate bonds with credit ratings, listed bonds, stocks, and listed fund certificates in accordance with legal regulations, principles, and investment objectives of insurance enterprises.

+ Research solutions to attract institutional and individual investors to invest in green financial instruments in accordance with legal regulations.

- Attract foreign investors:

+ Continue administrative reform, simplify investment procedures, and create favorable conditions for foreign investors to invest in Vietnam's stock market.

+ Enhance transparency in market activities, ensuring equal rights to access information for foreign investors through encouraging listed organizations and public companies to disclose information in English.

+ Implement solutions to include Vietnamese Government bonds in the international Government bond index basket to improve competitiveness and attract foreign investors to invest in Vietnamese Government bonds.

+ Review and supplement regulations to attract foreign investment capital into the capital market and bond market; improve the convertibility of the Vietnamese currency according to current mechanisms and policies of the State.

+ Promote the implementation of solutions to upgrade the stock market from a frontier market to an emerging market according to the stock market classification standards of international organizations.

Improve the efficiency of market operations and modernize infrastructure and information on the stock market

- Regarding improving the operational efficiency of the stock market:

+ Effectively deploy the operations of the Vietnam Stock Exchange and its subsidiaries and delineate stock trading markets at the Stock Exchanges on the principle of not disturbing, ensuring continuous and stable operation, meeting management requirements, facilitates capital mobilization activities of businesses, investment activities, and securities transactions of investors.

+ Develop a variety of post-transaction support services according to international practices and standards.

+ Apply international practices on environmental, social, and corporate governance standards (ESG standards) at Stock Exchanges and Vietnam Securities Depository and Clearing Corporations towards the goal of green and sustainable development in the securities sector. Stock exchanges actively participate in the United Nations' Sustainable Development Stock Exchange initiative.

- Modernize infrastructure, comprehensively innovate, and synchronize transaction, registration, depository, clearing, and payment technology on the stock market.

+ Focus on developing the Government bond secondary market to promote market liquidity, support meeting the need to mobilize capital for the State budget and restructure the budget and public debt in a safe and sustainable direction; Establish a standard interest rate curve in the Government bond market as a reference for the financial market.

+ Build and operate synchronously the trading, registration, depository, and payment systems for privately offered corporate bonds for professional securities investors; improve and modernize the corporate bond market infrastructure issued to the public, listed, and traded at the Stock Exchange; Upgrade the information page and information portal on corporate bonds at the Stock Exchange.

+ Autonomy in researching and applying information technology to organize transactions and manage and monitor the stock market: proactively choose to deploy appropriate technology solutions applied in trading activities, market management, and supervision; Implement solutions to improve the capacity and qualifications of information technology human resources; Focus on investing to ensure security, market safety, information security, and securities industry data.

+ Apply information technology in information exchange, management, and supervision activities between management agencies, stock exchanges, the Vietnam Securities Depository and Clearing Corporation, and market members.

+ Implement clearing and settlement activities for underlying securities transactions according to the central clearing partner (CCP) model; provide clearing and settlement services according to the CCP model for derivative securities on the over-the-counter (OTC) market. Research and advance linkages between Vietnam Securities Depository and Clearing Corporation with regional registration, depository, clearing, and settlement organizations to provide services for cross-border transactions.

Develop and strengthen the capacity of the system of market intermediaries and promote the role of social and professional securities organizations

- Develop securities companies and fund management companies:

+ Accelerate the process of restructuring securities companies and fund management companies according to the Project "Restructuring the stock market and insurance market to 2020 and orientation to 2025" issued together with Decision No. 242/QD-TTg dated February 28, 2019 of the Prime Minister to improve the operating capacity of securities companies and fund management companies; improve corporate governance capacity and risk management; and increase the competitiveness of companies in the market.

+ Continue to develop the activities of securities companies according to two models: multi-function (performs many securities business operations) and specialized (performs one securities business operation) on the basis of strengthening corporate governance capacity and classifying securities companies; continue to resolutely handle weak securities companies, make them healthy, and strengthen the financial capacity of securities companies; Professional development of services allowed to operate by securities companies according to the Securities Law 2019; Strengthen the role of market creation, improve financial potential, improve human resource quality, and develop in-depth technology systems at securities companies.

+ Complete the bankruptcy and insolvency handling mechanisms for intermediary organizations on the stock market.

+ Research and develop a mechanism to guide, manage, and monitor the application of financial technology in stock transactions: the popular application of electronic customer identification (eKYC); electronic payment applications in stock transactions; automated investment consulting services and automated portfolio management implementation; and promoting digital financial transactions on the stock market, meeting the needs of the digital transformation of the economy in general.

- Promoting the role of social-professional organizations and supporting securities organizations:

+ Promote the implementation of supervisory functions of social and professional securities organizations through strengthening and proactively supporting state management agencies in building legal policies, training human resources, and monitoring compliance with legal regulations for members of the association.

+ Coordinate with social and professional organizations to promulgate professional standards and professional ethics; Inspect and supervise the implementation of standards to improve the quality of practice and professional ethics of organizations and individuals participating in the stock market. Effectively deploy information, propaganda, and the dissemination of laws on securities and the stock market.

+ Improve operational efficiency, service delivery quality, financial capacity, and professional ethics of credit rating organizations and independent auditing companies on the stock market. Support management agencies in the management and supervision of accounting and auditing operations according to legal regulations of auditing organizations and auditors approved to audit entities with public interests in the securities sector. Encourage international credit rating organizations to participate in providing services in the Vietnamese market.

Strengthen coordination between fiscal, monetary, and other macroeconomic policies

- Strengthen close coordination between fiscal, monetary, and other macroeconomic policies to maintain macroeconomic stability, ensure major balances in the economy, and create conditions for stability, rapid development, safety, efficiency, and sustainability in the stock market and bond market.

- Strengthen the coordination between the Ministry of Finance and the State Bank in exchanging and providing information according to the Regulation on Work Coordination and Information Exchange between the Ministry of Finance and the State Bank.

- Strengthen coordination between the Ministry of Finance and the State Bank in supervising the issuance, investment, and service provision activities of credit institutions on the stock market to ensure transparency and limit systemic risks in the financial market; manage and monitor foreign indirect investment capital flows; and improve risk management capacity for the stock market to ensure market safety.

- Review and amend licensing regulations to create favorable conditions for credit institutions when participating in transactions and deploying products and operations on the underlying stock market and derivatives market.

Strengthen and proactively integrate internationally

- Proactively integrate internationally to harmonize the legal framework towards common standards in the securities sector in the region and the world, such as: corporate governance standards, information disclosure related to sustainable development, and application of international financial reporting standards (IFRS) for listed businesses, cross-border transaction and payment services (cross-border services), mutual recognition of practice certificates, analytical reports, participation in green finance initiatives, sustainable finance...

- Complete the technical, technological, and legal infrastructure for the process of international stock market integration, initially linking into ASEAN regional stock markets.

- Actively implement commitments, bilateral and multilateral cooperation agreements and signed agreements, and expand bilateral and multilateral cooperation in the field of securities: Effectively deploy projects signed with international partners until 2030; Search for sponsors and new funding sources and funding methods; proactively exploit financial resources from regional financial institutions for domestic projects; improve the efficiency of management and use of financial and technical support sources in the financial sector; Complete the management board model for programs and projects using foreign funding from the Ministry of Finance and the State Securities Commission.

- Develop a mechanism for cooperation, information sharing, and supervision between the Vietnam stock market management agency and other management agencies and international organizations operating in the field of securities and the stock market; Monitor, detect, and promptly handle cross-border violations.

- Actively cooperate with foreign partners to research new products for the market, especially focusing on products related to green finance and sustainable development.

Improve the quality of human resources, strengthen training, research, and propaganda in Vietnam 

- For training and fostering civil servants and workers working in management, supervision and inspection at state management agencies, Stock Exchange, Vietnam Securities Depository, and Clearing Corporation:

+ Develop and implement training and fostering programs appropriate to job positions; Focus on operating and using automatic management and monitoring systems on the stock market. Diversify forms of training and fostering, including promoting the application of information technology in the context of the 4.0 industrial revolution.

+ Improve the ability to evaluate and forecast developments in the stock market and the economy; have policies to manage, use, attract, reward, and develop high-quality human resources with good qualities in stock market management and supervision activities.

+ Enhance cooperation and exchange of information on training programs with international financial organizations; increase participation in activities and initiatives of the International Organization of Securities Commissions (IOSCO), the Securities Commissions of countries, and domestic and foreign financial and securities institutions.

- Train and improve the quality of securities practitioners:

+ Strengthen training programs for securities practitioners in harmony with other countries in the ASEAN region and around the world.

+ The State Securities Commission continues to coordinate with professional associations to strengthen the management and supervision of securities practitioners; apply principles and standards of professional ethics to managers of securities companies, securities investment fund management companies, and practitioners; Gradually transfer examination and practice certificate activities to professional associations on the basis of meeting the capacity requirements of each association.

- Improve the quality of individual investors associated with training, disseminating knowledge and propaganda information: building an overall training strategy for investors, and determining appropriate goals, subjects, and roadmaps according to each stage of stock market development.

- Develop the Center for Scientific Research and Securities Training into a leading unit in the field of securities research and training; promote cooperation with universities and research facilities at home and abroad in research and training activities; and diversify the content and forms of training for securities practitioners and investors through promoting the digitization of training programs and documents.

Mai Thanh Loi

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