Sai Gon Giai Phong Daily spoke with Nguyen Son, head of the Market Development Department about a recent announcement that beginning in December, securities firms will have to stop authorizing customers to sell or borrow before the T+4 trade settlement, where T denotes the transaction date.
Mr. Son said he considers this measure an effective solution to correct recent market infringements and ensure equality between firms and customers.
SGGP: Could you please explain why this correction hasn’t been implemented earlier?
Mr. Nguyen Son: After a periodic inspection, the State Securities Commission (SSC) found some securities firms were allowing their customers to sell holdings earlier than the standard settlement time, which is against the Securities Law.
Earlier, the commission warned firms to obey the law and continue to check T+ transactions. It has now ordered securities firms to stop such violations while waiting for the Ministry of Finance to issue new instructions for stock transactions.
It will investigate the infringements and report to the ministry to decide on a solution.
Obviously, there is a need to reduce trade settlement times. Do you think that it’s time to apply a shorter trade settlement on Vietnam’s stock market?
The SSC drafted a circular for transaction instructions, which allows investors to open many trading accounts and buy or sell same stock the same day. It also gives investors permission to sell the shares they bought on day T+2 and T+3 which means immediately after the Vietnam Securities Depository (VSD) cross-checks with market members.
The circular has been presented to the ministry for consideration. It will be applied at the beginning of next year if the ministry approves it.
Which requirements do you think Vietnam’s stock market needs to reduce trade settlement times?
The settlement currently finishes at 3pm on day T+3. Investors will receive shares and money in the morning when the trade settlement is reduced.
Technology plays an important role in reducing payment of stock transactions. The VSD has set up a new system and tested it. It plans to use this system by the end of the year. However, reducing the settlement not only requires effort from the VSD but also from market members.