At present, more than 50 companies are applying to establish securities companies, but the Vietnam Association of Securities Business (VASB) is asking for a temporary licensing suspension. However, representatives of securities companies said the suspension of licensing is against the spirit of the Enterprise Law. Are there enough securities companies, and how will these companies develop to match market requirements and principles?
Enough?
One reason for the temporary licensing suspension proposal of VASB is the number of intermediary organisations in Vietnam is too big in comparison with regional countries. However, operational securities companies said that the market remains very large and securities firms have not encountered any conflicts. Crowding is only seen at securities trading centres. The slow development of technology at trading centres prevents the development of securities companies capacity to serve investors.
An official from ACB Securities (ACBS) asked how “sufficiency” is understood. If 20 per cent of the Vietnamese population invested in securities and the technological infrastructure got a facelift, ACBS would freely open branches and trading floors to raise its capacity to serve one million investors. The Vietnamese stock market would only need 20 securities companies like ACBS. However, ACBS now has only 50,000 accounts.
In fact, the stock market is only developed in big cities like Hanoi and Ho Chi Minh City. Recently, several securities companies extended their networks to Haiphong and Can Tho cities. While operational securities companies are expanding their networks in big cities, who will develop the securities market in other localities if they are not newcomers? Notably, the proportion of Vietnamese people investing in securities in Vietnam is very low in comparison with those in Hong Kong, Thailand, South Korea and Taiwan.
Orientation for securities companies development
The number of applications for opening securities companies is growing at the State Securities Commission (SSC)’s office. To avoid conflicts, member companies should follow several basic orientations closely. First of all, securities companies need intensive and extensive development. However, this proposal encountered strong protests from long-standing securities companies. A company said the suspension of granting licences for new companies is against the law. The only way is to increase requirements for the formation of securities companies. On the other hand, the establishment of new members will create more opportunity for investors and generate pressure forcing them better their services. Even, poorly performing companies will dissolve.
Two of these orientations have been applied widely worldwide. Saigon Securities Incorporation (SSI) and Vietcombank Securities (VCBS) are pioneers in expanding their networks to localities outside of Hanoi and Ho Chi Minh City. Market expansion will enable companies to grasp bigger market shares and allow the securities market to attract more investors. Intensively, securities companies like SSI, Bao Viet Securities (BVSC) and Thang Long Securities (TSC) are trying to become investment banks or equitisation consultants. Applications to establish leading economic groups in the rubber, apparel and railway sectors will better the securities market.
The stock market is developing and is forecast to continue this trend in the coming years. This will create new opportunities for newcomers. Nonetheless, an official from the State Securities Commission said foreign securities companies will be allowed to operate in Vietnam as a part of the World Trade Organisation (WTO) accession commitments of Vietnam. Thus, Vietnamese securities firms need to improve their competitiveness. The SSC is also reviewing procedures for licensing new securities companies.
Thi Van
Vietnamese
