SSC to Stop Establishment Licenses for New Securities Companies

The State Securities Commission (SSC) has recently decided to stop licensing the establishment of new securities companies to reduce the overheat increase of stock bfokers and fund managers in the market, Securities Investment reported.

 

The watchdog will mull over the existing establishment documents, and raise requirements in capital, competence and technology for new securities firms.

 

Vietnam stock market now has 60 securities companies and 20 investment fund management firms in operation. Another 80 stock brokers and 30 fund managers are waiting for the SSC’s approval.

 

If approved, the number of securities companies in Vietnam will double that in S.Korea’s stock market and fold 3.5 times that in Thailand, while Vietnam’s market scale is still small.

 

As the end of August, the total market value of all shares on the bourse had reached US$19.5 billion, accounting for 31 per cent of the country’s GDP, 20 times higher than that in late 2005. Shares transaction also increased eight times.

 

However, the mass establishment of new securities firms and the downtrend of the stock market have hurt big companies’ revenue and profit. Bao Viet Securities Company reported net profit down 25 per cent and revenue 13 per cent in the first half. IBS, EABS and SSI’s revenue also decreased by 66 per cent, 61 per cent and nearly 90 per cent, respectively.

 

The overheating is forecast to result in the bankruptcy of many securities companies especially newly-founded ones.

 

The new establishment will also place great pressure on technology infrastructure of Hochiminh and Hanoi bourses. (Securities Investment)