Brokerages chomp at the bit to begin margin trading

The State Securities Commission has made about 10 stock brokerages eligible to offer their clients margin trading, with a number of other securities companies having submitted applications. The process has been held up, however, as the nation’s two stock exchanges have yet to designate which stocks may be traded on margin.
Shortly after the new regulations on margin trading were issued back on August 30, the commission announced that qualified securities companies would be fully entitled to offer the service once the stock exchanges determined a list of ineligible stocks.

However, the criteria to determine this list had yet to be made clear, requiring more time for consideration, said Ha Noi Stock Exchange deputy director Nguyen Vu Quang Trung.

“For instance, how do we handle the case of a business which reports quarterly profits but overall annual losses?” Trung asked.

Head of the HCM Stock Exchange’s listing department Tran Thi Anh Dao also said the exchange could not make a list of unqualified shares without detailed guidance from the SSC.

However, a source from the commission, asking to remain anonymous, said a guiding document had been completed and would reach the exchanges soon.

“Securities companies will be required to ensure their financial adequacy and establish a risk management system, as well as a software system compatible with margin operations,” the source said.

Inspection and supervision would be strengthened to ensure the compliance of participating securities firms.

“The surveillance will also focus on clarifying whether these companies have settled all of their investment contracts,” the source said, noting that the commission would prohibit any margin operations disguised in the form of investment contracts.

“Margin trading is risky but attractive to securities companies, and the issuance of a detailed guiding document will help prevent unhealthy competition,” said an representative of Kim Long Securities Co.

Vietnam News

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