Gold traders face tougher rules

Under new rules being considered by the State Bank of Viet Nam, investors on gold trading floors may be required to operate only through accounts provided by commercial banks in order to ensure proper risk management and payment capacities, according to Nguyen Quang Huy, head of the State Bank’s foreign exchange management department.

Due to recent chaos in the gold market, Huy told Viet Nam News yesterday that the State Bank was looking at ways to discourage this investment channel.

“If the gold trading floors are still allowed to operate, administrative regulations must be very strict about security deposits, taxes and scale of trading,” Huy said.

Around 20 gold trading floors are operating nationwide, mostly owned and operated by commercial banks, securities companies and large jewellery companies, and there are currently no regulations to govern them.

Nguyen Duc Thai Han, director of Asia Commerical Bank’s gold trading bourse, warned that closing the trading floors would just push investors into illegal or black market trading, or overseas investments, all of which would be even riskier.

If the security deposit rate were substantially increased, it would discourage investments in gold because such capital was usually borrowed, added Vu Tuan Ha, an investor on Sacombank’s gold trading bourse.

“If managed properly, gold can create a high-liquidity investment market and investors can use derivative tools to control risk,” said Han.

Tran Thanh Hai, director of the Viet Nam Gold Investment Joint Stock Co, also said the gold trading floors helped ensure domestic supplies of gold, cut the costs of importing gold, and encouraging organisations holding gold reserves to return some of them to the market, boosting liquidity.

Gold would always remain a risky market, said market expert Tran Quoc Quynh.

Some countries were known to have even limited this kind of investment to institutional investors or other well-financed players, while smaller investors were limited by stricter regulations, Quynh said.

He joined those who were arguing that regulations should allow all investors to participate in the market, as all investors would be limited by the extent of their own capital, as they have been on the foreign exchange market.

VNN/VNS

Tags: Vietnam gold market, Vietnam gold price