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27-11-2009 07:20 PM #1
Market watchdog reaffirms need for clearance
Under a new decision of the State Securities Commission aimed at curbing speculation and insider trading, stock brokerages will be required to forbid their clients from selling shares within the four-day settlement period after they have been purchased.
Effective December 1, the new regulation also forbids so-called short sales.
Under a rule known as T+4, an investor currently does not receive title to a purchased share until the transaction has been settled, typically four days after the transaction initially took place.
However, the rule has not been fully implemented in practice, with many securities companies allowing their VIP customers to turnaround and resell shares within the T+4 period.
In the context of a rapidly dropping market, the practice disadvantages smaller investors who are restricted to complying with the rule, while larger market players are able to cut losses within two or three days.
The new State Securities Commission decision would require the Viet Nam Securities Depository Centre to report any violations it discovers to the commission, which would take harsh punitive action and publish the identities of violators on its website.
"If any violation is detected, it will be treated harshly, and there will be no light penalty," said commission chairman Vu Bang.
Thang Long Securities Co deputy director Quach Manh Hao said the decision would result in a fairer playing field for investors
But Securities Depository Centre director Phuong Hoang Lan Huong told Sai Gon Economic Times that her centre now took an overview of the accounts of securities companies and did not check in detail the accounts of each investor.
Only securities enterprises knew and could manage the accounts of their investors in detail, she said.
Huong added that the centre was about to begin running on a trial basis an advanced system that could help give it both an overview of the accounts of a single stock brokerage and the details of the accounts of individual investors. The system would be up-and-running by the end of next month and was expected to help prevent violations by securities companies.
In the meantime, some were suggesting that the State Securities Commission shorten the T+4 requirement to just two days, helping create a more level playing field across the board. This would be closer to regional neighbours with more established stock markets, such as Singapore and South Korea, which have T+0 and T+1 requirements and have done away with the process of "clearing".
"The commission’s decision suggests the possibility of shortening the T+ requirement in the near future," said Hao. "As has been said, we need a new set of rules."
Many investors have simply called for a more open rule that would permit investors to trade in shares within a single day.Watch your thoughts, they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; it becomes your destiny.
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