Stock brokerages are calling for more time to comply with a regulation requiring them to increase their charter capital.
The Vietnam Association of Securities Businesses
(VASB) wrote to the Ministry of Finance and the State Securities
Commission last week seeking a delay in the deadline for securities
companies to make the compulsory increase in equity to June 30 of next
year.


The association said a postponement would help ease
disadvantages for securities companies, especially at a time when the
stock market was in a prolonged downturn and the economy was facing
difficulties.


Government Decree No. 14, issued on January 19, 2007
to further implementation of the Law on Securities, set minimum
registered capital levels for securities firms, effective December 31
of this year. The capital requirements were set in relation to the
level of services the firms offer. A firm that only offers investment
consulting would be required to have a capital of 10 billion VND
(606,000 USD) or more, while a brokerage would require minimum capital
of 25 billion VND.


A securities company representing institutional
investors would be required to have a much higher registered capital of
100 billion VND or more, while firms which underwrite securities would
be required to have capital of 165 billion VND.


Meanwhile, a firm which offers a combination of these
services would have to have separately met each of these capital
requirements. In other words, the requirements could not be met
cumulatively, and a firm that is both a broker and which engages in
trading on behalf of institutional investors would have to have a
minimum capital of 125 billion VND.


In a meeting with securities company representatives
last week, the State Securities Commission reaffirmed that the
companies were expected to comply with the December 31 deadline.


The securities company with the least equity currently
has only 9 billion VND in capital, the commission announced on its
website last week.


VASB figured that there were now 35 securities
companies that had not yet met the capital requirements, and these
firms needed an additional 7 trillion VND (424.2 million USD) by the
end of the month in order to meet the deadline.


“We will have to meet with our shareholders to discuss
plans,” said the chairman of one securities company, who requested to
remain anonymous. “Many shareholders don’t want to contribute more
money now.”


Some firms may want to cut services which they have
registered to offer, rather than comply, he said, suggesting that firms
that cut securities underwriting services would not significantly
affect their businesses in the current context.


“But firms involved in institutional trading are on the horns of a dilemma,” he said. “It’s not easy to cut this service.”


The question remained whether such firms could divest
themselves of institutional investor accounts prior to December 31 or
would be allowed to phase them out past that deadline, the chairman
said.


Cutting registered services or reducing registered
capital was no easy matter, in any case, said the director of another
securities firm, who also requested anomymity.