The Ha Noi Stock Exchange will soon impose new regulations requiring the application of a reference price and trading band for shares on their first day of trading, the exchange has announced.


The regulations will be applied on the Unlisted Public Company Market (UPCoM) beginning in April and on the Ha Noi Stock Exchange starting in May.
Under the new rules, a reference price will be set by the listed company and approved by the exchange. Shares would then be allowed to fluctuate within plus-or-minus 30 per cent of that reference price (Or 40 per cent on the UPCoM).
This fluctuation band would also apply to shares traded after 25 consecutive sessions of inactivity.
If, in the first three consecutive trading sessions, a weighted average price cannot be determined as the reference price for the next trading day, the listed company will be required to set a new reference price.
Under current regulations, listed companies are not required to set reference prices and there is no trading band limitation on shares on their first trading day.
The exchange said the system had worked so far since share prices on their first trading day had been decided objectively through real market supply and demand.
"However, in practice and in some cases, investors have unreasonable prices compared to actual share values, and this has affected the reference prices of these shares for the next trading day," the exchange said in a press release.
It cited the case in which shares of Transport Investment and Construction Consultant Company (TVG) were traded at just VND100 per share on the first trading day on February 24 on the UPCoM.
Au Viet Securities Company analyst Dang Lan Huong said the new regulations would help reduce price manupulation of newly listed shares, which has become widespread on the northern bourse and the UPCoM.