The State Securities Commission ordered brokerages yesterday to put a hold on future contracts with customers to reduce losses for both sides in the sluggish market.

Future contracts are deals where customers have agreed to buy or sell stocks in a certain period of time at a previously negotiating price.

"This kind of contract isn’t attractive for investors because it’s hard to define an exact price for a certain period in the future," said Vu Duc Nghia, deputy director of Bien Viet Securities. This kind of contract became popular in the local market when the VN-Index surpassed 1,000 points.

"Now, the VN-Index keeps falling, and there is no legal framework for this kind of trading. Securities firms or investors are suffering big losses," the commission said in the document.

It noted that the hold was positive for both firms and investors at the moment to avoid losing more money in the future.

Since April 7 the trading band has been loosened by one percentage point on the country’s two main bourses, bringing the HCM City bourse to 2 per cent and the Ha Noi bourse to 3 per cent. Since that date, the VN-Index lost a total of 22.46 per cent at 420.51 per cent as of Monday.

The commission also ordered brokerages to send reports on their internal activities soon, to carry out the planned supervision. The commission has stopped receiving applications for new securities and fund management firms to carry out supervision.