Ministry of Finance: Review and increase transparency for stock and bond markets

According to economic experts, in the 2016-2021 period, the capital market has had a rapid development, following the direction of the Party and State, becoming a medium- and long-term capital mobilization channel for the economy, developing the country’s economy. balance between capital market and money market; making an important contribution to the restructuring of public debt and public investment, the equitization process of state-owned enterprises and contributing to the overall development of the economy.

(Illustrated photo – Photo: VNA)

However, the Ministry of Finance also acknowledged that the corporate bond market, stock Due to rapid growth, risks arise, as well as some service providers such as securities companies, auditing companies, valuation companies, etc., which have not yet complied with legal regulations, leading to violations. Therefore, it is necessary to review and strengthen market control.

Risks arise due to rapid growth

In a report sent to the National Assembly deputies at the 3rd session of the 15th National Assembly, the Ministry of Finance said that the capital market has an average growth rate of over 28.5%/year in the period 2016 – 2021, in particular this year. 2021 is 33.2%.

By the end of the first quarter of 2022, the capital market size will reach 134.5% of GDP in 2021; in which, the stock market capitalization reached 93.8% GDP, the government bond market size was 22.7% GDP, the corporate bond market size reached 16.4% GDP; thereby balancing with the bank credit market (the size of outstanding loans is 131.8% of GDP).

According to the Ministry of Finance, through the capital market, entities can mobilize a large amount of capital for development investment and production and business. Total capital mobilization in the capital market in 2021 will reach over 1.12 million billion dong; in which, mobilized capital from Government bonds reached over VND 318,000 billion; capital mobilization of enterprises through the issuance of shares, equitization reached about 143.5 trillion dong; issuance of corporate bonds reached over VND 637,000 billion, equivalent to 38.7% of the total investment capital of the whole society. In the first 5 months of 2022, the scale of capital mobilization in the bond market is over VND 250 trillion, equivalent to the same period in 2021.

As for the stock market, the Ministry of Finance said, currently, on the stock market, there are 767 listed stocks and fund certificates, and 858 shares registered for trading; 83 securities companies, 44 fund management companies, 2 credit rating companies. The number of investor accounts is over 5.2 million accounts, an increase of 21.1% compared to the end of 2021, the average trading value of stocks and fund certificates reached VND 28,745 billion/session, an increase of 8, 1% compared to the average in 2021.

However, the Ministry of Finance also acknowledged that the corporate bond market grew rapidly, so there was a risk that a part of individual investors who did not fully understand the law had cheated when determining to become an investor. professional securities investment to purchase individual corporate bonds.

In addition, a number of service providers such as securities companies, auditing companies, valuation companies, etc., have not yet complied with legal regulations in advising on offering documents, and auditing reports. Financial statements, valuation of security assets or improper solicitation of investors are currently being inspected and examined by competent authorities to handle violations, such as the case of Tan Hoang Minh.

In addition, the financial situation of some issuers is still limited, and some businesses use capital for unclear purposes.

The Ministry of Finance believes that the cause of the above situation is that the compliance of some issuers is not high, there are enterprises that intentionally violate and collude with securities companies and service providers to conduct market fraud. In particular, the awareness of investors is still limited, especially individual investors, although they have been informed, propagated and warned many times, they still invest according to the psychology of the crowd, according to rumors. have no experience in analysis, financial management, investment, even many individuals have invested in the form of capital contribution contracts, so they are not considered bond owners.

Along with that, the compliance and professional ethics of some service providers are not high, some intermediaries are commercial banks, securities companies providing incomplete information to entice. For individual customers, in some cases, they can assist in the preparation of an offer file with incorrect information, or support the legalization of a professional securities investor profile in order to purchase individual corporate bonds.

The Ministry of Finance also said that in the stock market and derivatives market, there were price manipulation phenomena, making prices more and more sophisticated, many securities codes were pushed up, not associated with the current situation. The quality of business activities, information disclosure obligations of some public enterprises, listed companies, and investors are still not up to the mark. A typical example is the case of FLC and Louis.

According to the Ministry of Finance, the stock market has grown too fast in the last two years, causing many sophisticated violations and frauds in legal regulations while the regulations on sanctioning levels are still light, sanctions are not sufficiently deterrent; regulations on the authority of the State Securities Commission when examining and inspecting have not yet ensured comprehensive supervision of newly arising violations; the conditions for bond issuance and the conditions for becoming a professional securities investor in the Law on Securities are relatively low.

Along with that, the market is still in the early stages of development, so it is still heavily influenced by psychological factors; Under the impact of unfavorable international and domestic information, false rumors, concerns about cash flow factors, and inflationary pressure, the stock market has had many strong declines recently.

Many solutions

In order to develop a transparent and sustainable securities and bond market, in the coming time, the Ministry of Finance will review synchronously from the Law to Decrees and guiding documents to enhance information transparency, ensure legitimate rights and interests of market participants.

For corporate bonds, the Ministry of Finance is currently studying to soon submit to the Government to amend and supplement Decree No. 153/2020/ND-CP dated December 31, 2020 on offering and trading corporate bonds. individual businesses in the domestic market and offering corporate bonds to the international market.

Accordingly, focusing on strictly managing the identification of professional securities investors, the investment of individual investors; supervise the method of distribution of bonds to avoid selling to the wrong investors; credit rating request; strengthen responsibility and take management measures to supervise intermediary organizations.

At the same time, the Ministry of Finance has planned to review the Law on Securities and the Law on Enterprises to amend regulations on conditions for corporate bond issuance, conditions on professional securities investors, measures and sanctions to increase deterrence; and the authority of the State Securities Commission to supervise cash flows and manage and supervise activities on the stock market.

The Ministry of Finance will also urgently set up a separate corporate bond trading market, bringing all individual corporate bonds to be registered and deposited at the Securities Depository Center and traded at the Stock Exchange. securities in order to increase market transparency and monitor the corporate bond market from issuance to transaction; actively implement the restructuring of the stock market, improve the competitiveness and quality of market intermediary institutions, and supervise, inspect and inspect the activities of securities companies to improve the ethics of securities companies. professional ethics, service quality of service providers.

Simultaneously, it is promoting the formation and operation of professional investment institutions and professional securities investors, prioritizing the development of long-term investors such as investment funds, automatic retirement funds, etc. volunteer, insurance enterprise…; strengthen training and develop individual investors with full knowledge when participating in the market.

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