When the Ministry of Finance issued a new circular to ease stock trading restrictions on June 1, investors and experts welcomed it, saying it would improve liquidity and market transparency.
But with Circular 74 to take effect soon, on August 1, securities companies worry that the new regulations will increase their workload. They're now calling for additional measures to help smooth the transition.
The new circular not only allows investors to buy and sell a stock within the same trading session, but also legalizes margin trading. In addition, it permits investors to open multiple accounts at different brokerages.
Under the current rules, investors are allowed to only have one trading account at a securities firm. Although they will be able to use different accounts as of August 1, they will be permitted to open only one account at each brokerage.
Trinh Hoai Giang, deputy general director of the Ho Chi Minh City Securities Corp., said brokerages would have to work harder when the new rule comes into effect.
"Currently, securities companies only have to check the number of shares an investor is holding once a day.
"But as investors will be allowed to have multiple accounts at brokerages from next month, securities firms might have to check the volume of their shares several times in a day, whenever a new order is placed. This is so they don't ask different brokerages to sell more shares than they have," Giang told Thanh Nien Weekly by phone.
Giang also suggested that the Vietnam Securities Depository issue one single trading code that will work like an ID number for each investor.
That way, the depository can monitor all the stakes of investors even if they have multiple accounts, he said.
No investor confidence
The Vietnamese stock market is undergoing a prolonged slump as the VN-Index, the country's major stock index, has lost nearly 15 percent this year. This is mainly due to tightened government monetary policy aiming to tackle one of the world's highest inflation rates. Many listed companies have also reported losses in the first months of this year.
"As there is no investor confidence in the stock market at the moment, it is normal to see that investors don't want to buy even very cheap shares that cost the same as a cup of iced tea," said Le Dat Chi, a professor of financial investment at the Ho Chi Minh City University of Economics.
Dozens of shares listed on the HCMC and Hanoi exchanges are changing hands for between VND2,000 and VND5,000 each.
Huynh Anh Tuan, general director of SJC Securities, said it is easy to understand why shares are falling as companies report losses.
"Many firms are struggling to maintain their operations given the difficult backdrop of the economy," he said.
Saigon Maritime JSC (SHC), which reported a loss of VND13.63 billion (US$662,900) in 2010, expects to continue with a loss of VND6.3 billion this year. Tan Hoa Plastic JSC (VKP), meanwhile, has projected losses of VND17.79 billion this year after posting a loss of VND35.67 billion in 2010.
Chi said shares that are falling in price would rebound. But he stressed that it could take a long time as the economy has "many problems needing to be solved."