Vietnam moves ahead with the plan on merging two stock exchanges

VietNamNet Bridge – The merger of the two stock exchanges of Hanoi and HCM City is expected to be decided in 2013, after the State Securities Commission (SSC) submits the merger plan to the Prime Minister.

Vietnam, stock market, SSC, tax, policy,  merger

Under the Decision No. 1826 of the Prime Minister, the reshuffling of the stock market, insurance companies and the restructuring of the stock exchanges, the renovation process would be implemented in two stages.

In the first phase, which lasts two years 2012 and 2013, relevant agencies would draw up and release the plan on restructuring stock exchanges. Meanwhile, the implementation of the plan would be carried out in the second phase, in 2014 and 2015.

The outlines of the plan

In fact, the merger of the stock exchanges has been delayed by one year instead of getting completed in 2014 as previously expected. Since the restructuring of the stock exchanges depends on many factors, including commodities, technology and the labor force, the watchdog agency has to make thorough consideration on the issue in order to avoid bad things.

“At first, we decided that the plan drawing would be completed in 2012. However, the bad performance of the stock market has forced us to rethink. The plan would only be submitted to the government in 2013,” said Vu Bang, Chair of SSC.

It took other countries at least 3-4 years to complete the merger of stock exchanges. Therefore, SSC believes that the merger process may be completed by 2015.

Some analysts have also pointed out that the hastiness in the merger of the stock exchanges may not be a wise move. Vietnam many times raised the question of merging the stock exchanges in the previous years, when the merger became a growing tendency in the world.

However, after financial crisis broke out and lasted for a long time, the analysts believe that it is the merger which has weakened the resistance of the financial markets against the crisis.

A merger model has been suggested that a leadership would be set up at the top level, while the existing divisions in Hanoi and HCM City would be preserved. After that, some changes would be made to step by step restructure the current apparatus. For example, there would be more divisions at the headquarters, while there would be less divisions at the branch.

Merging means getting stronger

Experts all have agreed that the existence of only one stock exchange in Vietnam by merging the two existing ones would facilitate the stock market more.

Since only one stock exchange which manages and regulates the market, this would allow to cut down the expenses on the transaction systems, transmission line leasing fee, operation costs and transaction system maintenance. Especially, there would be only one standard transaction system instead of two.

The experts also pointed out that once the market scale gets bigger, this would more benefit investors, because this would better satisfy the investors’ demand, speed up the capital turnover and improve the market liquidity, thus allowing to improve the competitiveness of the Vietnam’s stock exchange in the region.

The managers of both the Hanoi and HCM City stock exchanges have admitted the necessity of the merger of the two stock exchanges.

Tran Van Dung, Chair and General Director of the Hanoi Stock Exchange, has denied the opinion that the restructuring would lead to the extermination of one stock exchange. “There would be no extermination as people think, but there would be a combination of the strength of the two,” Dung said.

Ha Dung

Vietnam, stock market, SSC, tax, policy, merger