some solutions to improve and enhance the sustainable development of the securities market in viet nam

Improving and promoting the sustainable development of the securities market in Viet Nam Acknowledgements First and foremost, I would like to thank all the teachers of English Faculty, Ha Noi University of Business and Technology, especially Prof Tran Anh Tho for his dedicated instructions as well as his unconcerned assistance along with invaluable advice and encouragement during the past four years I’m particularly grateful to Dinh Thi Phuong Anh, MA – my supervisor and lecturer for her clear and thorough guidance along with creative and useful suggestions in completing this Graduation Assignment I should also like to thank all staff at Tri Viet Securities Joint Stock Corporation (TVSC) for their enthusiastic instructions and help during the time I was on probation Also, I wish to express my gratitude toward my beloved parents for their passionate love and wholehearted cultivation throughout my school life Last but not least, it’s great pleasure for me to receive teachers’ precious comments and contribution so as to make my Graduation Assignment perfecter Sincerely thank! Tran Thi Thu Huong 5 - 2011 Student: Tran Thi Thu Huong Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam TABLE OF ConteNTS ACKNOWLEDGEMENTS VN-INDEX = X 100 Student: Tran Thi Thu Huong 11 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam Abbreviations 1 OTC : Over the counter market 2 NSC : National Securities Commission 3 SE : Stock Exchange 4 FI : Financial intermediaries 5 ATO : At the open order 6 ATC : At the close order 7 PM : Portfolio Management 8 SSC : State Securities Commission 9 STC : Securities Trading Center 10 HOSTC : Ho Chi Minh City Securities Trading Center 11 HASTC : Ha Noi Securities Trading Center 12 UPCOM : Unlisted Public Company Market 13 SDC : Securities Depository Center 14 IOSCO : International Organization of Securities Commissions 15 SOE : State owned Enterprise Student: Tran Thi Thu Huong Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam INTRODUCTION To implement the industrialization and modernization of the country, maintain the pace of sustainable economic growth and a strong shift of economic structure towards improving efficiency and competitiveness require great capital for investment and development Therefore, the establishment of securities markets in Viet Nam is a the main objective of the economy because the economic trend in the market mechanism under the State management is not reversible Securities market is an important channel to attract long term capital for enterprises in order to improve competitiveness in the fast growing commodity economy like our country Also, the stock market along with the banking system will create a strong financial system providing the short, medium and long term funds for the economy Moreover, politically and diplomatically, the construction of the securities market has very positive impact on the process of integration into the regional and international community Since its foundation, the securities market has made a great contribution to the economy However, there have been still exited limitations hindering the market development So how to deal with problems of the securities market and create positive solutions to promote the sustainable growth of the securities market in Viet Nam is a very practical and urgent matter To my best knowledge, I would like to give my opinion on the topic: “Improving and promoting the sustainable development of the securities market in Viet Nam” The assignment is divided into: Introduction Chapter 1: Overview of the securities market Chapter2: The situation of the securities market in Viet Nam Chapter 3: Some solutions for improving and enhancing the sustainable development of the securities market in Viet Nam Conclusion Student: Tran Thi Thu Huong 1 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam chapter 1 OVERVIEW OF THE SECURITIES MARKET 1.1 The basic knowledge on the securities market The securities market is considered a center of the modern corporate economy nowadays In the developed economies, the securities market was established more than 100 years ago and has become an important part of the socio-economic life An effective securities market will create many opportunities for people to invest their savings as well as channels to mobilize domestic and foreign capitals to provide funds to successful businesses Many countries in the transition from central planning economies to the market ones have used securities market as a channel to efficiently mobilize capitals for enterprises In the renovation process of the market oriented economy, the securities market in Viet Nam also was established and developed about a decade ago 1.1.1 The concept of the securities market Securities market is an financial organization where the sale and purchase transactions of securities take place The securities market in many cases is the same name as the stock exchange Basically, the stock exchange is an organization (or company) whose function is to link the buyers and the sellers and help them implement transactions The stock exchange is considered important in the modern market economies 1.1.2 Commodities and their characteristics in the securities market 1.1.2.1 Commodities in the securities market Securities are the kind of long-term financial instruments, including stocks and bonds and derivatives a, Stocks  Stock means a certificate confirming a person's capital contribution and ownership to joint stock companies  The owners are called shareholders who have the authority and responsibility for joint stock companies, enjoying the shares of profits (dividends) under business results of the company, have the right to vote in the Annual General Meeting Student: Tran Thi Thu Huong 2 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam  Stocks may be issued at established companies, or at any time to mobilize more capital to expand and modernize the businesses b, Bonds  A bond is a debt security which guarantees to repay the principal of the loan plus interest to the bondholders  Bonds are considered to be a long-term debt and have to be paid back on their maturity date Usually bonds have fixed interest rate, which is paid to the bondholders depending on the terms of the bond  Bonds can be issued by both governments and corporations c, Derivative Securities  Derivatives are issued on the basis of available instruments such as stocks and bonds with many different targets such as risk dispersion and protection of profits or profit making  The derivatives will be a lever, increasing many times the value of the investment objects such as stocks and bonds, to ensure that if how much the price of stocks and bonds change, the price of derivatives will be maintained at the original  The derivatives are plentiful and varied, but generally there are four main tools: the contracts of forward, future, option and swap 1.1.2.2 Commodities’ features in the securities market a, Liquidity The ability to convert securities into cash b Risk: Securities are financial assets whose value is suffered from large impact of risk, which is not only a loss of spirit, but also the expectations of investors There are two types of risk: systematic risk and unsystematic risk  Systematic risk: This risk is unavoidable, affecting all or most types of securities due to the influence of economic conditions such as inflation or deflation, changes in exchange rates, interest rate Systemic risks include: • Interest rate risk: is profit’s fluctuations because of interest rate changes in the market • Market risk: means the market prices of securities may fluctuate strongly due to the assessment and decision making of investors, Student: Tran Thi Thu Huong 3 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam although the company's income has not changed • Purchasing power risk: due to the impact of inflation or deflation • Exchange rate risk: due to the change of exchange rate  Unsystematic risk: the risk only impacts on a stock or a certain group of securities Systemic risks include: • Business risks: means adverse changes on the supply and demand of goods or services of enterprises • Financial Risk: The risk of ability to pay dividends, relating to the imbalance between revenue, expenses and debts of the businesses • Risk management: the impact of the managers’ decisions of the businesses c, Profitability Securities are the property which owners will earn income in the future in annual income and profits because of the stock price’s increase 1.1.3 Classification of the securities market 1.1.3.1 Classified by the market’s operating tools and commodities a Bond market The bond market (also known as the debt, credit or fixed income market) is a financial market where participants buy and sell debt securities, usually in the form of bonds b Stock market A stock market is a public entity for trading company stock (shares) and derivatives at an agreed price These are securities listed on a stock exchange c Derivatives market The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets 1.1.3.2 Classified by the movement of capital a Primary market  The primary market is that part of the capital markets that deals with the issuance of new securities which is called an initial public offering (IPO) Student: Tran Thi Thu Huong 4 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam  Primary market creates long term instruments through which corporate entities borrow from capital market and more revenue for the government’s consumption purposes b Secondary market  The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments are bought and sold aiming making profit, moving capital and social property  The secondary market increases liquidity, liquidity of the issued securities helps to convert the capital  Through auction, the prices of issued securities on the secondary market are valued which is an important measure to evaluate the company 1.1.3.3 Categorized by organizational form a Centralized market  Centralized market has headquarter, the central transaction or Stock Exchange  SEs are held completely with board, board of directors, others departments function and controlled strictly under the securities laws and stock market by state securities commission  At stock exchanges, listed securities are traded between buyers and sellers through a broker or securities agents  The payment is carried by the method of multilateral clearing with the time payment is T +1 (with the trading of bonds and 100,000 stocks or more ), and T+3(Less than 100,000 shares)  Payment of transacting members will be transferred on the basis of the Viet Nam Securities Depository Center carrying out clearing between the received money and amount of payments for transactions with the same period and payment method in the Securities Exchange b, Over the counter market (OTC)  OTC is the secondary market, which has no Stock Exchange, no certain place and is operated over the phone, via the Internet or at the counters of commercial banks or securities companies  Securities traded on the OTC market are mainly listed unqualified securities on a Stock Exchange, but they meet the criteria on liquidity and the financial requirements of the market securities Student: Tran Thi Thu Huong 5 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam  In the OTC market, the market maker (trading companies - brokers) holds a certain amount of stock which are ready to make the sale  The brokerage firms must register with the management agencies and compliance guidelines for financial, technical and professional ethics  Buying and selling securities prices are defined largely through negotiation and agreement between the buyer and seller  OTC market management: controlled strictly by the SSC under securities laws and the relevant law and by the association of securities dealers 1.1.4 The entities participating in the securities market The entities participating in the securities market include both small individual investors and the large organizations, such as government, corporations, investment funds,… The organizations and individuals involved in the securities market could be divided into the following groups: issuers, investors, and the organizations related to the securities market  The issuers: They are organizations who mobilize capital through the securities market such as governments and local authorities with the issuing government and local bonds; companies with the issuing corporate shares and bonds; and financial organizations when issuing financial tools such as bonds, other documents…  The investors: They are people who buy and sell in the securities market The investors could be divided into two kinds: individuals and organizations  The organizations operate in the securities market include securities companies, stock investment funds and financial organizations  In addition, there are organizations related to the securities market such as state management agencies, stock exchanges, stock businessmen associations,… 1.1.5 Characteristics and nature of the securities market  Due to the nature of the securities market which is a place to deal in long-term value documents and the investment decisions are mainly made by speculation The securities market’s characteristic is of high return and always associated with high risks  Similar to any markets, the securities market is controlled by the supply- demand rule A change in demand will lead to a change in supply; an increase in supply will lower prices, and increased demand Student: Tran Thi Thu Huong 6 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam will raise prices Security is also a market economy’s commodity, but slightly different than other commodities is that securities which aren’t bought to consume are confident that to bring profits in the future Therefore enterprises with good business and investment makes securities’ demand and the company's stock rise  All countries expect to have stable securities market One securities market is considered a stable one and high quality must guarantee the following factors: 1- high liquidity; 2- low risk due to price changes; 3effectiveness, information is disseminated rapidly and reflected into prices; and low cost for exchange transaction 1.1.6 The securities market’s functions Along with the monetary market, the securities market is the premium product of the modern economy and an important part in the financial market of each nation contributing to the nations’ prosperous development The basic functions of the securities market as the followings:  Firstly, the securities market is an important capital source to help companies to mobilize medium and long-term investment capital so as to expand their production and business activities This capital source has more advantages compared to that borrowed from banks which are usually short -term  Secondly, the securities market provides a favorable investment environment to the public and attracts foreign investors  Thirdly, the securities market creates high liquidity for securities The securities market is a place where sellers and buyers meet and they are guaranteed by the Law which easily encourages people to own stocks as a profitable –making saving way and help companies and governments mobilizing capitals easily for their investment projects  Fourthly, the securities market helps to assess enterprises’ activities When one company issues and sells stocks to the people, the most important factors deciding the added value of stocks are profit and their potential This information must be open so that people (including stockholders) can monitor, assess and make investment decisions for themselves When stock prices go up, many people buy stocks with the hope that they will be paid more dividend to the stocks they hold  In fact, the stocks which have high value (blue chip) usually belong to the companies which have good business and production, rapid growth and bring about more profit to the stockholders  Fifthly, the securities market creates a favorable environment to Student: Tran Thi Thu Huong 7 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam  2006 year: The young Securities market in Viet Nam had “a fantastic performance" with an 15 time increase of the capitalized amount within 1 year Total capitalization value reached 13.8 billion USD (accounting for 22.7% of GDP), value stocks held by foreign investors about $ 4 billion, accounting for 16.4% of the total market capitalization  2007 year: The capitalization rates continuously rose over 43% GDP, the new issuance activities were really explosive with about 200 issues of 192 enterprises and four commercial banks’ registration to the SSC with total mobilized capital up to nearly 40,000 billion VND  2008 year: Due to changes in the international financial markets and the difficulties of the domestic economy, the market capitalization dropped more than 50% to 19.76% and the only mobilized more than 14,300 billion VND through 100 issues offering securities  2009 year: the domestic and world economy began to recover slightly, stocks’ market capitalization value started rising again to reach 37.71%GDP Total mobilized capital via issuing shares increased over 50% compared with 2008, reaching 21,724 billion VND  2010year: The value of stocks’ market capitalization reached 42.5% GDP  In addition, the privatization of State-owned enterprises (SOEs) has been associated with raising capital from public investors, which helps to accelerate the economic reform process of the government, raise state funds, create a rich source of goods, and grow market scale  Issuing bonds through the Stock Exchange has become an important channel for the Government to raise capital The Government bond outstanding balance (bond) at the end of 2009 amounted to approximately 16.9% of GDP Student: Tran Thi Thu Huong 16 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam Table 1: Some data on the development of the Securities market in Viet Nam (Source: SSC) Time The average transaction value / a session (billion) Market capitalization (billion ) % GDP 2000 1,4 986 0,28% 2001 6,85 1.570 0,34% 2002 4,58 2.436 0,48% 2003 12,14 2.370 0,39% 2004 79,55 4.516 0,63% 2005 111,90 9.598 1,21% 2006 401,84 237.276 22,70% 2007 1.562,21 492.900 40,00% 2008 1.615,79 225.935 19,76% 2009 2.872,75 620.551 37,71% 2010 3.306,80 695.186 42,25% Sum 1268.355 3278.338 165.75% 2.2.3 The listing and trading securities  2000-2005 period: was the relatively quiet period of Viet Nam’s stock market • 2000 year: Ho Chi Minh City Securities Trading Center (HOSTC) went into operation with only 2 listed companies • 25/06/2001, stocks’ market prices grew fast due to the shortage of goods supply, the VN Index increased constantly and reached a peak of 571.04 points • 2002 -2004 market continued to decline • 2005 year, after Ha Noi Securities Trading Center (HASTC) went into operation, the total number of listed companies on both markets were 44 companies with a total of listed value of 4.94 trillion VND The average transaction stocks per a session was 667,600 shares  2006-2009 period: The Securities market in Viet Nam began to thrive Student: Tran Thi Thu Huong 17 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam and saw strong growth in number of listed companies and transactions turn over • 2006 year: This milestone was considered as a "breakthrough", bringing the Securities market a completely new look with the vibrant trading activities in the three floors: HOSE, HASTC and OTC • With the growth rate of 60% from early to mid-2006 Vietnam's stock market reached the "point" with the 2 nd fast growth in the world, only after the Zimbabwe And the flash up of this nascent market became more and more attractive to domestic and foreign investors • 3/2007, the index reached a record level when VN-Index reached 1,170.67 points and HASTC-Index reached 459.36 points Volume of shares traded also continued to increase to impressively 9.79 million • 5 / 2009 the trading volume of a transaction was 77 million shares, with the value of 2270.57 billion At the end of 2009, there were 541 listed companies on both the Stock Exchange stocks and four fund certificates are listed, with a total listed value reached 127.489 trillion VND, up 66.5 times over the end of 2009 year • In addition, in order to gradually improve market structure under the management of the State, narrow the free market, the trading system UPCOM on the HASTC – the system transaction for the unlisted securities of public companies - was put into operation on 24/6/2009 End of 2009, there were 34 stocks traded on the system UPCOM, total transaction value reached nearly 540 billion VND Market value on 31/12/2009 at 4075 billion VND Student: Tran Thi Thu Huong 18 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam Table 2: The vicissitudes of the VN-index 2.2.4 The basis system of investors (investment supply)  The number of individual and organized, domestic and foreign investors who have taken part in stock market, have increased significantly  From approximately 3000 accounts of investors joined in the new opening market in 2000, up to now there has had over 90,000 trading accounts, including 2662 accounts of organizations along with 807,558 accounts of individuals in the country and more than 13,000 accounts of foreign investors 2.2.5 The system of business organizations and securities services  The system of business organizations and securities services have developed rapidly both in scale and business capacity, with a network of branches and transaction offices which spreads across the provinces and large cities nationwide, has helped public investors to more easily access to the Securities market  When the market began operating, the overall market had only seven securities firms and until 2004 there wasn’t any a fund management company After 10 years of operating, there were 105 securities companies, 46 fund management companies and 122 custody members Student: Tran Thi Thu Huong 19 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam including 8 depository banks and 12 organizations of opening accounts directly  Number of practitioners increased quickly, meeting with the growth of the securities company From 2007 to 2009 there were nearly 8400 people granted certificates Table 3: Some data on the development of the Securities market in Viet Nam Time Investors’ accounts Fund management Companies Securities Companies Listed Companies 2000 2.908 - 7 5 2001 8.780 - 8 10 2002 13.607 - 9 20 2003 16.486 1 12 22 2004 21.600 2 13 26 2005 29.065 6 14 41 2006 110.652 18 55 195 2007 312.139 25 78 253 2008 531.428 43 102 342 2009 822.914 46 105 457 2010 925.955 46 105 557 Sum 2795.534 187 508 1928 2.2.6 On market organization  Regarding the organizational structure, the separating of the Stock Exchange and the SDC from the SSC in order to become independent legal entities has achieved certain results  The dividing of the concentrated market into two sub-markets with the trading method based on the listed conditions on profits and capital in the last period have significantly contributed to expand the organized markets, brought into full play the dynamism of the STC/SE in attracting enterprises to list and register transaction Student: Tran Thi Thu Huong 20 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam 2.2.7 Management operation and market supervision  The State management and the Securities market operation which were realized flexibly and comprehensively, took the protection of investor rights as a core, ensured the Securities market’s safe operation and stable development, and avoided big disorder which affects the country’s socio economic development  Securities market management policies demonstrated openness, transparency, gradually applied the practices of good and effective management, accounting standards, international auditing and recommendations of the international organization of Securities Commissions(IOSCO)  Establishing the Securities market’s monitoring mechanisms modernly and professionally under international rules Inspection and supervision of the SSC focused on: monitoring compliance of the market intermediary organizations, the issuers, the listed organizations, the SE, SDC, and monitoring transactions on the Securities market aiming at detecting market abuse 2.3 SOME THE Securities MARKET ’S RESTRICTIONS Behind the strong growth along with impressive results, the operation of the Securities market in Viet Nam has still existed limitations:  Firstly, the market scale is small  Secondly, In spite of the liquidity of the securities market which was expressed in the stock transaction values increased rapidly in the last time, the rate which compared to the total of the market capitalization was still too small  Thirdly, The securities market in Viet Nam has been mainly dominated by individual investors (up to 90%) who aren’t capable of ensuring the sustainable growth  Fourthly, The securities market grew too rapidly in the very short time (from by the end of 2006 so far) It was the mutant growth that caused the risk factors to the stock market as follow: • Securities speculation: Due to the fact that the Securities market’s authentic investors in Viet Nam were few, mainly focusing on securities dealers who were lack of knowledge about the market and business management When they had seen many people making a package, they rushed Student: Tran Thi Thu Huong 21 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam into speculating securities by trading for arbitrage (the price difference) They bought stocks to enjoy dividends, not for investment, so the stocks’ demand increased artificially (also known as the market bubble) • Securities inflation: When stock prices continuously increased, the stocks were traded completely, which promoted all businesses to continue issuing more shares in order to raise capital and expand and was a good opportunity to businesses Paying the dividend in shares was also considered as inflation securities by which millions of shares were issued and businesses gained a significant amount of money When the value of shares was reduced continuously, investors sold shares and limited the purchase which made stock prices low and unstable  Fifthly, investors’ needs and risk prevention haven’t been met because of undiversified goods, low quality and poor utility services (no derivative products and no short sales operations), also the transparency of the market hasn’t met the investment’s requirements  Sixthly, the promulgation of legal documents and the market operating policies haven’t been flexible and slower than the practical requirements of the Securities market’s development; as well as management, monitoring and enforcement have been also inadequate  Seventhly, the securities market in Viet Nam has still lacked of some important institutions such as the pension funds,  Eighthly, The privatization SOEs take a main part among the listed companies, in which the rate of stocks held by the State is relatively high  Lastly, the huge capital sources which flowed into the securities market in the last time showed that the big amount of money still was kept by public Student: Tran Thi Thu Huong 22 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam CHAPTER 3 SOME SOLUTIONS TO IMPROVE AND ENHANCE THE SUSTAINABLE DEVELOPMENT OF THE SECURITIES MARKET in viet nam 3.1 the Growth policies of the securities market in viet nam in the period of 2010 - 2020 In the next decade, The Securities market in Viet Nam will be able to develop strongly and thrivingly with many great potential and favorable conditions, however, development opportunities always go with challenges The Securities market’s goals in Viet Nam for the coming period set as follows:  Firstly, the Securities market development must be based on general standards of the market and the best international practices as well as in line with actual conditions and socio-economic development orientation and positively take the initiative in integrating into the regional and international financial markets  Secondly, promoting the Securities market’s growth synchronously, comprehensively, efficiently, safely and healthily so as to both mobilize investment capital for social development and create opportunities for profitable investment to contribute to boosting living standards and social security  Thirdly, developing the Securities market of multiple levels, making sure that the stocks will be traded in the market principles and under the management and supervision of the State in order to protect the rights and legitimate interests as well as create the incentive policies to attract investors’ attention  Fourthly, diversifying the market’s products and services, gradually restructuring the system of the market intermediaries  Fifthly, the securities market development must be placed in correlation to the development of the money market and the insurance market aiming at creating a system of unified and synchronous financial market under the management and supervision of the State  Sixthly, step by step closing the gap between the Securities market in Viet Nam and other securities markets in the region and the world Student: Tran Thi Thu Huong 23 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam 3.2 Measures to make the securities market become a really long-term channel for capital mobilization for enterprises, investors and the economic development 3.2.1 The State management on the Securities market To build an advanced Securities market, the State plays a decisive role in the following issuance:  Strengthening the management and supervision of the information announcing mechanism on the market, creating a transparent market so as to help investors to make decisions based on accurate and systematic information  Continuing to consolidate the legal framework for the market, enhancing the effectiveness of legal documents in the securities business Promoting audit activities, supervision and punishing violations strictly  Applying the management principles of the securities market under the recommendations of IOSCO on the fields of management of the issued shares, collective investment funds, market intermediary organizations, and the secondary market  Setting up an attractive environment for investors, listed companies, fund management companies, joint stock companies through the instituting of a stable economic environment, avoiding frequently policy changes  The government needs to play a role as the market leader The government should not use administrative measures to interfere deeply into the securities market, but should timely provide the public with necessary and clear information through the media to adjust the securities market’s behaviours  Offering measures to make the entire banking system safe and sound which is always closely linked with the financial market especially the securities market 3.2.2 Solutions on macroeconomic stability The economy’s steadiness and stability has an enormous importance to the securities markets’ development To ensure the securities markets’ fair, safe, effective and consistent operation which simultaneously matches with the conditions and circumstances of the country and integrate into the stock markets in the region and the world, the State should provide policies and measures as follows: Student: Tran Thi Thu Huong 24 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam  Implementing the flexible and steady exchange rate policies which need to be united with the interest rate policies, foreign currency reserves while staying in touch with the evolution of financial and monetary situation in the country and the world  Tightening monetary policy to curb inflation  Equilibrating the balance of international payments, bring into full play foreign economic policies aiming at raising external capital to the country's economic development  Intensifying credit management, improving the efficiency of loans, maximally reducing overdue debts, outstanding debts (unpaid debts) and bad debts, preventing and decreasing credit risks for the banking systems so as to intensify the investment efficiency  Consolidating and growing a healthy and modern banking system Perfecting the legal framework making the strong basis for the operation of the banking system as well as the activities of the Securities market 3.2.3 Improving the quality of human resources training Due to the fact that in any operation fields, human plays a decisive role in the all situations Being a senior market, the stock market also needs highly qualified people in many fields such as financial management, investment analysis, marketing to exist and grow To boost the quality of human resources for the Securities market in Viet Nam, the solutions need to be implemented in the near future as follows:  Updating and standardizing the securities training programs which have to be in conformity with international standards for securities lecturers and staff who work at securities firms and financial businesses to improve the quality of training and qualifications  Holding basically universal programs of securities and securities market for people on the mass media, and workshops in which people from all walks of life of are invited, so that they can know the way of profitable investment for themselves as well as for the country through the stock market  Effectively and radically taking advantages of the help of international organizations in human resource training activities on the stock market  Boldly recruiting outstanding students with business talent along with qualified foreign language skills and ability at the universities to send them for training and practicing in the securities transactions of the Student: Tran Thi Thu Huong 25 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam advanced countries aiming at establishing the source of main officials for the stock market in the coming years 3.2.4 Intensifying commodities for the Securities market  Accelerating the privatization of State owned enterprises is a method of creating the potential supply for the stock market, offering financial incentives such as reducing income tax, allowing tax payment by installment, exempting listing fee to encourage enterprises to list and issue shares; selling shares which the State does not need to hold in the listed company in the list of sectors and areas regulated by the government  Developing the bond market into a channel to mobilize and allocate significant funds for the economic development Special attention to promote the government bond market’s growth to raise funds for the State budget and basic construction investment  In addition to offering of the motivative policies, the government should appoint and force qualified securities to list, unqualified ones must be registered to be transacted in the OTC market to create liquidity for investment capital, thereby encouraging investment and helping investors to properly understand the company through the public's appreciation (market) which are reflected in securities prices  Constantly increasing in supply of securities and creative various goods on the stock market including certificates of the securities investment funds and derivative securities  Encouraging firms which mobilized capital on the stock market to continue to expand investment and business sectors aiming at establishing large enterprises with high technology and advanced science foundation and strengthening the product competitiveness on the international arena  Developing the derivative tools on securities such as : options, swap and futures 3.2.5 Developing investors  Pushing up professional securities investment organizations to establish fund management companies and securities investment funds  Propagating knowledge of securities and the securities market to the public to raise the awareness about the role, benefits and risks of the investment through the securities investment funds  Encouraging foreign investors to invest in a long term Student: Tran Thi Thu Huong 26 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam 3.2.6 Consolidating the system of organizations  The system of securities intermediary organizations should be consolidated more professionally with full of financial, technological and human resources ability to compete with other trading organizations in the region and to be in conformity with the general trend worldwide: the versatile organizational model 3.2.7 Enhancing the securities market’s infrastructure and information technological system  Upgrading equipment, infrastructure and information technology system in the SE, the SDC, as well as securities companies and other involved organizations to ensure the synchronous, compatible and safe operation  Gradually modernizing the SE with trading systems and modern information announcing systems so that they are capable of connecting to the international Stock Exchange to diversify trading methods and products aiming at meeting the market’s demand  Consolidating and enhancing the system of depository, registration, payment and clearing by international standards, along with step by step integrating into the regional and international Securities Depository Centers 3.2.8 Boosting the OTC market  Developing OTC market by raising the experience of market participants, as well as understanding and attracting the public’s attention  On the other hand, re-organizing the market to increase stock supply for the investors, creating favorable conditions for the companies which are not able to list to have a chance to access the market However, the growth of the OTC market must be accompanied by strict control  Carrying out deposit concentration and registration in order to reduce payment risks in the free market  Step by step making the free market’s activities integrate to the official market CONCLUSION Student: Tran Thi Thu Huong 27 Class TA 12 - 02 Improving and promoting the sustainable development of the securities market in Viet Nam The development and formation of the Securities market is the culmination of the market economy The foundation of the Securities market opened up a new raising capital channel for the economy, marked a significant turning point in the process of building and perfecting the structure of the market economy in general and the financial market in our country in particular Although the Securities market’s scale in Viet Nam is still small and its impacts on the economy hasn’t been great, during the past time it has made considerable progress It is acknowledged that the safe and smooth operation has attracted a large number of investors and gradually form habits and practices in public Moreover, growth in both quantity and quality of other important participants such as the listed organizations, securities companies has been also a positive sign With its role and importance to the country's economy, the securities market will contribute to bringing the economy in Viet Nam to a higher plane Student: Tran Thi Thu Huong 28 Class TA 12 - 02 ... Improving and promoting the sustainable development of the securities market in Viet Nam CHAPTER SOME SOLUTIONS TO IMPROVE AND ENHANCE THE SUSTAINABLE DEVELOPMENT OF THE SECURITIES MARKET in viet nam. .. Improving and promoting the sustainable development of the securities market in Viet Nam CHAPTER THE SITUATION OF the securities MARKET in viet nam 2.1 The structure of Vietnam''s stock market. .. Improving and promoting the sustainable development of the securities market in Viet Nam INTRODUCTION To implement the industrialization and modernization of the country, maintain the pace of sustainable