September, 12 2012 09:36:55

Shorter settlement period falls flat

HA NOI (VNS)— Stock investors are showing little interest in the three-day settlement period for market transactions, referred to as T+3, made official on September 4. Implementing T+3, stock brokerages are required to settle payments to the securities depository centre prior to 4 pm on the T+2 date, making shares fully tradeable on the third day.

T+3 therefore allows investors to resell shares within three days of acquiring them, yet sales taking place on the T+3 date have actually increased, helping pull share prices down.

"Most would think it is a positive way to benefit investors and the market as a whole with faster capital turnover and reduced risk, since investors can sell securities one day earlier than before," said Nguyen Dinh Dung, an analyst for the financial information website vietstock.vn.

However, many investors were still cautious, he said, with most investors willing to accept T+4 if share prices were rising, rather than T+3 with a stagnant market. T+3 only had an impact on investor psychology, but did not increase capital flows into the market, he said.

"Rising demand based on psychology is not sustainable," Dung said.

The market would develop more sustainably if regulators could ensure proper governance within listed companies, which would form a solid foundation for their shares, he added.

After a week since the formal implementation of T+3, two brokerages – Trang An Securities Co (TAS) and South Korea-invested Golden Bridge Securities Co – fell on liquidity deficit. The Viet Nam Securities Depository suspended depository activities of Golden Bridge from September 7 until September 30 due to late settlements, while it previously suspended custody operations of TAS from September 5 to October 5.

Depository Centre director Phuong Hoang Lan Huong told the publication Dau tu chung khoan (Securities Investment), "Under current regulations, investors must pay for the transactions to brokerages on the initial transaction date."

Huong said the centre would ask the State Securities Commission for stricter penalties against violations. — VNS

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