HA NOI (VNS)— The Ministry of Finance has issued Circular 229/2012/TT-BTC guiding the establishment of exchange-traded funds (ETFs), which will take effect from September 1.
The move was announced yesterday by HCM City Stock Exchange board member Le Hai Tra and is largely similar to the previously issued draft.
The circular regulates that to build ETFs with fund management companies, fund managers must include securities firms with brokerage and self-trading operations, along with the minimum capital adequacy ratio of 220 per cent.
Stock exchanges will be the only agencies able to make and manage the base indices for ETFs – a move seen as bringing more restrictive regulation than the draft, which also mentioned "reputable foreign institutions."
Duong Ngoc Tuan, deputy general director of the Viet Nam Securities Depository, said: "We are working to ensure the system functions well before the effectiveness of the circular."
Meanwhile, a source from the State Securities Commission said that as ETFs held large amounts of stocks over a certain period of time, risks would increase.
"When ETFs are in operation in the future, authorities will certainly study the implementation of derivative securities to reduce risks," the source said, adding that derivative products would only serve as a risk management tool instead of speculation. — VNS