The headquarters of Hồ Chí Minh Stock Exchange (HoSE) in HCM City. — Photo courtesy of HoSE

HÀ NỘI — More than 1,200 foreign investors successfully implemented a non pre-funding mechanism at various securities firms in 2024, statistics showed.

This innovative solution has quickly gained traction, now accounting for over 11 per cent of the total trading value among foreign investors in the market.

The non pre-funding mechanism was introduced as a direct result of Circular 68 issued by the Ministry of Finance last year. This regulation allows foreign investors to place orders for securities without the need for immediate capital deposit, facilitating a more fluid trading environment.

In 2024, foreign investors represent approximately 0.6 per cent of the total accounts in the Vietnamese stock market, holding around 7.35 per cent of the total market capitalisation.

Recent statistics indicate a growth of roughly 4 per cent in the number of securities held by foreign investors and a 3 per cent increase in the overall value of their portfolios compared to 2023, said Tạ Thanh Bình, General Director of Việt Nam Securities Depository and Clearing Corporation (VSDC).

After three months of applying the mechanism, the VSDC conducted a survey among major securities firms catering to foreign clients, revealing positive outcomes.

Under this new framework, when foreign investors cannot meet payment deadlines, securities firms are responsible for fulfilling these obligations. While there have been instances where payment duties shifted to the securities firms, these situations have been managed effectively within established procedures.

Bình said that the non pre-funding solution is seen as a preliminary step toward aligning Việt Nam’s market with international standards, particularly the criteria set by FTSE for market upgrading.

On the other hand, implementing the central counterparty (CCP) clearing mechanism set by MSCI will further enhance the market's robustness.

VSDC is also upgrading its electronic communication systems to streamline information exchange between securities companies and custodial banks.

This upgrade is expected to facilitate faster, more secure transactions for foreign investors, with completion anticipated by March 2025.

Looking ahead, VSDC aims to attract more institutional foreign investors through investment funds, particularly as the market gears up for potential upgrades, said Bình.

The focus will be on enhancing services to better support foreign investment, anticipating a growing interest as the Vietnamese stock market continues to develop. VNS