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Brokerages open to foreign ownership

Update: July, 31/2012 - 09:55

HA NOI — Foreign investors will be able to own up to 100 per cent of a domestic securities company under a new decree issued by the Government.

Decree No 58/2012/ND-CP, guiding implementation of the Law on Securities, would allow foreign investors operating in the banking, securities and insurance sectors for at least two years to establish a securities company in Viet Nam or acquire up to 100 per cent of an existing domestic firm.

However, any foreign acquisition of or capital contribution to a securities company would have to be made under the Ministry of Finance guidance, and the decree will not take effect until the ministry modifies other regulations capping foreign ownership in securities companies at 49 per cent. If the ministry makes that change, Decree No 58 will take effect on September 15.

The new regulation would have little impact on the operations of securities companies, predicted Hoa Binh Securities Co deputy director Nguyen Huy Duong.

"Regulations capping foreign ownership in securities companies, like that in banks, only aim to protect the sector [from foreign competition] for a limited period of time," Duong said. "But the nation's stock market is not attractive at the time being and several foreign investors even want to withdraw their investments."

The State Securities Commission is trying to hasten the restructuring of securities companies and aims to reduce the number of brokerages from over 100 currently to around 30 firms. While many firms are narrowing the scope of their operatios against the backdrop of the market downturn, some are looking to merge with other companies to boost their financial capacity.

On August 15, securities companies must disclose their financial health to the State Securities Commission. After that, the commission will announce a list of securities companies under special control and, within six months, any companies which fail to fix their shortcomings will be dissolved in accorance with the law. — VNS

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