The headquarters of Ho Chi Minh Stock Exchange (HoSE) in HCM City. (Photo courtesy of HoSE)

This innovative solution has quickly gained traction, now accounting for over 11 % 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 % of the total accounts in the Vietnamese stock market, holding around 7.35 % of the total market capitalisation.

Recent statistics indicate a growth of roughly 4 % in the number of securities held by foreign investors and a 3 % increase in the overall value of their portfolios compared to 2023, said Ta Thanh Binh, General Director of Vietnam 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.

Binh said that the non pre-funding solution is seen as a preliminary step toward aligning Vietnam’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.

The 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 this March.

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

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