Vietnam eases rule for foreign investors ahead of market upgrade
The new regulation also stipulates that there are no limitations on the types of securities eligible for non-prefunding trading
[HANOI] Vietnam will allow foreign investors to trade through global brokerages directly instead of with local firms, a step aimed at improving market accessibility as the country prepares for an upgrade to emerging-market status from FTSE Russell.
Under revised regulations issued by the Ministry of Finance, overseas investors will be able to place orders via international brokerages acting as authorised intermediaries without the need to open individual trading accounts at domestic securities companies, according to a statement on the government’s website.
“This framework addresses long-standing concerns raised by FTSE Russell and foreign institutional investors regarding contractual complexity, onboarding friction and legal clarity,” said Pham Luu Hung, chief economist at SSI Securities.
Foreign investors are still required to register a securities trading code and open a securities custody account with a custodian member, preserving regulatory oversight, according to the regulation, which took effect Feb 3.
The South-east Asian nation in October clinched a long-awaited upgrade from frontier status by FTSE Russell. The reclassification will officially take effect in September, subject to a March review. Officials also aim to win a similar promotion from MSCI by the end of the decade.
The new regulation also stipulates that there are no limitations on the types of securities eligible for non-prefunding trading. This move would help “ease operational constraints for index tracking and benchmark replicating”, Hung said.
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Foreign securities investment fund management companies are also permitted to open two trading accounts, one for proprietary trading and another for client asset management, according to the statement. This clarification enhances transparency, improves risk segregation and supports more effective supervision of foreign asset managers operating in Vietnam. BLOOMBERG
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