National bourses merger to be delayed due to slump in trading, unsuitable timing
National bourses merger to be delayed due to slump in trading, unsuitable timing
The State Securities Commission will submit a restructuring plan to the Government this year to merge the nation's two stock exchanges by 2015.
The move comes a year later than originally forecast due to the complex nature of the plan.
"We planned to submit the restructuring plan last year but due to the prolonged market slump, we delayed it for a year," said the commission's chairman Vu Bang.
Bang said that current conditions were unsuitable for a merger because the implementation needed careful consideration of political and economic factors, as well as a head office.
Similar projects in other countries showed that it would take three to four years to complete the merger, Bang said.
Unlike merging other organisations, the biggest challenge of combining two exchanges is maintaining stability without causing any disruptions to the market.
The organisational structure, leaders and functional departments of both the HCM City and Ha Noi's exchanges will remain unchanged for the time being, but will be gradually reduced after a headquarters is chosen.
After the merger, both exchanges will use the same technology but a standardisation of stocks, bonds and derivatives on both markets will be needed to improve quality.
According to market insiders, a united exchange would help to increase investment and liquidity with increased volume and value of transactions that would enhance the competitiveness of Viet Nam's stock market compared with other regional exchanges.
State enterprise activities and listings will be centralised, contributing to accelerating the equitisation of large-scale State-owned companies and increasing the quality of goods on the market.
In addition, a single market will help reduce investment in the trading system and save both operating and maintenance costs.
"The most important issue of merging the two exchanges is how to organise the internal structure of the united exchange in order to most benefit the long-term development of the market and facilitate the access of businesses," said Tran Van Dung, chairman and general director of the Ha Noi Stock Exchange.
However, according to securities companies, domestic investors seem to be indifferent to news of the merger which they view as a State management issue, while foreign investors are more interested in the quality and classification of listed companies.
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