An investor (L) consults a staff in a securities company. (Source: tinnhanhchungkhoan.vn)Hanoi (VNS/VNA) - If serious turbulence is caused by large-scale sell-offs and considered athreat to the security of the equity market, the Ministry of Finance will haveto switch the market off.
Ina written response to the Vietnam Financial Advisory Association, the Ministryof Finance said amid the prolonged COVID-19 pandemic and rising tensionsbetween the world’s largest economies, global stock markets are becoming morevulnerable and sensitive to bad news.
“Usingtechnical solutions to intervene in the stock market did not help prevent themarket's decline and also affects the confidence of investors, therefore undernormal circumstances, the Government should not intervene in stock trading toensure the market's smooth operation and transparency,” the ministry said.
However,in emergencies, if the market falls too much in a trading day due to unexpectednegative news impacting overall sentiment, the ministry would have to halt stocktrading to calm the market down.
Accordingto the finance ministry, market turbulence caused by large-scale sell-offs isconsidered a threat to the security of the equity market. The reasons for sucha sell-off may come from bad news from international markets, the dissolutionor insolvency of a company, or changes of regulations.
Asidefrom halting the market, the finance ministry would also ask stock exchanges toadjust the trading time and change the daily trading limit of stock prices toprevent the market from plunging.
Stockprice adjustments have been applied in volatile periods of the stockmarket, most recently in the financial crisis in 2008. This acted as an“emergency” solution, helping stop the downtrend of the market. But itseffectiveness did not prolong so it was just a short-term solution, theministry said.
Theministry also said halting trading is an extreme solution, only applied invery special cases. For example, the ministry had to shut down the Ho Chi MinhStock Exchange (HoSE) on January 23-24, 2018 due to a technical problemwith its system.
Extend fee cut regulation
Thefinance ministry will also extend the validity for the fee exemptionregulation until June next year, scheduled to be applied from March to August31 this year.
UnderCircular 14/2020/TT-BTC issued on March 18, the ministry announced it would cutthe fees of nine securities services and exempt fees for six others fromMarch 19 as part of efforts to support the stock market amid the negative impactof the COVID-19 pandemic.
Thecut and exemption will now be extended till June 30 next year./.
VNA
