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OTC market is ready, market watchdog says   2008-07-09 - ThanhNienNews

The over-the-counter (OTC) market, where unlisted stocks can be traded, was ready to begin operating in the near future, Hanoi Securities Trading Center (HaSTC) Deputy Director Nguyen Vu Quang Trung told Thanh Nien.

 

 
Investors watch the Hanoi Securities Trading Center stocks move in the trading board room of a Hanoi brokerage
    Thanh Nien: The OTC market was scheduled to be operational in this year’s second quarter, but it still hasn’t opened. Has the HaSTC delayed the debut?

Nguyen Vu Quang Trung: No, we haven’t. The preparation for the market was completed and it is poised to be put into operation.
We conducted a trial run in February and a trial remote trading session between the Securities Depository Center and 69 brokerages in April.
Companies, which registered to list on the OTC market, are mainly unlisted brokerages, banks, financial firms and insurers.
I believe the number of the new market’s members will increase quickly as we will launch many promotion programs for it right after its debut.
We are now completing the final paperwork, which will only take a short time.
The formal stock markets [Ho Chi Minh City and Hanoi’s stock exchanges] remain gloomy, so what is the purpose of the OTC market?
It will be a more transparent marketplace for unlisted stock trades that will reduce the risk of traders being deceived.
Brokerages will also benefit from the OTC market, which will offer them more customers.
For unlisted companies, the OTC market will help their share transactions be executed transparently.
Do you expect investors will be interested in the OTC market?
A busy formal market will usually boost the OTC market and vice versa.
Therefore, it will take time for the OTC market to grow.
But its liquidity will surely be higher than the current forums, with traders making unlisted stock transactions at coffee shops or restaurants.
The government will also be able to oversee the transactions.
Will the enterprises listed on the OTC market have to comply with any regulations that are different with common unlisted firms?
Firstly, companies that want to participate in the new marketplace will have to register to list their shares on it.
The registration, which helps the market watchdog supervise the transactions, is very simple and quick.
Once an entity has become a member of the market, it will have to comply with the Ministry of Finance and the HaSTC’s regulations on announcing their share transactions, in addition to the Law on Securities instructions, which also provided guidelines on reporting share transactions for common unlisted companies.
Therefore, share transactions at the OTC market will be supervised very closely.
I insist investors participating in the OTC market have much better protection than before.
Which formalities will investors have to complete when they want to join the market?
Investors, who have already opened an account at a brokerage for listed stock transactions, will be able to use their account to trade unlisted stocks on the OTC market.
Those who haven’t opened any trading account at a brokerage will have to create one if they want to join the market.
There will be two ways to make transactions on the OTC market: investors bargain with each others and place selling or buying orders through brokerages later, or they place orders at brokerage and wait for their order to be matched.
How does the OTC market watchdog monitor brokerages?
All brokerages have to report transactions of unlisted stocks to the HaSTC before the HaSTC announces publicly through its daily bulletin.
The HaSTC also combines selling and buying prices every day to fix the preference price for unlisted stocks, which will be announced on the HaSTC’s trading boards.
After buying a parcel of shares, how long until an investor will be able to re-sell them?
Transactions will follow the T+3 standard [will be able to be sold on the third day after a transaction is completed].

 



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