Efficiency from inspection and supervision a key factor for a transparent stock market


Stock market supervision units coordinate with the Stock Exchange and related units to strengthen transaction and compliance supervision on the stock market. Photo: ST
Stock market supervisors coordinate with the Stock Exchange and related units to strengthen transaction and compliance supervision on the stock market. Photo: ST

Strengthening supervision and strict sanctions

According to the Securities Law 2019, the supervision system is built towards a three-level supervision model. Specifically: securities companies are the first-line supervisors; the Stock Exchange and Vietnam Securities Depository and Clearing Corporation (VSDC) are the second-line supervisors; the State Securities Commission (SSC) is the third-line supervisors. The Securities Law 2019 also allows supervisory entities such as the SCC and the Stock Exchange to promptly handle and prevent risks and violations that affect the stable and safe operation of the market.

Market supervision is reflected in two main tasks: transaction supervision and compliance monitoring, which are conducted regularly. In particular, regarding transaction supervision activities, the stock market supervisor coordinates with stock exchanges and related units to monitor and analyze developments in trading sessions with strong fluctuations, and organize inspection of codes with signs of unusual transactions, violations of securities trading regulations…

In addition, the SCC also apply strong sanctions, including measures to force refunds to investors, making an important contribution to limiting violations of unregistered and unreported offering and issuance from businesses. If from 2015 to 2020, there were an average of more than 170 sanctioning decisions each year, then from January 1, 2021 – the time the Securities Law officially takes effect and increases the authority of the SCC in inspection, sanctioning, the average number of penalty decisions in the three years 2021-2023 more than doubled. This reality shows that the proactiveness in management, supervision and inspection activities has become increasingly effective, close to the reality of the stock market and ensures all activities take place openly and fairly.

Continuing to improve the effectiveness of inspection and supervision

The detection and settlement of transactions on the stock market have faced many technical and legal difficulties. The supervision system to detect fraud is not timely, nor accurately evaluate the effectiveness of monitoring criteria, and is unable to predict new fraud methods; The legal system, anti-fraud policy and whistleblowing policy are not established nor effective; sanctions are not strict enough to deter and market participants have many ways to avoid penalties or choose penalties for lighter crimes…

However, through inspection and supervision activities, many violations have been detected and transferred to competent authorities for settlement.

In the near future, to strengthen line-based supervision and effective inspection, it is first necessary to ensure the implementation of legal policies and further improve the supervision system and regulations on supervision activities to meet the supervision requirements of strong growth of the market.

In addition, it is necessary to continue to strengthen supervision of information disclosure as well as rectify and enhance the quality of inspection work; closely coordinate with authorities in investigating, verifying, and handling cases showing signs of crime and law violations on the stock market; coordinate with regulatory agencies in monitoring legal compliance of market members; enhance inspection and handling of violations to help management agencies evaluate the law compliance of the market participants; solving legal inadequacies to improve legal regulations.

An important solution is to soon build a general database system for the entire stock market, connect and share information, build management and monitoring applications and have data exchange connections not only in within the sector but also with other authorities such as tax, banking inspection and supervision agencies and the Police.

Currently, the Government has assigned the Ministry of Finance to direct the SCC, the Stock Exchange and VSDC to connect the national population database, electronic identification and authentication system, and carry out review, authentication and cleaning of data about securities trading participants. On November 24, 2023, the SCC signed a Plan to coordinate with the Police Department for Administrative Management of Social Order (C06) to implement the Project on developing application of population data, identification and electronic authentication to serve national digital transformation in the 2023-2025 period, with a vision to 2030. In the coming time, the SCC will continue close coordination with C06 and relevant units to organize the implementation of data cleaning tasks about stock investors and securities practicing certificate holders.

In 2023 (from the beginning of the year to November 2023), the SCC worked with authorities under the SCC, the Vietnam Stock Exchange, subsidiaries and other competent agencies to analyze, inspect and handle 94 stock codes after transaction; established 12 teams to inspect abnormal transactions for 12 stock codes; one team to work with investors related to stock transactions.

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