The 2024 Amended Securities Law: A Bold Step Towards Market Integrity

The stock market is one of the most important areas for raising capital and meeting investment needs in the economy. However, ensuring transparency and fairness in the stock market has always been a top priority. Against this backdrop, the 2024 Amended Securities Law, which revises several key provisions, has been approved by the National Assembly of Vietnam and will officially take effect on January 1, 2025.

Concept and Role of the Stock Market

The stock market is a platform for trading securities such as stocks, bonds, and other financial instruments. It is an essential tool for raising capital for businesses, increasing liquidity for investors, and ensuring the efficient allocation of financial resources.

However, the stock market also faces numerous risks, especially in the form of unethical practices. These acts often distort supply, demand, and market information.

New Provisions on Stock Market Practices Under the 2024 Amended Securities Law

Under the 2024 Amended Securities Law, several actions are now clearly outlined as improper market activities, including the following six practices:

Using multiple trading accounts to create false supply and demand

This behavior includes using multiple trading accounts (belonging to oneself or others) to continuously buy and sell a specific stock. The purpose is to create an illusion of demand or supply, thus affecting stock valuation unfairly.

Placing buy and sell orders for the same stock on the same trading day

This involves collusion to buy and sell the same stock on the same trading day without the actual transfer of ownership. Ownership simply rotates among a select group of participants to mislead other market participants.

Intentional trading during critical market hours

This involves large volume trading during market openings or closings to create artificial price impacts. These practices unfairly alter how investors perceive stock value.

Creating partnerships for coordinated trading activities

Linked trading groups use strategies to impact prices unfairly. These strategies could influence trading volume and lead investors to misunderstand market direction.

Disseminating misinformation to the public

Spreading false or misleading information to influence market prices is another behavior specifically prohibited under the 2024 Amended Securities Law.

Employing additional disruptive methods

Using innovative tactics that bypass traditional oversight mechanisms yet still mislead the market is another concern addressed directly in the 2024 Amended Securities Law.

The Impact of Market Malpractice and the Role of Regulation

These actions collectively disrupt three fundamental components of the stock market:

Individual Investors

Individual investors, particularly newcomers or small-scale participants, may face greater losses due to unethical trading practices, especially from misinformation or artificial inflation.

Listed Corporations

Even well-managed corporations can be victims of manipulation. Market fluctuations driven by false perceptions jeopardize not only their value but also limit access to funding.

Public Confidence in Markets

Widespread manipulation corrodes public trust in financial systems, endangering the country’s broader economic standing. The lack of transparency could discourage both domestic and foreign investments.

Prioritizing Integrity

The 2024 Amended Securities Law distinguishes itself by prioritizing market transparency. Stakeholders stand to gain from cohesive regulation benefiting traders, stakeholders, and investment partnerships.

Successful reforms may include the following:

1. Support for small investors at both local and national levels to identify fraud.
2. Increased focus on sustainable, digitally reliable oversight capabilities.
3. Proactive response to address sharp distinctions that once let boundary pushers behave unsanctioned.

Broader Economic Implications

The 2024 Amended Securities Law is set to contribute positively to Vietnam’s economic framework. Transparent markets attract both domestic and international investments, paving the way for economic resilience and growth. Moreover, fair practices ensure a level playing field, giving businesses confidence to participate in long-term investments.

A clear example is the growing interest from international stakeholders. These investors, seeking stable and ethical markets, are increasingly drawn to countries with robust legal frameworks like Vietnam’s under the 2024 Amended Securities Law. This bolstered interest translates to more substantial foreign direct investments (FDI), technological advancement, and market diversification.

Challenges in Implementation

Despite its advantages, implementing the 2024 Amended Securities Law comes with challenges. Among them are:

• Awareness Campaigns: Educating stakeholders, from individual investors to large corporations, about their rights and responsibilities under the new law.
• Enhanced Oversight: Strengthening monitoring and enforcement mechanisms to ensure compliance with the 2024 Amended Securities Law.
• Technological Integration: Leveraging advanced technologies such as AI and blockchain for improved transparency and fraud detection.

Conclusion

The 2024 Amended Securities Law represents a bold and necessary step towards a transparent and fair stock market. By addressing unethical practices and fostering a culture of integrity, this law not only protects investors but also builds a robust foundation for Vietnam’s economic future. Effective enforcement of the 2024 Amended Securities Law will ensure that Vietnam remains a key player in the global financial landscape.

About ANT Lawyers, a Law Firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest protection, risk mitigation and regulatory compliance. ANT Lawyers has lawyers in Ho Chi Minh city, Hanoi, and Danang, and will help customers in doing business in Vietnam.