Completing the legal framework and transaction infrastructure
According to Ms. Tran Ngoc Thuy Vy - Analyst at Mirae Asset Vietnam Securities Company, the process of upgrading the Vietnamese stock market has made clear progress since the end of 2024, focusing on removing the technical criteria set by FTSE Russell for the group of secondary emerging markets.
From November 2024 to now, a series of important policies have been issued and put into operation:
23.11.2024: Circular 68/2024/TT-BTC officially takes effect, applying a non-prefunding mechanism to allow foreign institutional investors to buy stocks without having to pay enough money when placing an order. This is one of the important technical criteria of FTSE.
05:05.2025: KRX information technology system officially operates, improving order processing capabilities and preparing for T+0 transactions.
At the same time, the Ministry of Finance issued Circular 18/2025/TT-BTC, amending regulations related to registration, storage, clearing, payment and disclosure of information on the stock market.
Next, Circular 14/2025/TT-BTC (effective from June 1, 2025) and Circular 03/2025/TT-NHNN (effective from June 16, 2025) respectively amended and supplemented regulations related to securities deposits and indirect investment accounts in VND for foreign investors.
At the regular press conference of the second quarter of 2025 of the Ministry of Finance, the leader of the State Securities Commission affirmed that the goal of upgrading the market is included in the official plan of the management agency this year.
One of the remaining contents being finalized by the management agency is the amendment of Decree 155/2020/ND-CP, expected to be issued in July 2025. This Decree will update regulations on foreign ownership ratio, while legalizing the central clearing compensation (CCP) model applicable to both corporate and derivatives stocks.
Nearly fully meeting the criteria for upgrading
According to FTSE Russell's classification, to be raised from the frontier market to the secondary emerging market group, the market needs to meet 9 important criteria. As of March 2025, Vietnam has been assessed by FTSE to have met 8/9 criteria, including:
Management agencies proactively monitor the market.
Do not object or significantly limit or punish the investment or withdrawal of capital and income back to the country.
Brokerage: Effective competition ensures high-quality brokerage services.
Transaction costs: Implied and official costs must be reasonable and competitive.
transparency: In-depth information about the market, with timely display and reporting of the transaction process.
T+2 payment cycle.
Securities archiving center.
Registry: Effective competition ensures high-quality registry services.
The remaining criterion - low failure rate - is still in the process of being monitored and has not been officially assessed by FTSE.
With the reform steps completed and the legal framework continuing to be updated, we expect FTSE Russell to make a decision to upgrade Vietnam in the September 2025 review, said a representative of Mirae Asset.
Positive signals from international capital flows
According to Mirae Asset, if upgraded, Vietnam can be included in the list of the FTSE Emerging Markets index from March 2026, with an expected proportion of about 0.7%. This could trigger a disbursement of up to $622 million from large ETFs such as:
Vanguard FTSE Emerging Markets ETF (USA): 581 million USD
Vanguard FTSE UCITS ETF ( London, Canada, Australia): nearly 41 million USD
Notably, countries that have been upgraded by FTSE such as Qatar, Romania, and Saudi Arabia all recorded a strong increase in the stock market right before and after receiving official information.
Ms. Vy said: "Not only capital flows from FTSE index funds, the upgrade also helps improve market image, attract more global institutional investors, thereby supporting liquidity and long-term valuation".
