Vietnam opens stock market wider to foreign investors

The ministry’s Circular 08/2026, effective on February 3, introduces 16 provisions, including new trading methods for foreign investors.

Pursuant to the rules, foreign investors can place orders via international brokers directly to Vietnamese securities firms, eliminating the need for separate local accounts.

This streamlines procedures and reduces costs for large investment funds.

The changes respond to requirements from FTSE Russell and international investors, ensuring Vietnam’s stocks are included in the FTSE Emerging Markets Index by September 2026 as planned.

The move is expected to increase Vietnamese stocks’ weighting in FTSE’s index basket.

The circular also addresses non-prefunding (NPF) transactions, which allow trades without full cash deposits at the time of order.

Foreign institutional investors violating NPF payment obligations will be reported to regulators, including the State Securities Commission of Vietnam, the Vietnam Securities Depository and Clearing Corporation, and the Vietnam Exchange, on the day the breach occurs.

The violation will not be publicly disclosed to the market.

Penalties include a seven-day suspension for first-time violations and up to 180 days for repeated breaches within 30 trading days.

The Vietnam Exchange will notify member securities firms that affected foreign investors must maintain sufficient funds in their custody accounts when placing buy orders during suspension periods.

Unlike previous rules, the new circular does not restrict which stocks can be traded under the NPF mechanism.

This change helps investment funds replicate indices more accurately, even when securities firms or their parent companies are part of the index.

To prevent regulatory breaches, securities firms may accept NPF orders for their own shares or affiliates if contractual agreements are in place with other firms to transfer ownership.

On October 8 last year, FTSE Russell officially announced Vietnam’s upgrade to secondary emerging market status, marking a milestone in the country’s financial reforms.

The latest regulatory changes align Vietnam’s trading standards more closely with international practices, paving the way for greater foreign participation.