The State Securities Commission (SSC) has admitted that 105 securities companies are too much for a fledgling stock market like Vietnam. Experts believe that it is now the right time to re-organise the market.

In mid November 2011, SSC organised a press conference, where it informed the measures to be taken to improve the stock market. This is for the first time SSC made a move to “make information transparent”, the thing that quite different from the attitude of “keeping quiet for a medium term” since late 2010, since the stock market fell.

SSC has informed that it is finishing compiling the stock market development strategy for 2011-2020, and it is now consulting with the Ministry of Justice on the strategy before submitting to the government for promulgation in the fourth quarter of 2011.

SSC has also finished the drafting of the Prime Minister’s instruction on stepping up the operation and strengthening the management over the stock market. The draft document has been submitted by the Ministry of Finance to the Prime Minister, while it is expected that the legal document would be issued in the fourth quarter of the year.

Especially, the plans on restructuring the stock market and restructuring securities companies have also been drafted.

The detailed steps in the implementation of the plans and strategies have been concretized recently, following the working sessions of SSC with the newly appointed Minister of Finance Vuong Dinh Hue.

A recent report shows that there are a lot of securities companies in Vietnam, especially small ones, which have the ratios of cash on short term debts at low levels. Meanwhile, a lot of companies still cannot meet the requirements on the capital safety ratio set up by SSC. The reports by securities companies to SSC showed that by October 2011, 12 securities companies still had had the usable capital at less than 180 percent.

By mid 2011, 61 out of 105 securities companies had reported loss. The figure had risen to 80 companies by the end of the third quarter, which accounts for 80 percent of the operational securities companies.

Analysts, quoting finance reports of securities companies, have pointed out that securities companies have fallen into the worst ever situation, and that the current situation is even worse than that of 2008.

Reports show that 54 branches of more than 30 securities companies have shut down so far this year, while only 28 new branches have opened. The Thang Long Securities Company has closed six branches, while WSS has closed five branches.

Especially, some experts have criticized SSC for being too late in trying to restructure securities companies. They said that the restructuring should have been kicked off right in mid 2011 or in the first quarter of 2011, when the first negative signs in securities’ companies appeared. They also said that the restructuring should have been thought of before the number of securities companies was below 105.

Experts now still argue about the concept of “restructuring securities companies”. As for many people, restructuring means liquidating some securities companies which cannot operate well or badly affect the stock market. The same thoughts have been assigned to the banking restructuring.

Meanwhile, some others believe that restructuring not only means eliminating some weak companies, but also re-arranging and making the companies healthier. In this case, they believe that it is a bit late to do the restructuring, because securities companies cannot do the restructuring themselves, and they need the intervention of SSC.

It remains unclear about the result of the restructuring. However, after SSC informed about the tasks it will fulfill in the time to come, a lot of investors have expressed their hope that the market would be improved soon.