Jan 15, 2013

Vietnam - Depository fee cuts intended to make life easier for brokerages, investors

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VietNamNet Bridge – The State Securities Commission will consider reducing depository fees by 20 per cent to lessen difficulties for securities companies and investors.

The Viet Nam Securities Depository started to collect depository fees in 2010. Accordingly, investors had to pay 0.5 Vietnamese dong per share or fund certificate every month and 0.2 dong for each bond.

Prior to the decision, brokerages often supported their clients in paying the depository fees. However, as the difficulties of the stock market increased, the payments created a significant burden for securities firms and investors.

In addition, many brokerages reported that they could not collect the fees from investors and had to pay the depository centre with their own money.

"Many customer accounts in our company ran out of funds, as investors did not carry out transactions," said a Ha Noi-based securities firm leader, who asked to remain anonymous.

Late last year, Saigon Securities Inc said it was burdened by over VND14 billion (US$666,700) in fees it owed to the commission, depository centre and the Viet Nam Association of Securities Businesses for 2010 and 2011.

Securities firms proposed reducing depository fees three months ago, saying the measure would help the stock market overcome challenges.

They also suggested fees apply to each investor account, rather than each type of security.

Moreover, the current fees were relatively high, they said, which made them difficult to collect, as many investors purchased dozens of different stocks. They also recommended implementing a maximum fee for each account.

The top investors on the stock market suffered from fees worth billions of dong for their long-term portfolios; reduced fees would allow them to save considerable amounts.

Chairman of property developer Hoang Anh Gia Lai (HAG) Doan Nguyen Duc, with 260 million HAG shares, paid the most, according to the financial information website vietstock.vn. However, if the policy was applied, he would save VND360 million ($17,100), paying VND1.2 billion ($57,100) per year instead of VND1.56 billion ($74,200).

Owners of shares of property developer Vingroup (VIC), food processor Masan (MSN) and financial conglomerate Ocean Group (OGC) would be also able to save millions of dong.

The total savings of the 10 richest investors on the stock market could reach VND1.2 billion.

Source: VNS

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