On the afternoon of 30/9, the Vietnam Stock Exchange (VNX) and the Singapore Exchange (SGX) signed a memorandum of understanding to develop depositary receipts (DRs). This signing establishes a framework for the two exchanges to further research and promote cooperation in product development.

A depositary receipt (DR) is a security issued by an intermediary organization, representing ownership of a quantity of shares in a company listed on another market. This means investors can purchase DRs traded on their domestic exchange instead of directly buying foreign shares. The DR issuer will hold the underlying shares and issue corresponding certificates to investors.

This "cross-listing" model can expand the customer base, increase liquidity, and enhance international recognition for businesses. However, this mechanism requires high compatibility in legal frameworks, custody, information disclosure, capital flow control, and investor protection.

Vu Thi Chan Phuong, Chairwoman of the State Securities Commission (SSC), stated that exchanges, businesses, and intermediary institutions in both countries can strengthen connections to gradually form an ecosystem supporting the issuance and listing of DRs. She emphasized, "Developing market connection channels like DRs not only opens more international fundraising opportunities for Vietnamese businesses but also diversifies products, expands the investor base, and promotes two-way capital flows between Vietnam and Singapore."

FTSE Russell is collaborating with MAS to develop index products in the Singaporean market. Therefore, the SSC Chairwoman expressed her desire for Vietnamese securities companies to participate as market makers, thereby enhancing connectivity between the capital markets of the two countries.

Lim Tuang Lee, Assistant Managing Director of the Capital Markets Group at the Monetary Authority of Singapore (MAS), welcomed the research and development of DR products. He believes that for this product to operate effectively, it requires the synchronized participation of market members, including custodian banks and clearing and settlement organizations.

Vu Thi Chan Phuong, SSC Chairwoman, and her delegation at a meeting with MAS on the afternoon of 30/9. Photo: SSC

Additionally, the two sides discussed the crypto asset market. The SSC Chairwoman proposed increasing exchanges and sharing experiences on building legal frameworks, organizational and management models for exchanges, and market surveillance mechanisms, especially solutions for preventing money laundering and terrorist financing.

The SSC is also interested in Singapore's experience in building a market surveillance system; selecting an appropriate organizational model for the crypto asset market; mechanisms for managing issuance and trading activities; and the ability to connect with international markets. Lim Tuang Lee affirmed his readiness to continue coordinating, sharing experience, and professional information on crypto asset market management.

Tat Dat