I.Historical and development Vietnam started to develop its capital markets in 1991.

However, in 1996,the State securities Commission was established to regulate the development of the national stock exchange. Then, the Ho Chi Minh City Securities Trading Center (HoSTC) that is the largest stock exchange in Vietnam was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (REE) and Saigon Cable and Telecommunication Material Joint Stock Company (SACOM). In the beginning, an overall foreign ownership limit of 20% for equities and 40% for bonds was implemented. Along with the Ho Chi Minh City Securities Trading Center , the Hanoi Securities Trading Center (HaSTC) was launched in March 2005. It was the second securities trading center to open in Vietnam after to Ho Chi Minh City Securities Trading Center. Ho Chi Minh STC is listed and traded securities of large companies while Hanoi STC will be playing field for small and medium enterprises with capital falling from 5 to 30 billion. All securities traded on the Stock Trading Center of Vietnam are denominated in Vietnamese Dong. Par valued is standardized at VND 10,000 for equities and VND 100,000 for bonds (http://en.wikipedia.org/wiki/Ho_Chi_Minh_city_Stock_Exchange#History). According to

statistics of the State Securities Commission of Vietnam, in the first five years, from 2000 to 2005, the market has not actually attracted the attention of the public and the variable of market might create social impact on the operation of the economy as well as the residents live. In contrast, the starting year of 2006 is considered as a developed breakthrough which made the Vietnamese exchange market a brand-new appearance with the exciting operation of the transactions on the Stock Exchange. Hence, the two years (2006-2007) are the boomed stage of this market. Ho Chi Minh STC was transferred to HCM stock exchange on 11/5/2007, following by Hanoi stock exchange in 2009. As of this date, according to the websites of Hanoi and Ho Chi Minh Stock Exchange (on March 18, 2012), 397 and 305 companies are listed here respectively with a total market capitalization of US$866m. Hopefully, in the near future, our countrys securities market will develop more and more along with the changes in recent times. II. Main types of securities in Viet nam. A security is generally a fungible(can be replaced), negotiable financial instrument representing financial value. In Viet Nam,we have three main kinds of securities which are

stocks, bonds and fund units. Each one has their own characteristic and marketability also, now, lets see them in detail. 1.Stocks There are many different types of stocks in which you can invest based upon your financial position, your appetite for risk and your investment goals. A companys stock offerings generally fall into one of two categories:Common stock (Ordinary shares) or Preferred stock(Preference shares). Preffered Stock is an equity with characteristics of both bonds and common stock and is a capital stock which provides a specific dividend that is paid before anydividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Common stock represents equity ownership in a corporation,provides voting rights and entitling the holder to a share of the company's success through dividends and/or capital appreciation. In Vietnamese market we only have common stocks which should actually be considered in their both sides to help investors make decision about any investment. The fact of the matter is that common stock has a number of advantages which make it a desirable investment vehicle,which are listed bellow:

Common stock has the potential for delivering very large gains, unlike bonds, Certificates of Deposit (COD), or some other alternatives. Annual returns-on-investment (ROIs) of over 100% have occurred on a somewhat regular basis. The potential loss from stock purchased with cash is limited to the total amount of the initial investment. Stocks offer limited legal liability. Passive stockholders (those who take no active part in the running of the company) are protected against any liability stemming from the companys actions beyond their financial investment in the company. Most stocks are very liquid; in other words, they can be bought and sold quickly at a fair price. Although past performance is not a guarantee of future performance, stocks have historically offered very high returns in relation to other investments. Stocks offer two ways for their owners to benefit, by capital gains and with dividends

While there are numerous advantages, common stocks, like all investments, have some distinct disadvantages which investors must remain aware of:

Since common stock represents ownership of a business, stockholders are the last to get paid, like all other owners. A company must first pay its employees, suppliers, creditors, maintain its facilities and pay its taxes. Any money left can then be distributed among its owners. While shareholders are company owners, they do not enjoy all of the rights and privileges that the owners of privately held companies do. For example, they cannot normally walk in and demand to review in detail the companys books.

Investors in a company may not know all that there is to know about the company. This limited information can sometimes cause investment decision-making to be difficult. Stock prices tend to be volatile. Prices can be erratic, rising and declining quickly. That leads to higher risk and much loss. Stock values can sometimes change for no apparent reason.

2.Bonds. There are four kinds of bonds: Coporate bonds, Municipal bonds, Government bonds and Foreign bonds in which only Corporate bonds and government bonds are traded in Viet nam market.

Government bond: (included local authority bonds): the debt securities issued by the Vietnamese government, accounted for more than 80% of bond market structure. They are issued to help finance all of the costs involved in operating the Vietnamese government. Several characteristics described for general government bond: Lower risk with no default risk than other shares with lower rate of return and no tax also. Corporate bond: A debt security which is issued by a corporation and sold to investors, has nominal value returned to the investor on a stated future date. In Vietnam, the most popular type of corporate bond is convertible bond which can be converted and exchanged for common stock of issuing firm. These bonds represented about 20% of bond market structure. - In the primary bond market, the main issuance method is floating rate notes. According to Bank for Investment and Development of Vietnam, in 2009, there were about 18,000 billion VND worth floating rate bonds sold, made up 77% of total value of mobilized bonds (more than 26 billion VND). - As for secondary market of corporate bond, in Vietnam, banks often make the transactions of short-term bonds while the long-term ones are normally traded by insurance companies. The liquidity of this market is low owing to the lack of discrepancy and information for investors.

3.Fund units Fund units are securities certifying the ownership of investors for a capital contribution of public funds. Public funds are investment funds formed from the stock of capital contributed by investors, with the intent to profit from the diversification of investments in security or other assets distributed to various risk, including Investors have no control over daily decisions for the funds investment. Fund management companies issue certificates of the fund, investors buy fund units which confirm their contribution of capital to the fund. Here are some fund units are listed including MAFPF1,VFMVF4,VFMVF1, PRUPF1 with the table about their NAV( Net Assets Value) changes from 14 May to 21 May, 2009 which are reported in BULLETIN of BSC Research Department (BSC- BIDV Securities Company) (www.bsconline.com.vn).

III. Major participants in Vietnamese securities market 1.Issuers: Issuer is a legal entity that develops , registers and sells securities for the purpose of financing its operations. Issuers may be domestic or foreign governments, corporations or investment trusts. Issuers are legally responsible for the obligations of the issue and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions. The most common types of securities issued are common and preferred stocks, bonds, notes, debentures, bills and derivatives. Government issue bonds, bills to raise capital for important and large project or to cover governments budget deficit. Local government issues municipal bond to finance spending. Corporations offer corporate bonds and different type of shares to increase capital for economic transaction. 2. Fund manager 2.1 Definition. A fund manager is an investment professional, who manages the allocation of the financial resources in order to achieve optimal fund performance. Typically, a fund manager is responsible for the assets of a mutual fund though a fund manager can manage other types of funds such as a pension fund or insurance fund. A fund manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity. Another important aspect of the fund manager position is to sustain nominal risk of the mutual fund by developing prudent investment strategies. 2.2 The role of fund manager

The Prime Goal of a Fund Manager is to ensure that the wealth of his investors is protected.

After protecting the wealth of those who invest in the fund, the second most important duty of the fund manager is to manage the risk of investos managernent.

When fund managers buy shares in publicly listed companies, they are purchasing these shares on behalf of those who have invested in their fund. As such, another duty of fund

managers is to represent the interests of shareholders to the management of the company. 2.3 Information in Viet Nam Monitoring mechanism of fund, fund managerial companies and the authorities - Management agency of fund managerial companies is The State Securities Commission (SSC). Ministry of finance and SBV supervise all operating activities of fund managerial companies. - Commercial banks monitor preservation, custody of investment funds and managerial fund companies to protect the interests of investors - Fund managerial companies manage and invest the fund by using the investment portfolio written in companys charter - Audit firms test and evaluate objectively, accurately the operating status of the investment fund to ensure Transparency

Fund managerment company

Managing, supervising

State agencies

- operating - managing investment funds - researching Auditing Audit firm Montitoring Investment fund

custodian bank

3.Brokers:

3.1.Definition A broker is an individual or party (brokerage firm) that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. In general a broker is an independent agent used extensively in some industries. The prime responsibility of a broker is to bring sellers and buyers together. Therefore, a broker is the third person facilitator between a buyer and a seller. 3.2.Trading _Principle trading A principal trade occurs when a brokerage house buys securities on the secondary market with the express strategy to hold long enough for a price appreciation. At that point the broker sells retails to the end use and gains appreciation plus commission. Brokers are required to notify when they provide a principal trade, though will typically obfuscate the fact through the fine print. The broker always seeks to sell their inventory to prospective buyers rather than buying new into the market. Common in bond sales

(http://en.wikipedia.org)/wiki/Principal_trade _ Agency trading A buy or sell order that is initiated by a brokerage firm on behalf of a customer. An agency trade is in contrast to a trade that is initiated directly by the customer. If a customer has given a brokerage firm discretion to manage his or her account, then any trades from that account are agency trades (http://invest.yourdictionary.com)/agency-trade 3.3.Services provided A transaction on a stock exchange must be made between two members of the exchangean ordinary person may not walk into the New York Stock Exchange (for example), and ask to trade stock. Such an exchange must be done through a broker. There are three types of stock broking service

Execution-only, which means that the broker will only carry out the client's instructions to buy or sell.

Advisory dealing, where the broker advises the client on which shares to buy and sell, but leaves the final decision to the investor.

Discretionary dealing, where the stockbroker ascertains the client's investment objectives and then makes all dealing decisions on the client's behalf. 3.4.The role of brokers

The role of the stock broker is to execute the demands of their client or, at most, to offer advice and participate in shaping a financial plan. But, because brokers are pressured to generate income and clients are seeking to benefit from an insider's perspective, and because the brokers themselves are paid higher commissions on riskier investments, there is a constant temptation to make recommendations that ideally, but not always, balance risk and profitability for all (http://www.ehow.com)/about_4578403_what-role-stock-broker.html 4. Investors Individual investor: Definition: An individual who purchases small amount of securities for him/herself, as opposed to an institutional investor also called retail investor small investor. Characteristics: 1 securities trading code registration from signed by the individual investor 1 foreign individual investors information verified and sealed by the State Notary Public or by an authorized body of the originating country and legalized by an authorized body of Vietnam. 1 copy passport.

Today, in Viet Nam stock market have approximately 300,000 individual investor account for individual investors when organization investor are 1,200 accounts.when individual investors see bright economic future, they may choose stocks instead of other investment channels like gold, foreign currencies and real estate.Otherwise, it may not be easy to convince them to invest in the stock market.While the economy expanded 6.78 percent in 2010, up from 5.32 percent in 2009, the benchmark stock index fell around 2 percent during the year. In nowadays, investors want to invest in telecommunications and logistics stocks because these sectors would not be heavily influenced by economic instability. Institutional investors

Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets. They can also include operating companies which decide to invest their profits to some degree in these types of assets. Types of typical investors include banks, insurance companies, retirement or pension funds, hedge funds, investment advisors and mutual funds. Their role in the economy is to act as highly specialized investors on behalf of others. For instance, an ordinary person will have a pension from his employer. The employer gives that person's pension contributions to a fund. The fund will buy shares in a company, or some other financial product. Funds are useful because they will hold a broad portfolio of investments in many companies. This spreads risk, so if one company fails, it will be only a small part of the whole fund's investment. Institutional investors will have a lot of influence in the management of corporations because they will exercise the voting rights in a company. They can actively engage in corporate governance. Furthermore, because institutional investors can freely buy and sell shares, they can play a large part in which companies stay solvent, and which go under. Influencing the conduct of listed companies, and providing them with capital are all part of the job of investment management.

IV. How securities are issued. There are two major methods to issue securities in Viet Nam: private placement and public placement rather than underwriting and auction. 1.Private placement Private placement is the sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market. An issuing is private when: the security is offered only to institutional investors during the issuing the securities is offered only to a few selected investors specified prior to the offer a public limited company provides free shares to its shareholders the issuer swaps securities which does not result in an increase of the share capital of the issue and only if the securities swapped for are not issued publicly 2. Public placement

Going public is a enormous decision for any companies which changes how a company goes about doing business. A public company has access to more and often deeper, sources of capital than private company. The actual process of IPO can be time consuming and needs certain unique challenge that a company should be prepared to undertake Firstly to understand more about IPO, we will discuss about the definition of it. IPO standing for initial public offering or stock market launch is the first sale of stock by a company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises. Many companies that undertake an IPO also request the assistance of an investment banking firm acting in the capacity of an underwriter to help them correctly assess the value of their shares, that is, the share price. There are 7 steps to sell stock to the public:
Step 1: company hires an investment bank to do the underwriting Steps 2:the investment bank and company initiate the process of deal negotiation Step 3: The investment bank sets a registration statement up to the Securities and Exchange commission Step 4: The Securities and exchange commission examine all the summited documents Step 5:the underwriter publishes an initial prospectus containing all the necessary information regarding the company Step 6: the company and the underwriter meets to decide the price of the stock Step 7: the stocks are sold in the market and money is raised from the investors

An example about IPO : on December 5th 2011, the government official declared the official dispatch number 1392 VPCP-DMDN about setting the price of BIDV bank by going to public with the price was 18,500 VND. In addition, investment bank would hold the auction with 3% charter capital(about 84,754,146 stocks) at Ha Noi securities exchange ( that are listed in the table 2 of Appendix from http://tinnhanhchungkhoan.vn/GL/news_event.shtml?e=64ngay23-3) 3.Underwriting Underwriting is the procedure by which an underwriter brings a new security issue to the investing public in an offering. In such a case, the underwriter will guarantee a certain price for a certain number of securities to the party that is issuing the security(in exchange for a fee). Thus,

the issuer is secure that they will raise a certain minimum for the issue while the underwriter bears the risk of issue To underwrite securities for the company, the insurance underwriter has to work following the process

collecting the necessary information

analysation

identifying options

There are 5 method to underwrite securities: 1. Guarantee for certain commitments method. 2. Guaranteed under the reserve method. 3. Guarantee with the highest effort method. 4. Guaranteed by the method of selling all or not method. 5. Guaranteed by the method of minimum maximum method. 4.Auction Auction is a process of buying and services by offering them up for bid, taking bids, and then selling them to the highest bidder. In economic theory, an auction may refer to any mechanism or set of trading rules for exchange.There are 8 steps to auction securities:
Step1: register for auction issuing Step2: public the infomation before holding auction Step3: register to participate in the auction and deposit the money to buy securities

Step 4: Vote for participation in the auction:

Step 5:Carry out auction Step 6:Notice of the auction results Step 7: Payment and distribution of securities Step 8: Handle some special cases

Refference

http://www.investorwords.com/3775/preference_shares.html http://tinnhanhchungkhoan.vn/GL/news_event.shtml?e=64ngay http://www.finweb.com/investing/types-of-stocks.html http://info.finweb.com/investing/common-stock.html http://en.wikipedia.org/wiki/Security_(finance) www.bsconline.com.vn). http://www.ehow.com)/about_4578403_what-role-stock-broker.html http://en.wikipedia.org)/wiki/Principal_trade http://invest.yourdictionary.com)/agency-trade http://en.wikipedia.org/wiki/Ho_Chi_Minh_city_Stock_Exchange#History). http://info.nbf.ca/fbn/cda/theme/0,,divId-2_langId-1_navCode-10093_navCodeExTh0,00.html