Decision No. 1413/QD-TTg, signed by Deputy Prime Minister Nguyen Van Thang on July 27, outlines measures to modernize the country's financial system, deepen integration with global markets, and strengthen the role of capital markets in providing long-term funding for the economy.

The reform blueprint seeks to build a more balanced and market-oriented financial system capable of mobilizing and allocating capital more efficiently while supporting sustainable economic expansion.

Among the key measures, the government will review foreign ownership rules in eligible sectors and gradually allow publicly held foreign-invested enterprises to list on Vietnam's stock exchanges.

The plan also calls for accelerating the equitization of state-owned enterprises and state divestments, while requiring companies to register for trading or list their shares as soon as they meet regulatory requirements following equitization.

Authorities will also study the creation of a dedicated trading platform for innovative startups to improve access to capital for early-stage companies.

In the derivatives market, Vietnam plans to introduce new products, including stock index options, single-stock futures and equity options, to broaden risk management tools and deepen market liquidity.

A central component of the reform is the planned introduction of a central counterparty (CCP) clearing mechanism for the cash equity market in 2027, a move widely regarded as an important step toward aligning Vietnam's market infrastructure with international standards.

Trading systems will also be upgraded to accommodate new products and trading mechanisms, including additional order types, midday trading, intraday trading, securities lending and borrowing, and regulated short-selling through a covered settlement mechanism.

The reform package also includes accelerating the adoption of International Financial Reporting Standards (IFRS), strengthening corporate governance, expanding the investment fund industry, encouraging greater participation by institutional investors and introducing a regulatory framework for financial technology in the securities sector.

Market participants welcomed the reform agenda but said implementation would determine its success.

Speaking at a capital market conference held by The Investoron July 23, Nguyen Duy Linh, CEO of SHS Securities, said Vietnam should focus on three priorities: opening the market more meaningfully to foreign investors, improving the sector composition of listed companies, and expanding the domestic institutional investor base.

He said the stock market should better reflect the broader economy and called for measurable targets to support the growth of domestic investment funds, including the number of new funds established each year and assets under management.

Thieu Huu Chung, vice chairman of Bao Minh Securities, said stronger corporate governance and greater transparency would be essential to protecting investors and strengthening confidence in the market.

"In addition to infrastructure and transparency, Vietnam needs to improve the quality of listed companies, diversify investment products, and create incentives for large, fundamentally strong businesses to list and raise capital," Chung said.

Nguyen Ngoc Linh, CEO of DNSE Securities, said reforms to the legal framework could help revive capital raising by removing bottlenecks in securities issuance and improving capital flows across the economy.

She said many businesses have increasingly turned to securities firms for financing when banks are unwilling to accept securities-related assets as collateral, a trend that may partly explain continued growth in margin lending despite weak market conditions.

Linh also proposed introducing regulatory sandbox models linking credit markets and capital markets, including potential combinations of peer-to-peer lending platforms with investment or public infrastructure projects under regulatory oversight.

"Instead of allowing these financing needs to develop outside the formal financial system, authorities should gradually legalize, standardize and improve transparency under government supervision," she said.

Analysts said Vietnam's reform strategy shares many similarities with successful capital market reforms undertaken by other Asian economies.

Nguyen The Minh, head of investment banking at ABS Securities, said Malaysia expanded its capital markets through two capital market masterplans for the periods 2001-2010 and 2011-2020 following the 1997 Asian financial crisis to reduce reliance on bank lending.

South Korea adopted similar reforms through its Capital Market Consolidation Act as part of efforts to develop Seoul into a regional financial hub, while India overhauled its capital markets after its 1991 balance-of-payments crisis by establishing the Securities and Exchange Board of India (SEBI) and launching the technology-driven National Stock Exchange (NSE).

Drawing on those experiences, Minh said Vietnam's policy announcement represented only the first step, with implementation speed likely to determine whether the reforms succeed.

He said introducing a CCP clearing framework and adopting IFRS would be critical to attracting long-term institutional investors, including pension funds and sovereign wealth funds.

Developing a stronger domestic institutional investor base, similar to Malaysia and South Korea, would also help reduce market volatility by decreasing reliance on retail investors, he said.