Vietnam has made remarkable progress over the past months. The removal of the pre-funding requirement through Circular 08 was the decisive regulatory breakthrough and, in substance, resolves the key structural issue that had held back reclassification for years.
At this point, however, the discussion has clearly moved beyond legal reform.
The central question now being assessed by FTSE Russell is straightforward:
Does the system work in practice — under real trading conditions and at institutional scale?
This distinction is critical. From a regulatory perspective, Vietnam has delivered. From an operational perspective, the system is still in the process of proving itself.
Market feedback indicates that the remaining evaluation is no longer about rules, but about execution reliability — in particular:
- whether trades can be executed seamlessly through global brokers,
- whether settlement consistently completes without disruption,
- and whether local intermediaries are fully prepared to carry the residual risks embedded in the new non-prefunding model.
The current period should therefore be understood as a live validation phase. FTSE is not waiting for further policy announcements; it is observing how the market performs in reality.
This is where the remaining risk lies.
Even isolated operational issues — such as settlement delays, failed trades, or hesitation among brokers to assume risk — can have a disproportionate impact at this stage. Not because the framework is insufficient, but because confidence depends on demonstrated performance under real conditions.
In that sense, the priority now is not additional reform, but active, coordinated implementation.
Immediate Priorities for the Next 30–60 Days
First, the system should be actively tested under realistic conditions. This means facilitating larger transactions, ideally involving reputable international institutions, to confirm that execution, clearing and settlement function smoothly when volumes increase. The objective is not theoretical readiness, but observable performance.
Second, the role of local brokers deserves close attention. The move away from pre-funding shifts a degree of settlement risk onto intermediaries. It is essential that brokers are not only legally enabled, but also operationally and financially comfortable supporting larger foreign flows. Where necessary, temporary support mechanisms or clearer risk allocation could reinforce confidence.
Third, engagement with global brokers should be practical and direct. Allowing access in principle is not enough; systems must be fully connected, trade routing must be seamless, and any operational frictions must be eliminated. Well-executed pilot transactions can be more convincing than formal assurances.
Finally, outcomes should be monitored closely through a focused internal view of settlement performance, execution quality and any recurring bottlenecks. At this stage, rapid resolution of issues is more important than the absence of issues altogether.
Conclusion and Action Plan
Vietnam stands at the decisive final stage of its upgrade journey. The regulatory foundation has been successfully established, and the removal of pre-funding has addressed the core historical barrier. What remains now is not a question of policy, but of confidence in execution.
The coming weeks are therefore critical. FTSE Russell’s assessment will be shaped not by further announcements, but by what can be observed in actual market practice. Demonstrating that the system works smoothly, reliably, and at scale is now the single determining factor.
To secure a successful outcome, a focused and coordinated effort should be undertaken immediately:
- Actively validate the system through real transactions
Facilitate a number of larger, well-structured trades involving credible foreign institutions to demonstrate that execution, clearing, and settlement perform seamlessly under real conditions.
- Ensure broker readiness and confidence
Confirm that local brokers are operationally prepared and financially comfortable with the settlement risk under the non-prefunding model. Where needed, provide clarity or temporary support to reinforce their willingness to facilitate larger trades.
- Engage global brokers at operational level
Work directly with major international brokers to confirm that connectivity, trade routing, and settlement processes function without friction. Practical execution matters more than formal access.
- Monitor performance in real time
Establish a focused internal mechanism to track settlement success, execution quality, and any emerging bottlenecks, ensuring that issues are identified and resolved immediately.
- Resolve issues with speed and coordination
Any operational friction should be addressed within days, not weeks. At this stage, responsiveness is critical to maintaining confidence.
In essence, Vietnam has reached the point where demonstration replaces intention. If the market can show, in a clear and consistent manner, that the new framework operates effectively under real-world conditions, the path to FTSE upgrade in September 2026 should be secure.
The opportunity is fully within reach — but it now depends on disciplined execution over the immediate term
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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under [email protected]. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
