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Who protects gold investors?   2008-09-15 - TBKTVN

It is expected that the Prime Minister will give instructions on setting up regulations for gold trading floors next week.


SJC and Eximbank has opened the gold trading floor in HCM City

The news that drew the attention of gold investors last week was that the Asia Commercial Bank (ACB), which is running ACB gold trading floor, announced it would reduce the gold and cash payment limit within a day. As of September 15, investors will be able to get one tael of gold a day from the volumes of gold they purchase. This is the fourth time ACB has reduced the gold payment limit so far this year, from 20 taels to 10, and then 5 and 1 taels.


The decision has immediately faced strong opposition from investors, who think that the limited payment volume means that they cannot take initiative in their investments.


The decision by the bank once again has raised the question: Who protects the interests of gold investors?


Nguoi lao dong newspaper quoted Nguyen Thanh Toai, Deputy General Director of ACB, as saying that ACB creates rules in order to ensure the liquidity of the bank. “If investors do not want to play by the rules, they should not make transactions here,” he said.


In fact, gold investors now have many choices. A new gold trading floor, run by the Saigon Jewellery Company (SJC) and Eximbank, debuted on September 8, raising the total number of gold trading floors to 4 in HCM City. In Hanoi, with the establishment of the trading floor run by the Vietnam Gold Investment and Trade Joint Stock Company, investors also have three choices.


While a lot of new gold trading floors have been established, no legal framework has been drawn up to protect the benefits of investors.


While talking with Thoi bao Kinh te Vietnam on September 14, Governor of the State Bank of Vietnam Nguyen Van Giau said that in May 2008, the Prime Minister ordered the establishment of a taskforce responsible for surveying and compiling the regulations for gold trading floors’ operations. On September 12, a report was submitted to the central bank’s governor, which is expected to be submitted to Prime Minister. It is highly possible that the Prime Minister will issue instructions on the regulations next week.


While waiting for the legal framework to take shape, gold investors still have to follow the rules set by the organisers.


Returning to the fact that ACB has reduced the gold payment limit, an analyst said that the key problem lies in the payment.


“Payment is dependent on one bank, thus relying on the liquidity and capability of the bank,” he said.


Tran Thanh Hai, General Director of the Vietnam Gold Investment and Trade Company, also said that the reliance on one bank in payment is really a problem.


Hai said that Techcombank is responsible for payments on the company’s trading floor, in which Techcombank is a shareholder with 10% of capital contributed.  However, “If one bank cannot meet the requirements, we will invite other banks to join,” he said.

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