HANOI, Vietnam: As part of the reforms to advance the country’s stock market and attract more foreign investors, Vietnam will launch a new stock trading system this week to speed up the settlement of transactions.

The system, provided by the Korea Exchange, will help Vietnam, which both the MSCI and FTSE indices currently classify as a frontier market, be reclassified as an emerging market. This will mean that many funds, family offices, and others can invest in companies listed in the Southeast Asian country.

Reuters reported that the new stock trading system has been tested for months and is expected to go live on May 2 after securities companies complete the switchover from the old system during a five-day public holiday starting at the business’s closing on April 26.

The new system will enable transactions to be settled within a day, speeding up operations and facilitating trading, most notably short selling, which was prevented by the current slower system.

Officials said that with the upgrade for Vietnam planned to be completed by next year, the FTSE may make a positive announcement as early as September, but the upgrade by the MSCI is expected to take longer.

In 2023, the World Bank said that upgrades to Vietnam’s trading system could generate net inflows of between US$5 billion and $25 billion to the $200 billion market by the end of the decade. So far in 2024, Vietnam’s benchmark stock index has risen 4.5 percent, but it fell by more than 7 percent this month.

Key reforms needed for the upgrades include less strict limits on foreign ownership of listed companies and the removal of a prefunding requirement for share transactions