(Bloomberg) -- Vietnam’s market regulator rejected Ho Chi Minh City Stock Exchange’s proposal to start a new system to clear trades faster, delaying an upgrade that’s been eagerly anticipated by local investors. 

The bourse failed to show that local brokerages are ready to connect to the new trading system, called KRX, that has been scheduled to launch May 2, according to an April 25 statement from the State Securities Commission seen by Bloomberg News. It also didn’t obtain input from relevant parties, the statement said. 

The launch of a new trading system, which would shorten the settlement cycle, is needed to help Vietnam address concerns in its bid to upgrade to emerging market status from frontier market with global indexes. Shares of local securities firms fell on Friday.

“This news may affect investors’ sentiment in the short term,” said Phung Trung Kien, founder of asset management firm Vietnam Holdings Inc. Brokerage stocks would be affected the most as they are expecting the new trading system to boost trading volume, he added. 

Among the other reasons for the rejection, the regulator said the proposal didn’t include input from the bourse’s parent Vietnam Stock Exchange and the Hanoi Stock Exchange. It also didn’t include the opinion of the Vietnam Securities Depository and Clearing Corp., while failing to inform the finance ministry.

SSI Securities Corp. fell as much as 1.8%. Shares of  VNDirect Securities Corp. dropped as much as 2.4% and Vietcap Securities JSC declined as much as 2%. The benchmark VN Index rose 0.3% as of 11:53 a.m. local time. 

Ta Thanh Binh, head of market development for the SSC, confirmed the statement. 

A representative for Ho Chi Minh City Stock Exchange didn’t immediately reply to a request for comment.  

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