New stock trading system from RoK in trial run from next week

An investor follows stock movements on a computer screen. (Photo: VNA)

A trial run of a stock trading system from the Republic of Korea, known as KRX, will be conducted from June 14 next week, Ho Chi Minh Stock Exchange (HoSE) announced on June 10.

HoSE said from June 11, it will send technical specifications via a forum to securities companies.

From June 14 to July 23, a connection trial will be in place. After that, from July 26 to August 6, a functional trial will be applied. In these two trial phases, securities companies will be connected to the new system to freely experiment with its features. Trial time is from 8:30am to 3:00pm on weekdays.

The move aims to tackle system overloads which have troubled investors recently.

The implementation of KRX project was delayed last year due to the COVID-19 pandemic. HOSE would use all available resources to accelerate the implementation of the project this year, it said.

The new system is set up by HoSE with support from the South Korea Exchange, meeting the requirements for Vietnam’s stock trading, including market information, market surveillance, clearing, settlement and depository and registration.

The KRX’s system will be used on the HoSE-affiliated Hanoi Stock Exchange as well.

HoSE will work with the Korean side to trial KRX software installation, completing the WAN connection test with securities companies, performing market-wide data to be ready for the trial plan.

HoSE will also accelerate information security projects to improve the safety, security and confidentiality of the trading system.

Significant high trading volumes on HoSE recently have caused continuous system overloads, troubling investors.

Order cancellation

In order to ease the overload, the State Securities Commission instructed HoSE to temporarily stop the allowance of order amendments or cancellations during trading activities, reasoning that if these orders are stopped, the liquidity on HoSE will be eased by 30 percent.

Large securities companies on HoSE then simultaneously sent notices to customers and asked them not to cancel or amend orders during this period to minimise the risks.

An investor with more than 10 years of trading experience on the Vietnamese stock market said that, in a fair way, the investors have the right to cancel or amend their orders.

“However, the current HoSE system is not capable of handling such numerous orders, with liquidity reaching 25-30 trillion VND per session,” he said.

“Therefore, if too many investors cancel or amend orders at this time, it will lead to a lot of system errors, making HoSE collapse. If this happens, the consequences will be huge for Vietnam's stock market.

“While waiting for KRX to be put into use, investors have no other choice but to co-operate with HoSE.

He said investors needed to adapt to current market conditions and have a trading plan in advance, consider carefully before placing buy and sell orders./.