Exchange expands to 3x daily

Vietnam’s burgeoning stock market plans to raise order matching from twice a day to thrice daily to meet increasing demand from investors, the exchange’s watchdog body has said. The Vietnam Stock Exchange is changing with the times. “Investors have now placed so many orders that brokers can hardly handle them in two sessions, so an increase in order matching is inevitable,” Tran Dac Sinh, director of the Ho Chi Minh City Securities Trading Centre (HSTC), said when he unveiled the plan last week. “The change will possibly start from mid-June this year,” he told Vietnam Investment Review, but declined to give an exact date for the change. He said other share trading rules will remained unchanged. The change is also a preparatory step to develop the trading centre, which was launched in July 2000 and now has 35 listed companies with a market capitalisation of more than $1.5 billion, into a national stock exchange by early 2007, the director said. Under the project, which is to be sent to the Ministry of Finance for consideration by June, the exchange will adopt an automatic order matching approach, which will enable investors to place both market and limit orders. The exchange will operate under the form of a limited liability company in the first three years and then sell shares to the public to transform itself into a shareholding concern. The exchange will be subject to both the Unified Enterprise Law, which will come into force in July, and the Law on Securities, which is expected to be passed next month. It can issue listing conditions and licences as well as supervise stock transactions and the activities of its members. It will also allow investors to trade not only bonds, fund units and corporate shares but also their derivatives like forwards, futures and options, he said. The trading centre now acts both as a regulator and a service provider, which Sinh said was no longer suitable. “The State Securities Commission should serve as a regulatory body while the exchange will be tasked with creating more commodities and supporting transactions to go smoothly,” he said. He said to develop the centre into an exchange was inevitable as many more investors and companies had been joining the market. In preparation for the development, in the first quarter of this year, the trading floor was moved to a larger hall at 45-47 Ben Chuong Duong Street, District 1, which also has better technical facilities. Sinh said a project, in cooperation with domestic and foreign partners, to provide a new, modern trading system is under development. “The new project will enable securities companies to send in more trading orders and the centre to carry out automatic order matching,” said the director. Vietnam’s stock market has seen strong development in recent months, with the benchmark VN-Index rising more than 100 per cent over last year-end period. It broke the old all-time high of 571.04 point set five years ago to close at 591.39 last Friday and experts predict it will breach the 600 level soon. Market capitalisation has increased from a level of $144 million two years ago to more than $1.5bn and is expected to rise by nearly 30 per cent to $2.3bn in June with the expected listing of the Ho Chi Minh City-based Sacombank. No. 758/April 24-30, 2006 By Duong Nguyen - Vietnam Investment Review