VIETNAMESE STOCK MARKET

Tutor: Ms. Khong Thanh Dung

Class: Tut 1 TR Students: Ng Duy Thuy Duong Bui Thi Huyen Le Thao Huong Nguyen Dieu Linh Ng Thi Nga Ng Thi Thu Phuong

Trading venue
Trading floor: take place transactions of buying and selling stocks 2 trading venues:

Ho Chi Minh stock exchange (HOSE)

Hanoi stock exchange (HNX)

HOSE
20 July, 2000, started to operate with the name of HOSTC 11 May, 2007, renamed into HOSE

Number of listed stocks in 2011: 284

Benchmark index: Vn index& Vn30 index

HNX
First operation on March, 2005 with the name of HASTC Changed name to HNX on January, 2nd, 2009 Number of listed stocks in 2011: 379

Benchmark index: Hnx index

Functions of 2 stock exchanges

Continuous and ready market for securities Facilitates evaluation of securities Encourages capital formation Provides safety and security in dealings

Regulates company management

Functions of 2 stock exchanges

Facilitates public borrowing Provides clearing house facility Facilitates healthy speculation Serves as Economic Barometer Facilitates Bank Lending

Listing rules
Must be licensed by SSC before publishing stocks Each stock must be listed on only 1 stock exchange SSC makes decision of listed companies

Precedence rules
Price priorities: higher price orders will be executed first Time priorities: at the same price, the first entrance of the order will be matched first

Process of VN stock market

Step1. Opening stock trading account and make deposit
Opening stock account 2 ways - Offline: Go directly to stock agents - Online: go on stock company websites having online registration function Kinds of account: Cash Accounts, Margin Accounts, Discretionary Account, Deposit

Process of VN stock market

Step 2. Selecting stock and setting orders
Choose stock Set orders Order through telephone, telex, fax and electronic computer system

Process of VN stock market

Step3. Transferring the order to Securities Trading Centre
Information on the order is checked by Trading department in securities companies Transfer the order to broker Transfer to Match division of securities centre Take part in auction

Step4. Matching order and informing the result

Order method Call Auction Continuous Auction Matching order rule:

Based on price priority (purchase order with higher price level and selling order with lower price will be given priority to match first) Based on time priority (at the same price ) Informing the transaction result to investors

Process of VN stock market

Step 5: Verify the transaction and payment procedures
Trading division transfers all order notes to accounting department Vietnam Securities Depository operates the payment process Securities trading center send customers a confirmation note

Step 6. Settling the payment

Comparing and verifying transaction results Carrying on settling clearing payment (by Vietnam Securities Depository )

The over-the-counter market (OTC)

Step 1 Opening stock trading account and set order
Open an account Set order

Step 2 Transferring the order to securities companies

Be received by legal representatives (brokers) Be transferred to the Trading departments, which contacts some dealers in order to arrange transactions for customers.

The over-the-counter market (OTC)

Step 3 Informing the result to investors and set payment
Brokers inform result to investors as they find the corresponding needs of buying or selling Set payment Securities are deposited: a buyer or a seller comes to headquarter of the securities company to register change of ownership, 2 weeks latter, the buyer may have a securities ownership certificate

Orders
At opening order (ATO) At closing order (ATC) Market price order (MP) Limit order (LO) : HOSE : HOSE : HOSE : HOSE & HNX

Orders
1. Limit order (LO)
Buy or sell at a specific price A buy limit order can only be executed by the broker at the limit price or lower A sell limit order can only be executed at the limit price or higher

2. Market price order

buy or sell a security at the best price currently available. is simplest order

ATO &ATC
prior to LO order in matching process

Matching method
Regulation
Continuous matching Negotiating/Put through Price unit Trading unit Trading amount Order type Correcting 100 VND Share: 100 units Bond: 10 mil VND Limit Reason: 1. Technical error 2. Price adjusting Before executed. Before executed Share: 5000 units Bond: 100 mil VND Reason: Technical error 15 min before closing

Cancelling

No cancelling without negotiation.

Settlement

T+3

Multilateral T+3 Bilateral T+2 Direct T+1/2/3

Matching method
Continuous order matching method Matching rule: 1st . Price priority: Buy order-high price vs. sell order- low price 2nd . Time priority: Waiting orders with same price: sooner first. 3rd . Executed order: price of the sooner order applied.

Put through/ Negotiating method

Process
+ Parties determined: Investor informs security company -> Exchange confirm + Result posted. + No parties: Investor -> Dealer: Seeking parties+ matching order-> Exchange confirm+ result posted.

Thanks for your attentions