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SSC allows trading transfer from HOSE to HNX to reduce overloads
The State Securities Commission (SSC) has instructed the transfer of transactions of listed shares from the Ho Chi Minh City Stock Exchange to the Ha Noi Stock Exchange to alleviate system overloads which have troubled traders in recent times.
This instruction was recently sent to the two stock exchanges and the Viet Nam Securities Depository (VSD) following the approval of the Ministry of Finance.
This new mechanism came into force yesterday.
The SSC has asked the Ha Noi Stock Exchange (HNX) to receive and process transactions from HCM City’s bourse (HOSE) without reviewing the documents according to the new listing procedure.
Listed companies wishing to transfer the transactions of their shares from HOSE to HNX must file a request together with a resolution of the company’s board of directors or of the general shareholders’ meeting to be sent to the two bourses.
The mechanisms for trading, trading supervision, listing management, reporting and information disclosure will follow the regulations on Ha Noi’s bourse.
HOSE and HNX will co-ordinate to supervise the transactions of these stocks to ensure continual supervision.
According to the SSC’s guidance, shares of the companies in the VN-Index will be temporarily removed from the HOSE's VN-Index during relocation time. Shares in the VN30 basket are temporarily not subject to this transfer.
The regulatory body also requested HNX, HOSE and VSD urgently handle procedures for companies to transfer transactions similar to the cases of transferring listings that have been done so far. At the same time, the two bourses need to publicise this information to the enterprises and investors.
SSC will inform the termination of this mechanism after the technology solution is ready to tackle congestion in HOSE's trading system.
Since December last year, there was a phenomenon that some trading orders made through securities companies could not be sent to HOSE’s trading system. The order congestion, suspension and slow processing took place before and after the Tet (Lunar New Year) holiday when liquidity suddenly increased by about VND14-17 trillion (US$600-$730 million), affecting many investors’ trading.
The investigations pointed out a number of reasons for the problem but mainly blamed the limited designed capacity of HOSE’s trading system.
To tackle the problem in the short term, HOSE has adopted several measures to optimise the volume of trading orders logged into the system such as increasing the lot size from 10 to 100 shares/lot from January 4 to alleviate pressure on odd-lot trades.
It has requested securities companies review and limit errors arising from the company to avoid negative impacts on the system during peak trading times.
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