Amid recurring trading system crashes on the Ho Chi Minh City Stock Exchange (HoSE), Minister of Finance Ho Duc Phoc has requested the ministry’s inspectorate to carry out an administrative investigation on the stock exchange.

An investor at a securities firm in Hanoi. Photo: Cong Hung

“Depending on the actual pandemic situation, inspectors would hold meetings with the HoSE,” stated an announcement from the Ministry of Finance.

In the past six months, the frequent overload of orders forcing the stock exchange to halt market trading has been a major source of frustration among investors as such issues have been putting them at risk.

The average transaction value in each trading session on the HoSE is estimated at around VND25-30 trillion (US$1.1 – 1.3 billion), a more than 10-fold increase against the pre-pandemic period in early 2020.

At the morning session on June 1, the strong capital inflows into the market pushed the liquidity to over VND21.7 trillion (US$947.2 million), causing the stock authorities to halt the afternoon session to avoid a potential system crash.

Investors voiced their dissatisfaction as many securities companies did not allow them to modify or cancel transaction orders on HoSE from June 2 to mitigate risks of overload. One week later, such functions have been reopened but only for a certain time frame in the day.

Among short-term solutions, the HoSE has raised the minimum trading lot from 10 to 100 or encouraged public firms to switch to the Hanoi Stock Exchange (HNX).

The HoSE has also announced the imminent test of a new trading system provided by the Korea Exchange (KRX) from June 14-August 8 that is subject to operate this year.

In March, the Vietnam Association of Finance Investors (VAFI) has proposed the privatization of the stock market authorities, namely the Vietnam Stock Exchange and the Vietnam Securities Depository (VSD), saying the move would help enhance their corporate governance capabilities to the level comparable to regional peers.

The VAFI has argued the fact that investors could not place their orders in the stock market as a result of the current issue that has “directly impacted their lawful rights and jeopardized the credibility of the stock market.”