The State Securities Commission of Vietnam (SSC), the country’s stock market watchdog, is working on both short- and long-term solutions to address the overload issue when a surge of orders forces the stock exchange to halt trading.

The minimum trading lot would be increased from 10 to 100 shares to avoid overload issue. Photo: Pham Hung.

A report from the SSC confirmed since December 21, 2020, there have been several cases of orders from investors via securities firms that were not sent to the Ho Chi Minh City Stock Exchange (HoSE), home to the majority of large-caps.

“The reason was due to the transaction processing capacity of HoSE that limits the number of transactions per day, while a recent surge of orders has exceeded the expectation of the market,” noted the SSC.

In a bright note, the fact that a sharp increase in the number of investors and orders in the final months of last year proved their strong belief in Vietnam’s economic outlook amid the country’s effective containment of the Covid-19 pandemic.

Vietnam was among a handful of countries in the world that delivered a positive economic growth of 2.91% in 2020, and the government targets an economic rebound of 6.5 – 6.8% in 2021.

“This is a significant factor contributing to a positive sentiment among investors and continuing  to attract investment capital into the stock market,” stated the SSC.

Data from the General Statistics Office (GSO) revealed the amount of capital poured into Vietnam stock market surged 20% in 2020 to VND383.6 trillion (US$16.64 billion). The average transaction value in the stock market is estimated at VND7.05 trillion (US$304.8 million) per session, up 51.5% year-on-year.

Meanwhile, the number of new investors soared by 109% in 2020 against the previous year.

To ensure the smooth operation of the stock market, the SSC requested related agencies to optimize the transaction process by increasing the minimum trading lot from 10 to 100 shares, starting from January 4, 2021.

The SSC also urged securities firms to prevent their internal errors or limit automatic transaction.

For mid-term, the HoSE is tasked with upgrading the transaction backup system to ensure the safety of the system until the new IT system for the stock market with support from the Korea Exchange (KRX), South Korea’s bourse operator, is put into operation.