Financial managementFinancial management

Vietnamese stock Vietnamese stock exchangesexchanges

Tutor: Ms. Le BinhTutor: Ms. Le Binh

Presenters: Group 4- Tut 1 AC09Presenters: Group 4- Tut 1 AC09

Trading venueTrading venue

Trading floor: take place transactions of Trading floor: take place transactions of buying and selling stocksbuying and selling stocks

2 trading venues:2 trading venues: Ho Chi Minh stock exchange (HOSE)Ho Chi Minh stock exchange (HOSE) Hanoi stock exchange (HNX)Hanoi stock exchange (HNX)

HOSEHOSE

20 July, 2000, started to operate with the 20 July, 2000, started to operate with the name of HOSTCname of HOSTC

8 August, 2007, renamed into HOSE8 August, 2007, renamed into HOSE Number of listed stocks in 2011: 284Number of listed stocks in 2011: 284

HNXHNX

First operation on March, 2005 with the First operation on March, 2005 with the name of HASTCname of HASTC

Changed name to HNX on June, 2009Changed name to HNX on June, 2009 Number of listed stocks in 2011: 379Number of listed stocks in 2011: 379

Functions of 2 stock exchangesFunctions of 2 stock exchanges

Organize, regulate and operate securities trading Organize, regulate and operate securities trading activities;activities;

Interrupt, suspend or cancel trading activities Interrupt, suspend or cancel trading activities under the Securities Trading Regulationunder the Securities Trading Regulation

Inspect and supervise the information about the Inspect and supervise the information about the listed firms and trading members listed firms and trading members

Supply market information and others related to Supply market information and others related to listing stockslisting stocks

  Deal with trader's problems related to trading Deal with trader's problems related to trading activitiesactivities

Listing rulesListing rules

Must be licensed by SSC before Must be licensed by SSC before publishing stocks publishing stocks

Each stock must be listed on only 1 stock Each stock must be listed on only 1 stock exchangeexchange

SSC makes decision of listed companiesSSC makes decision of listed companies

Precedence rulesPrecedence rules

Price priorities: higher price orders will be Price priorities: higher price orders will be executed firstexecuted first

Time priorities: at the same price, the first Time priorities: at the same price, the first entrance of the order will be matched firstentrance of the order will be matched first

Process of VN stock marketProcess of VN stock market

Step1. Open stock trading account and setting orderStep1. Open stock trading account and setting order Opening stock account Opening stock account 2 ways - Offline: Go directly to stock agents2 ways - Offline: Go directly to stock agents

- Online: go on stock company websites having online - Online: go on stock company websites having online registation functionregistation function

Kinds of account: Cash Accounts, Margin Accounts, Discretionary Kinds of account: Cash Accounts, Margin Accounts, Discretionary Account Account

Setting orderSetting order Kinds of order: MP, LO, ATO, ATCKinds of order: MP, LO, ATO, ATC

Step2. Transferring the order to Securities Trading CentreStep2. Transferring the order to Securities Trading Centre Information on the order is checked by Trading department in Information on the order is checked by Trading department in

securities companies securities companies Transfer the order to broker Transfer the order to broker Match division of securities centre Match division of securities centre Take part in auctionTake part in auction

Step3. Matching order and informing the resultStep3. Matching order and informing the result Matching order rule:• Based on price-time priorityMatching order rule:• Based on price-time priority

(the best price orders are matched first)(the best price orders are matched first)

• • Based on ascending time orderBased on ascending time order

(at the same price )(at the same price ) Informing the transaction result to investorsInforming the transaction result to investors

Step 4: Verify the transaction and payment proceduresStep 4: Verify the transaction and payment procedures Trading division transfer all order notes to accounting departmentTrading division transfer all order notes to accounting department Vietnam Securities Depository operate the payment processVietnam Securities Depository operate the payment process Securities trading centre send customers a confirmation noteSecurities trading centre send customers a confirmation note

Step 5. Settling the paymentStep 5. Settling the payment Comparing and verifying transaction results Comparing and verifying transaction results Carrying on settling clearing paymentCarrying on settling clearing payment

(by Vietnam Securities Depository )(by Vietnam Securities Depository )

//

III. OrdersIII. Orders

-At opening order (ATO) : HOSE-At opening order (ATO) : HOSE

- At closing order (ATC) : HOSE- At closing order (ATC) : HOSE

- Market price order (MP) : HOSE- Market price order (MP) : HOSE

- Limit order (LO) : HOSE & HNX- Limit order (LO) : HOSE & HNX

1. Limit order (LO)1. Limit order (LO)

Buy or sell at a specific price Buy or sell at a specific price A buy limit orderA buy limit order can only be executed by can only be executed by

the broker at the limit price or lower the broker at the limit price or lower A A sell limit ordersell limit order can only be executed at can only be executed at

the limit price or higher the limit price or higher

2. Market price order2. Market price order buy or sell a security at the best price buy or sell a security at the best price

currently available. currently available. is simplest orderis simplest order

ATO &ATCATO &ATC

prior to LO order in matching processprior to LO order in matching process

Matching methodMatching methodRegulationRegulation

5. Sửa lệnh giao dịch thỏa thuận5. Sửa lệnh giao dịch thỏa thuận

Continuous matchingContinuous matching Negotiating/Put throughNegotiating/Put through

Price unitPrice unit 100 VND100 VND --

Trading unitTrading unit Share: 100 unitsShare: 100 unitsBond: 10 mil VNDBond: 10 mil VND

--

Trading amountTrading amount -- Share: 5000 unitsShare: 5000 unitsBond: 100 mil VNDBond: 100 mil VND

Order typeOrder type LimitLimit --

CorrectingCorrecting Reason: 1. Technical Reason: 1. Technical errorerror 2. Price 2. Price adjustingadjustingBefore executed.Before executed.

Reason: Technical errorReason: Technical error

15 min before closing15 min before closing

CancellingCancelling Before executedBefore executed No cancelling without No cancelling without negotiation.negotiation.

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

Matching methodMatching methodContinuous order matching methodContinuous order matching method

Matching rule:1st . Price priority: Buy order-high price vs. sell order- low price2nd . Time priority: Waiting orders with same price: sooner first.3rd . Executed order: price of the sooner order applied.

Put through/ Negotiating methodPut through/ Negotiating method

ProcessProcess+ Parties determined: + Parties determined: Investor informs security company -> Investor informs security company ->

Exchange confirm + Result posted.Exchange confirm + Result posted.+ No parties:+ No parties: Investor -> Dealer: Seeking parties+ matching Investor -> Dealer: Seeking parties+ matching

order-> Exchange confirm+ result posted.order-> Exchange confirm+ result posted.

      

ReferencesReferences

http://forum.thuchanhchungkhoan.com/showthread.php?t=1795http://www.stock-market-investors.com/stock-investing-basics/stock-order-types.htmlhttp://lastbull.com/order-routing-order-matching-in-stock-markets http://lastbull.com/types-of-orders-in-stock-trading-based-on-price/http://lastbull.com/types-of-orders-in-stock-trading-based-on-price/ http://blog.namdan.net/2010/06/cac-lenh-trong-au-tu-chung-http://blog.namdan.net/2010/06/cac-lenh-trong-au-tu-chung-

khoan.htmlkhoan.html http://www.investopedia.com/terms/m/marketorder.asphttp://www.investopedia.com/terms/m/marketorder.asp http://www.investopedia.com/terms/a/at-the-opening-order.asphttp://www.investopedia.com/terms/a/at-the-opening-order.asp https://www.fxpro.com/vn/help/fxpro-xtrader-what-market-orderhttps://www.fxpro.com/vn/help/fxpro-xtrader-what-market-order http://www.wisegeek.com/what-is-a-market-order.htmhttp://www.wisegeek.com/what-is-a-market-order.htm http://en.wikipedia.org/wiki/Order_%28exchange%29http://en.wikipedia.org/wiki/Order_%28exchange%29

Lệnh mua Lệnh bán

Buy Sell

Price Price Amount

Amount Price Price Amount

1000 a 52 55 2000 c

3000 d 51 53.5 3000 f

1500 e 50.5 53.5 2000 b

53 9000 g

A, b, c, d…h: time priority <-> a first, b second, c third

New order: Buy 10,000, price=54 (h)-> Executing: 9000 x 53 (G-H) 1000 x 53.5 (B-H)