MoF says no to increasing board lot before incoming stock trading system upgrade
MoF says no to increasing board lot before incoming stock trading system upgrade
The Ministry of Finance (MoF) does not support the Ho Chi Minh City Stock Exchange's proposal to raise the board lot size to 1,000 while an infrastructure upgrade is coming.
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The MoF has just announced a statement on recent congestions on the stock market.
According to the MoF, the major reason leading to the overload and congestion in the last few months lies in the significant increase in demand by market participants. The sudden rush has taken a toll on the old trading infrastructure, while the capacity and readiness of the current system is still limited.
The State Securities Commission (SSC) under the MoF also acknowledged that a brand-new trading system is of utmost importance, so the SSC has requested the Ho Chi Minh City Stock Exchange (HSX) and other relevant agencies to speed up the implementation of a new trading platform.
Moreover, a solid trading infrastructure with support from the Korean Exchange was to be adopted in late 2020, but the health crisis has kept experts from the Korean Exchange from entering Vietnam on schedule.
While waiting for the new system, the MoF has assigned FPT – the local IT giant – to develop an alternative system to host HSX transactions.
This plan is being implemented urgently. The MoF believes the new system would alleviate congestions and technical issues on HSX.
Previously, Le Hai Tra, CEO of HSX, suggested an increase to the board lot size from 100 to 1,000 shares in a bid to solve trade congestions.
“Investors can negotiate with securities companies to sell odd-lot shares. Currently, the MoF has not had a plan to raise trading lots,” the MoF noted.
According to Bao Viet Securities (BVSC), raising the minimum trading slots is a counter-trend movement against the global trend, as many stock exchanges in other countries are trying to reduce the trading slots. For example, the Singapore Stock Exchange reduced the board lot size from 1,000 to 100 in 2015, and its Tokyo counterpart also reduced it by the same amount in 2018.
Nonetheless, assuming a new trading system is not yet ready to be implemented, an increase in the size of board lots could keep the trading system from collapsing and failing trades – both obvious negatives when it comes to trying to promote Vietnam to an emerging market from a frontier market by both the FTSE and MSCI, BVSC noted.
The MoF is looking forward to receiving support from retail and institutional investors to a create sustainably operating domestic stock market.
