FINANCIAL MANAGEMENT

VIETNAMESE STOCK EXCHANGE OPERATION

Lecturer: Ms. Khong Thanh Dung

Tutor : Ms. Dao Mai Huong

Group: 5- Tut 2-FB-12

Members: Phan Thi Lan 1104040048

Nguyen Thi Kieu Oanh 1104040073

Nguyen Thuy Ly 1104040057

Phan Thi Bich Ngoc 1104040068

Nguyen Thi Van Trang 1104000118

Do Le Quyen 0907080040

TRADING VENUESTrading floor: transactions of buying and selling stocks

1. HCM Stock exchange HOSE Established: July 20, 2000 Started to operate under the name HOSTC Renamed: HOSE in Aug 8 2007 Number of listed stocks in 2011: 284

TRADING VENUES

2. Hanoi Stock exchange HNX First operation: March 2005 Starting name: HASTC Renamed: HNX in June 2009 Number of listed stocks in 2011: 379

TRADING VENUES

3. Function of 2 stock exchange venues Organize, operate, regulate securities trading

activities. Interrupt, suspend or cancel trading activities

under the Securities Trading Regulation Inspect and supervise the information of listed

firms and trading members Supply market information related to listing

stocks Deal with traders' problem in trading activities

TRADING VENUES

4. Listing rule Must be licenced by SSC before publishing stocks Stock is allowed to be listed in only one stock

exchange venue SSC make decisions of listed company

TRADING VENUES

5. Precedence rule Price priority: higher price orders will be

executed first Time priority: at the same price, the first

entrance of order will be matched first

TRADING VENUES

MARKET ORDERS• Buy or sell the number share at the price

close to the current market price• Available and liquidity stock• Buy at the only lower price and sell at

higher price

LIMIT ORDER Buy or sell the stock at the price you are

willing to pay. A buying LO : at the given price or lower one. A selling LO : at the given price or higher

one.

ATC & ATO Priority to Limit Order At-The-Opening Order (ATO)

Buy/Sell order at the opening price of a trading day

Valid within periodic matching time Unmatched volume is canceled automatically

when opening price has been determined At-The-Closing Order (ATC)

Buy/Sell order at the closing price of a trading day

Valid while closing price is being determined Unmatched volume is canceled automatically

when closing price has been determined

ATC & ATO Example AAA stock, reference

price = 99. A, B and C is the input order

Buying volume

Buying price

Selling price

Selling volume

5,000 (C)

100 ATO (ATC)

4,000 (B)

99 2,000 (A)

Matching result:- Matching price: 99- Matching volume: 5,000 of which C-B: 4,000- ATO (ATC) had the priority to LO in the matching process

TRADING PROCESS1. Step 1: Registering account and

placing orders Offline: Direct registration in stock agents

For individuals: ID number For organizations: some documents are required

Online: creating account through the stock company’s websites (which have online registration function).

2. Step 2: Transferring the orders to security trading center before taking transactionRequirement:

Investors deposit securities at securities company and ensure a sufficient number of securities placed for sale on the securities trading account.

When setting orders to buy securities, the investors sign deposit funds under the agreement with the Securities company where investors open accounts

STEP3. MATCHING ORDER AND INFORMING THE RESULT

Matching order rule:

• Time priority: same price, the order entered earlier gets the higher priority

• Price priority: two orders entered into the system, the order with the better price gets the higher priority

• Quantity priority: same price and time, priority is given to orders with the larger quantity of shares

Inform the result:

Inform the security company-> investor

STEP 4: CLEARING AND SETTLEMENT

Data of trading results are sent to Vietnam Securities Depository (VSD)

Buyers will receive stock and the seller will receive money on account

“Delivery Versus Payment” principal

Matching rule:

1st . Price priority: Buy order-high price vs. sell order- low price2nd . Time priority: Waiting orders with same price: sooner first.3rd . Quantity priority: orders at same price and time: highest quantity

of shares will be matched first

TRADING METHODS

1. Order matching method (OM)

Periodic order matching (POM)

Continuous order matching (COM)

The method is made on the basis of comparing buy orders and sell orders of stocks in a specified time at single price

The method is made on the basis of comparing buy orders and sell orders immediately when they are inputted into the trading system.

TRADING METHODS

2. Put- through trading method (PT)

The trading method in which investors negotiate with each other regarding to trading conditions and representative staff will enter information into the trading system to recordDuring the time of negotiation, investors can place buying and selling orders following negotiation order matching method

TRADING METHODS

Trading units: no limit

Negotiation orders include: securities code, quantity, price, buying order, selling order, contact phone number.

Minimum trading volume: 5,000 shares 

Price quotation unit: no limit

TRADING METHODS

Time HOSE HNX UPCOM

9:00-9:15 POM (ATC,LO) COM & PT ( LO)

9:15-11:30 COM & PT ( LO)

11:30-

13:00

Intermission Intermission

13:00-

13:45

COM (LO, ATO) COM & PT (LO, ATO)

13:45-

14:45

PT

Vietnamese stock exchanges use the different method at a specific time

TRADING METHODS