Day-trading could benefit individual customers

Friday, Mar 04, 2016 08:15

"Day-trading would benefit both listed companies and brokerage firms as market trading liquidity would rise, helping listed companies issue shares more easily and boosting revenue for securities firms" said Chung. — VNS Photo Gia Vi

HA NOI (Biz Hub) — Top brokerage companies with a large number of individual customers will benefit from day-trading as individual customers have high demands within a trading session, said a securities official yesterday.

Day-trading is a new instrument that allows investors to buy and sell shares in a single company on the same trading day. Day-trading is regulated in the Circular 203/2015, which was issued in late December 2015 by the Ministry of Finance.

Duong Van Chung, Military Bank Securities Corporation's Head of Investment Division, said during an online talk that individual customers may see day-trading as an opportunity to make more money. However, they are likely to suffer losses as their earnings depend on share prices and on the market conditions during the trading session.

In addition, day-trading would benefit both listed companies and brokerage firms as market trading liquidity would rise, helping listed companies issue shares more easily and boosting revenue for securities firms, he said.

He said that brokerage firms should be prepared with a large amount of shares to provide for individual customers, and ensure a risk management mechanism in order to manage trading activities.

Le Duc Khanh, Maritime Securities Incorporate's Head of Strategic Investment Division, said that day-trading would help improve market liquidity, attract more investors to participate in the market and help put Viet Nam on the global stock markets.

Individual investors, whose fund is between VND500 million (US$22,300) and VND2 billion ($89,300), would have great interest in day-trading activity, and brokerage firms which meet the requirements of day-trading would see an increase in their market shares in the future, he said.

"However, brokerage companies should try to conduct some tests in the early stages instead of getting totally involved in day-trading activity as there are a lot of risks with this new product," Khanh said.

The stock market and its participants should not expect too much from day-trading as it was just a new tool, which did not have comparative advantages over other stock trading instruments, Bui Nguyen Khoa, BIDV Securities Corporation's Head of Macro Economics and Markets Division, said, and added that profits that investors could earn depend on various conditions such as company's risk management.

Stepping up IT

Securities companies should develop their own IT systems or import products from overseas suppliers in order to prepare for day-trading activities, Nguyen Son, State Securities Commission's Head of Market Development Department said.

It could take about six months to a year for securities firms to get their IT systems ready, he said. Securities firms must take the decisive role now, especially after the Government had provided them with sufficient conditions for day-trading, he added.

He also said that securities companies should develop their risk management mechanisms in order to deal with risks that come from trading activities and changes on the global stock markets, which could impact Viet Nam's stock market movements.

Son said that the State Securities Commission (SSC) had organised meetings to collect feedback from the two local bourses and market members on the development of Circular 203.

One major change is that SSC has reduced the required equity for a securities firm to carry out day-trading activity to VND300 billion from VND800 billion, he said.

Market participants, including investors, securities companies and management agencies, should strictly comply with the legal system, and the market should also provide some other securities products such as derivatives and covered warrants in order to minimise the chance of risks for the markets, he said. — VNS

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