HoSE considers suspending amendment and cancellation orders while trading

Saturday, Mar 06, 2021 06:52

Investors at the Ho Chi Minh Stock Exchange. HoSE said it would listen to all feedback from investors regarding new solutions. — VNA/VNS Photo Hua Chung

The Ho Chi Minh Stock Exchange (HoSE) is considering stopping the allowance of order amendments or cancellations during trading activities to reduce system overloads which have troubled traders recently, the bourse said.

The proportion of amendment and cancellation orders has tended to increase. If these orders are stopped, the liquidity on HoSE will be eased by 30 per cent. This solution can be implemented immediately without any technical intervention, said HoSE.

HoSE said that this solution had certain impacts on investors’ behaviour as they will consider carefully before placing buy and sell orders. Algorithmic trading orders will be harder to execute due to the higher risk. At the same time, split spread orders will also be reduced.

However, according to the general manager of a securities company, the suspension of cancellation and amendment orders can be applied theoretically, but in terms of service and experience, it will not be really applicable.

“Even at banks, when customers write incorrect payment orders, they can still leave and re-correct,” he said.

An individual investor said that in case this solution is applied, if the order is placed wrongly, trading may become troublesome because it cannot be modified.

“We have to watch the electronic board all day if we want to trade because it is impossible to predict market movements during the session,” he said.

HoSE said it would listen to all feedback from investors regarding this new solution.

According to HoSE, in January 2020, the total number of amendment and cancellation orders on the bourse reached nearly 770,000 out of a total of more than 2.7 million orders, equivalent to an average of more than 45,000 cancel orders among over 160,900 orders per day.

Thus, the number of amendment and cancellation orders accounted for more than 28 per cent of the total trading orders. The number of trading days per month fluctuates from 15 to 23 depending on national holidays.

In June 2020, there were nearly 2.6 million amendment and cancellation orders out of a total 8.4 million transaction orders, accounting for 31 per cent.

In December 2020, the number of amendment and cancellation orders soared to nearly 4.4 million out of a total 13.9 million transaction orders, accounting for 31.76 per cent.

In February this year, although there were only 15 trading sessions, there were still more than 3 million amendment and cancellation orders, out of a total of nearly 9.1 million transaction orders, accounting for 33.05 per cent.

System overloads took place before and after the Tet (Lunar New Year) holiday when liquidity suddenly increased to about VND14-17 trillion (US$600-$730 million) per session, affecting many investors’ trading.

The sudden increase in liquidity recently is unpredictable, causing undesired interruptions in trading, said Le Hai Tra, Chairman of the Board of Members of HoSE.

To tackle this issue, the State Securities Commission said it was speeding up the implementation of a new information technology system for the entire stock market, known as KRX.

However, due to the impact of the COVID-19 pandemic, the implementation of the new system was delayed and if the disease progresses, it will be difficult to continue the plan.

In another move to ease system overload, the State Securities Commission has instructed the transfer of transactions of listed shares from the Ho Chi Minh City Stock Exchange to the Ha Noi Stock Exchange.

However, so far, no companies listed on HoSE have volunteered to switch trading to the HNX. — VNS

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