Vietnam’s new stock trading system KRX to go live on May 5

Vietnam’s new stock trading system KRX has been approved to begin operation on May 5, according to the Ho Chi Minh Stock Exchange (HoSE).

The KRX system is expected to bring a breath of fresh air to the market and open up many opportunities for investors, the bourse noted in an announcement.

To ensure a smooth and secure system transition and operation, the HoSE has adjusted the effective date for the application of the VNX-Index, VN DIAMOND Index, and VNFINSELECT Index for April from May 5 to April 28.

Similarly, the effective date for updating the free-float ratio, market capitalization, and limits for the HoSE-Index, VNSI, and VNFIN LEAD indices will be moved from May 5 to April 28.

The KRX system is a comprehensive information technology platform designed to manage and oversee trading on Vietnam’s securities market. The HoSE is the primary developer, with the Korea Exchange (KRX) as the project’s partner.

The project, approved in 2012, aims to modernize Vietnam’s stock trading and settlement infrastructure. In addition to the HoSE, the Hanoi Stock Exchange (HNX) and the Vietnam Securities Depository and Clearing Corporation (VSDC) are also key beneficiaries of the KRX system.

The new platform is expected to enhance the trading and settlement capabilities of the market, introducing advanced features such as same-day trading (T+0), short selling, reduced settlement time, options contract, and the availability of a central counterparty clearing (CCP) system.

Previously, the HoSE announced seven expected changes in trading regulations in the Vietnamese stock market when the KRX system is applied.

Firstly, when the KRX system is applied, ATO/ATC (at-the-open/at-the-close) orders will not be given priority over limit orders already entered into the system during the matching session. Ccurrently, ATO/ATC orders are prioritized over limit orders.

Secondly, investors can modify the price or volume of limit orders (LO) that have not been executed or the remaining part of unexecuted orders during continuous matching sessions.

Thirdly, investors will no longer be able to modify or cancel throughput transactions that have already been executed in the trading system.

Fourthly, regarding foreign investor transactions, for matched transactions of stocks and closed-end fund certificates, the foreign investor quota will decrease when a foreign investor’s buy order is entered into the trading system. At present, the quota decreases only after the buy order is executed.

For throughout transactions of stocks and closed-end fund certificates, the foreign investor quota will decrease when a foreign investor's buy order is entered into the trading system for a throughout transaction. Currently, the quota decreases only after the negotiated transaction between foreign and domestic investors is executed.

Fifthly, odd lot transactions will be conducted through periodic matching, continuous matching, and throughput, instead of only continuous matching and throughput as present.

Sixthly, securities with trading restrictions will be available for trading all day and will follow the periodic matching method.

Seventhly, in a periodic matching session, the best three bid and ask prices displayed will be the best remaining bid and ask prices expected after order matching. Currently, the best three bid and ask prices of all orders in the order book are displayed.