Vietnam's new stock trading system KRX to operate in Q2

Vietnam’s new stock trading system KRX is expected to go live in May or June, following a testing phase, according to the State Securities Commission (SSC).

The KRX system is an advanced IT platform designed to manage and oversee trading on Vietnam’s securities market. The Ho Chi Minh Stock Exchange (HoSE) is the primary developer, with the Korea Exchange (KRX) as the project’s partner.

Approved in 2012, the project aims to modernize Vietnam’s stock trading and settlement infrastructure. The HoSE, Hanoi Stock Exchange (HNX), and the Vietnam Securities Depository and Clearing Corporation (VSDC) will all benefit from the system.

The new platform is expected to improve market trading and settlement capabilities, introducing advanced features like same-day trading (T+0), short selling, reduced settlement times, options contracts, and a central counterparty clearing (CCP) system.

The SSC said it has proposed amendments and updates to legal documents and collaborated with various ministries and agencies to gradually meet the criteria of global rating organizations, toward the upgrade of Vietnam’s stock market status from “frontier” to “emerging.”

The Ministry of Finance (MoF) and the SSC have engaged in multiple discussions and dialogues with international financial institutions such as the WB, Morgan Stanley Capital International (MSCI), FTSE Russell, the Global Custody Association (AGC), and the Asia Securities Industry & Financial Markets Association (ASIFMA), all of which have praised Vietnam’s reform efforts.

To further support foreign investors and facilitate the market upgrade, the SSC will continue implementing nine targeted solutions in 2025, focusing on the MoF’s Circular No. 68/2024/TT-BTC, the KRX system, and the central counterparty clearing mechanism.

Experts had noted two major obstacles preventing Vietnam’s stock market from upgrading: the pre-funding requirement and the foreign ownership limit.

Regarding the pre-funding requirement, Vietnam has introduced a technical solution through Circular No. 68/2024/TT-BTC (effective November 2024) that allows foreign institutional investors to not deposit 100% of the margin before trading. Instead, securities companies where foreign investors register their accounts will be responsible for ensuring successful transactions.

However, several issues remain, including a lack of consensus on handling transaction errors, restrictions on the list of securities eligible for the non-prefunding (NPF) service at certain securities companies, challenges with information disclosure, and foreign ownership limits.

While some of these issues have been resolved, others will be addressed once the KRX system runs. The SSC plans to launch the KRX system in May or June 2025 and has asked exchanges and VSDC to announce the new system’s features in April.

However, Circular No. 68 alone is not enough but a central counterparty clearing mechanism is needed. After the KRX system becomes operational, the SSC will introduce a roadmap for implementing the central counterparty clearing mechanism in 2026.

Key tasks include establishing a subsidiary of VSDC, improving settlement processes between VSDC and its members, and allowing commercial banks to become clearing members.

Additionally, the SSC plans to amend and supplement certain regulations to streamline the account opening process for foreign investors and enhance their indirect investment opportunities.

It also intends to establish a policy dialogue group to help foreign investors navigate the market within the legal framework, further supporting the market’s upgrade.

Other proposed measures include implementing an electronic trading system between securities companies and custodian banks, and setting up omnibus accounts.