KRX is an information technology system invested by the Ho Chi Minh City Stock Exchange (HoSE) and designed by the Korea Stock Exchange (KRX). This system has many new features, which are expected to help attract more investors to the market, thereby increasing liquidity.
With the KRX system put into operation, according to HoSE, the most important change is in the two ATO (early session) and ATC (late session) orders in periodic order matching sessions.
1. Changes in ATO/ATC session
When applying the KRX system, the two orders ATO and ATC will no longer have priority over the limit order ( LO ) entered into the system before when matching orders. These two orders will also be displayed at a specific price, similar to limit orders, instead of only being displayed at the price marked "ATO" and "ATC".
2. Change the order modification/cancellation principle
With the KRX system, investors cannot simultaneously edit both price and volume at the same time. Editing price or increasing volume will change the order's time priority; while decreasing volume does not change the order's time priority. During the ATO/ATC session, investors are still not allowed to cancel/edit orders as per the old principle.
3. Replace MP order with MTL on HOSE floor
MP ( Market Price ) orders will be replaced by MTL ( Market To Limit ) orders. When an MTL order is partially matched but not fully matched, the remaining volume will be automatically converted to a LO limit order with a price difference of ±1 tick size compared to the price of the original order.
4. Negotiated trading and odd lot trading
The KRX system allows both the seller and the buyer to enter orders and the other party will be the order confirmer, instead of only the seller being able to enter orders and the buyer being able to confirm like the old system. And once the agreed order has been executed, it cannot be canceled/modified.
The new KRX system allows investors to place odd lots (with LO orders) throughout the session, from 9:00 to 14:45, instead of only being able to place orders during the continuous order matching session and negotiated transactions like the old system.
5. Securities transactions of foreign investors
The KRX system updates foreign investor room as soon as an order is placed on the floor, instead of only updating when foreign orders are matched like the old system.
A boost for the stock market and a stepping stone for upgrading
KRX is expected to help liquidity surge, solving the congestion phenomenon that occurred in 2020-2021. At the same time, it will bring a new breeze to the stock market.
The KRX system is also expected to bring new products, trading and payment solutions to the Vietnamese stock market, such as intraday trading, selling securities on the way back, short selling, shortening payment time... creating the premise to solve bottlenecks, moving towards upgrading the market from marginal to emerging such as central clearing, improving the quality of infrastructure.
Many securities companies expect that the new system will help the average trading value per session of the VN-Index increase by 30-70% compared to the average liquidity of the past 5 years.
VNDirect once predicted that the KRX system, when put into operation, could help increase liquidity capacity by up to 4 billion USD/session. The new system will help reduce settlement time from the current T+2.5, thereby boosting capital turnover.
In many international stock markets, the day trading mechanism (also known as T+0) is applied, allowing investors to buy and sell the same type of securities (or other financial products) many times in the same day for the purpose of speculation to seek profits or to limit risks due to securities prices fluctuating in a downward direction compared to the time of purchase.
With intraday trading, at the end of the day, all investor's securities holding positions will be offset against each other, so there is no obligation to pay securities. Investors only have to pay in cash if they lose or receive money in case of profit.
Short selling is the act of selling stocks that the seller does not own at the time of the transaction. When short selling, the investor borrows securities from a broker's account and sells them in anticipation of a decrease in the stock price, then buys them back at a lower price in the future to make a profit.
According to analysts, T+0 transactions and short selling of stocks will be a boost to help the stock market develop more strongly. This is also the premise for FTSE and MSCI to upgrade the Vietnamese stock market, thereby strongly attracting international capital flows.
When the KRX system comes into operation, the group of securities stocks is assessed to benefit the most thanks to high liquidity.
Source: https://vietnamnet.vn/sang-nay-he-thong-krx-van-hanh-sau-hon-10-nam-chuan-bi-2397655.html
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