Why did the State Securities Commission request a halt to the use of order-placement robots?

We have to stop placing orders using robots and algorithms due to... overload.

In a document recently sent to securities companies, the State Securities Commission (SSC) stated... The State Securities Commission (SSC) has requested securities companies to review and immediately cease the use of automated order placement; and to implement technical measures to prevent automated order placement and require investors to stop using such methods until authorized by the regulatory authority. Accordingly, through the management and supervision of online securities trading services, the SSC has observed a high frequency of using robotic technology for automated online securities trading.

The State Securities Commission of Vietnam (UBCKNN) has ordered securities companies to immediately stop using automated order placement robots.

The automated order placement system causes a surge in orders from securities companies to the Stock Exchange at the same time, leading to the number of orders entering the exchange exceeding the system's design capacity, resulting in system overload.

At the same time, this activity also poses a risk of a chain reaction of failures when the stock market deteriorates, thereby negatively impacting the risk management of securities companies. The State Securities Commission requires securities companies to seriously implement and be fully responsible before the law for the above issues.

Going against the needs and development trends?

The request from the State Securities Commission (UBCKNN) comes amidst a continuous increase in market liquidity in recent months, with consecutive trading sessions exceeding $1 billion. In fact, many securities companies have been applying algorithms or robots to place orders automatically, increasing the frequency of order placement in recent times.

Automated order placement using robots or algorithms is a need and trend among stock market investors.

According to Mr. Nguyen The Minh, Director of Analysis at Yuanta Vietnam Securities Company, the requirements of the State Securities Commission will impact market trading, but not significantly. Because regulations do not yet permit it, automated order placement services are currently only offered in small groups and are not widespread. This service is provided by securities companies to investors to increase trading efficiency or for those who do not have time to directly monitor market transactions.

However, Mr. Nguyen The Minh argued that automated order placement and the use of robots have been applied for a long time worldwide , and there are even many other tools to support investor transactions, especially with the development of artificial intelligence. Therefore, the State Securities Commission could consider proposing a roadmap for its application. Regarding avoiding system overload, it is necessary to quickly upgrade or expedite the deployment of the new information technology system – KRX. At that time, along with the application of many new products and solutions such as shortening transaction times and allowing short selling, automated order placement, and even copy trading services (algorithms that allow investors to copy the transactions of brokerage staff...), will become a demand of investors.

Agreeing with this, the general director of a securities company in Ho Chi Minh City commented that while the issuance of a document requiring the cessation of automated order placement might affect the market, the impact would not be significant. However, the use of robots for order placement is no longer uncommon in the global financial market; in fact, many places consider it an outdated technique and are moving towards using artificial intelligence (AI) with more advanced features. The Securities and Exchange Commission's decision has led investors to believe that the current information technology system is outdated and weak.

Therefore, the most important and necessary thing to do is for the State Securities Commission to quickly bring the KRX information technology system into operation after more than a decade of delays. Infrastructure upgrades must be accelerated to introduce more new trading products to the market. Only then can the upgrading of the Vietnamese stock market be accelerated, attracting more major investors from around the world.

Source: https://thanhnien.vn/vi-sao-uy-ban-chung-khoan-nha-nuoc-yeu-cau-ngung-su-dung-robot-dat-lenh-185230910144815549.htm