Great expectations are placed on KRX System in the Vietnamese stock market as it continues to upgrade its information technology infrastructure. This not only effectively supports current transactions but also facilitates the expansion of new products and services. This not only helps attract more foreign capital but also promotes the diversification of the Vietnamese stock market. The KRX system plays an important role in transforming the Vietnamese stock market, creating new opportunities and enhancing Vietnam's position in the international financial community.
1. What is the KRX system?
KRX is an information technology system for managing and operating transactions on the Vietnamese stock market, and is expected to be put into operation by the end of 2023. The KRX system plays a role in managing and operating transactions on the Vietnamese stock market, signed by the Ho Chi Minh Stock Exchange (HOSE) with the Korea Stock Exchange (KRX) in December 2012 with a contract value of 600 billion VND.
Previously, the technology system used in the Vietnamese market was purchased and transferred from Thailand. This system was old and often had problems, peaking in mid-2021 when the system was often congested because it could only receive about 900,000 orders, while the market was in a booming phase. FPT Information System Company (FPT IS) has come up with a temporary solution to replace the Thai system while waiting for the KRX to be deployed. FPT's system has increased the number of orders received to about 2 to 3 million orders per day, temporarily solving the problem of order congestion. In addition, the settlement time has also been reduced from T+3 to T+2.5.
By this time, KRX system is being tested by HoSE with member securities companies. As of October 11, 2023, more than 77% securities companies have successfully tested 100% functions of KRX, but only more than 13% companies are ready to deploy the new system.
To recover and grow sustainably, the State Securities Commission and the Ministry of Finance are focusing on many solutions, including upgrading information infrastructure with the launch of the KRX system. However, this project has encountered many difficulties, from complicated bidding documents to the impact of the COVID-19 pandemic and the high security requirements of the new system. The KRX system is expected to be operational in mid-2023, bringing opportunities to enhance the position of the Vietnamese stock market in the international community.
2. Advantages of KRX management system
- Handling command congestion: In the past, the market often experienced order congestion, making it impossible for investors to send or receive order status confirmation. The KRX system has not only improved the number of orders but also the speed of order matching, quickly meeting the demand during times of increased liquidity.
- Shorten payment time: The KRX system is expected to reduce the settlement time from the current system's T+2.5 to T+0, allowing for intraday trading. This will improve liquidity and make it easier for investors to move money between the derivatives market and the underlying market.
- Laying the foundation for new products: In addition to shortening settlement times, KRX provides a platform for the deployment of options products and promotes algorithmic trading such as ultra-short scalping, pairs trading, and grid trading. This variety of financial products attracts capital and provides tools for risk management.
- Improve liquidity: With the KRX operational, market liquidity is expected to increase significantly. Forecasts from experts show that liquidity could reach $4 billion per session, enhancing the flexibility and liquidity of the market.
- Support for market upgrade: The KRX system and the central clearing mechanism (CCP) are important factors in the process of evaluating the upgrading of Vietnam's stock market according to international standards. Their presence helps control settlement risks and bring the market closer to international standards.
3. Benefits that Vietnamese Securities receive from KRX
With the support of the KRX System, the future development of Vietnam Securities is promising and promising. This system brings advanced technologies and professional services, helping to improve efficiency and transparency in securities trading activities.
Vietnam has received many significant benefits from the KRX (Korea Exchange) System. One of the important benefits is the increase in liquidity of the stock market. Thanks to the advanced trading system of KRX, buying and selling stocks has become easier and more convenient than ever.
Furthermore, the presence of KRX has attracted the attention and investment of foreign investors. This brings economic benefits to Vietnam, helps promote the development of the stock market and contributes to the opening and activating of economic relations with other countries.
Not only that, the KRX System has also contributed to improving the trading process in Vietnam. Advanced technology and automation in trading help shorten processing time and make the process more efficient. This not only benefits securities companies but also helps ensure transparency and fairness in the trading process.
Support from the KRX System makes securities trading more convenient and secure. Advanced technology such as Blockchain is applied to ensure the integrity and security of transaction information. At the same time, data analysis tools are also provided to help investors have a clearer and more strategic view when participating in the stock market.
4. Limitations when applying the KRX system
As the KRX system is about to be deployed in the Vietnamese stock market, many investors consider this to be an important step forward. The KRX system brings many special features, of which the ability to trade within a day is expected to be a highlight. Experts and investors hope that this will contribute to increasing market liquidity. With a shortened capital cycle, investors can make more transactions, which also means having to pay more transaction fees.
Among the new products introduced on the KRX system, short selling and T0 trading have attracted particular attention. This could greatly increase stock volatility, especially when previously only derivatives were allowed to be shorted. With the ability to short all stocks, the market could experience sharper and more severe declines.
Additionally, as these new products are introduced, volatility may become more difficult to control than it is currently. This increases risk, especially when combined with the use of margin and ineffective risk management, which can lead to rapid loss of investor capital.
In short, KRX system bring many values, helping the Vietnamese stock market transform from a frontier market to a new format. This system will support the development of many new financial instruments and operations, attract foreign investment and create competitive advantages for the market to grow stronger and stronger.
Source: Onstocks
