KRX missed the appointment with investors again

While the market and investors are excited about the KRX system going live on May 2 as announced by the Ho Chi Minh City Stock Exchange (HoSE), the State Securities Commission (SSC) on the last trading day of April issued an urgent dispatch confirming that there is not enough basis to approve the official operation of this system. Securities investors once again missed the appointment with this system.

Missed appointments again and again

KRX is an information technology system for managing and operating transactions on the Vietnamese stock market, signed by HoSE with the Korea Stock Exchange in 2012. The implementation of KRX is expected to bring a series of positive changes to the domestic stock market such as T+0 trading, short selling, expected options... However, after the signing, the implementation of KRX was "forgotten" for many years for many reasons.

In the period of 2020-2021, when the stock market was in the boom phase, the old system was often congested, KRX was mentioned and restarted later. However, it was not until early 2023, when the Government and the State Securities Commission were determined to upgrade the stock market, that KRX was promoted.

HoSE has begun testing connections with more member securities companies and expects to operate KRX in 2023. In particular, the milestone of operating KRX in December 2023 is mentioned by many people.

The group of stocks of securities companies had a strong breakout wave at the end of 2023 according to investors' expectations. However, when the 12-2023 milestone passed, KRX could not operate, making many investors disappointed.

Since the beginning of 2024, the KRX system has continued to be tested and connected to member securities companies. The results of the continuous leaks of the testing sessions have made investors believe that KRX is about to operate with many new features. Thanks to that, the group of securities stocks has also increased sharply in price, contributing to the market's growth.

At the 2024 annual general meeting of shareholders in April, many shareholders asked the securities company's leaders about the compatibility and official operating timeline of KRX. Responding to shareholders, Ms. Nguyen Thi Thu Huyen, General Director of Rong Viet Securities Joint Stock Company (VDSC), said that KRX will officially operate in early May in accordance with the common spirit of the units participating in the project, if nothing changes.

According to VDSC leaders, all companies participating in the KRX testing in April have completed 100%. When KRX is operational, there will be many new products such as selling pending securities, intraday trading (T+0)... These new features will have a positive impact on market liquidity and help securities companies benefit.

Mr. Nguyen Duy Hung, Chairman of the Board of Directors of SSI Securities Corporation, also "boasted" to shareholders: "SSI is one of the few securities companies that responded to the State Securities Commission that it is ready to go-live the KRX system". According to him, the Government and management agencies have gone in the right direction in implementing KRX and are determined to upgrade the market, because that is a necessary condition for the stock market to develop. "When KRX is operating, it will not bring many new things in the short term, the market will not change much. But in the future, this is the basis for bringing new products to the market, attracting investors" - Mr. Hung acknowledged.

With high expectations, when the State Securities Commission did not agree to allow HoSE to operate the KRX system from May 2, many investors and market members were quite disappointed. Because, in the last week of April 2024, many securities companies excitedly sent notices to customers and investors about being ready to trade on the new system right after the April 30 and May 1 holidays.

Mr. Hoang Thanh (residing in District 4, Ho Chi Minh City) said that he is holding a large proportion of securities company stocks in his portfolio with the expectation that when the KRX system operates and the market upgrade roadmap will help the stock market explode, securities stocks will benefit. "The recent decline of more than 100 points in the market caused the value of my stocks to decrease by 10% - 15% but I have not sold yet. Now the KRX system has missed the deadline, I am quite disappointed and worried, not knowing whether to continue holding this stock line or not" - he wondered.

Investors expect that when the KRX system is operational, there will be many new features and products for the stock market. Photo: Hoang Trieu

Slow and steady?

Meanwhile, some professional stock investors believe that it is necessary to not put KRX into operation when it is not certain.

"It is necessary to ensure carefully before the official operation to avoid incidents that affect the interests of investors. Because if there are problems, who will be responsible? In my opinion, the current system and KRX should be run in parallel for comparison. When it is stable, the management agency will decide to replace it. Otherwise, KRX should be deleted instead of dragging on for more than ten years" - Mr. Nguyen Van An (residing in District 3, Ho Chi Minh City), an investor who has participated in the market for many years, suggested.

Speaking to a reporter from Nguoi Lao Dong Newspaper, Mr. Truong Hien Phuong, Director of KIS Vietnam Securities Company, stated that the delay in operating KRX once again would not affect the market too much, nor would it be a serious problem for investors. Because the goal of operating KRX is to ensure higher safety, lower risk, and smoother transactions compared to current systems.

KRX is the basis for the management agency to add new features and products such as derivatives for each stock code; shortening the transaction time to T+0 or selling off short stocks... "If anything, KRX mainly affects investors' psychology, not necessarily the entire trading process of investors" - Mr. Phuong commented.

According to securities companies, operating KRX is easy but requires simulating many possible situations and solutions. Mr. Phuong stated his opinion: "There must be a smooth connection between the parties involved. Just instability and not being thoroughly handled will make the management agency worried. The caution from the leadership is understandable and this is necessary. A little slower but safer and with a higher absolute level is still better."

Mr. Huynh Anh Tuan, General Director of Dong A Securities Joint Stock Company (DAS), said that the issues raised by the State Securities Commission in the urgent dispatch sent to HoSE about "not having enough conditions to operate KRX" are reasonable. Operating a new securities trading system is very important; when operating, absolute safety must be ensured for the system and for investors.

"The question now is what are the standards for operating KRX? What standards must be met to be able to operate?" - Mr. Tuan expressed his opinion, at the same time suggesting that the management agency needs to complete the legal system for KRX before considering operating. That means investors still have to wait.

"I think investors will not be too disappointed when KRX is not operational yet, partly because they have waited too long and are less excited and expectant. Investors themselves do not know how KRX is different from the current trading system, how it affects the way orders are placed, whether there are any new types of orders, whether it is easy or difficult to place orders, what the hours are, etc.

When investors cannot visualize it, they are not worried. Even when securities companies conduct KRX testing, they just follow and "learn from experience" without any detailed instructions or official written procedures," Mr. Tuan analyzed.

Need closer coordination

Regarding some recent inconsistent directives between the State Securities Commission and HoSE - which may affect market sentiment, Mr. Nguyen Hoang Hai, Vice President of the Association of Financial Investors (VAFI), said that the State Securities Commission needs to closely monitor and coordinate with all market members, from stock exchanges, securities companies, custodian banks... in implementing and operating KRX.

"The State Securities Commission must be an insider, closely monitoring and urging all parties throughout the process, not "waiting for reports and for appraisal". Because, it must closely monitor to promptly direct, resolve or recommend higher-level agencies to resolve..." - Mr. Hai commented.

Source: https://nld.com.vn/krx-lai-lo-hen-voi-nha-dau-tu-196240505201106468.htm