Stock market

Private entity steps in to relieve congestion

Saigon Investment
The entry of the FPT Company last week revealed an unprecedented new solution to the problem of congestion on the trading system on HoSE. So far, when looking at various options and solutions, the setting up of a temporary trading system by a private entity for HoSE had not been taken into account or even considered.

Illustrative photo

Illustrative photo

Overcoming barriers

The meeting chaired by the Ministry of Finance on 9 March finalized a plan to modify the existing trading system of HNX by building a temporary trading system for HoSE with the participation of the private sector. The emergence of this unexpected solution is not impossible. The idea of moving part of stock trading to the trading system of HNX is also a solution similar to that proposed by FPT. In fact, the HNX has also promoted the construction of a separate trading board for stocks on HoSE. This solution can make use of the available resources of one of the two units of the Ministry of Finance without having to equip additional items, at no cost, as well as use technical human resources already on the payroll.

With the proposed solution by FPT, the trading system used for the HNX will be revised and run on a new server system different from the current system at HoSE. Private capital will be mobilized to purchase new hardware server system, and technical staff who previously were deployed for the system on HNX will modify the software. This new revised trading system will temporarily replace the existing trading system at HoSE.

It is immediately apparent that this solution cannot be implemented without approval from the highest level. This is also the reason why in the list of given solutions, there is no similar solution of FPT, that is to say, the choice of a private company to immediately deploy the work without going through normal procedures. Changing the core of a term trading system, which only operates for a few months until the full implementation of the KRX system, is unheard of. Even a simple solution that HoSE immediately buy a new server system is impossible. It is even more impossible for HoSE to raise capital outside the budget to purchase any equipment.

On the other hand, if there is no voluntary financial and human support of private companies to check this solution, it will be impossible to choose such an expensive, time consuming and risky solution. The KRX system is being implemented urgently and this is an overall system to operate the stock market, while the system congestion is an incident occurring in the short term. The solution of replacing the core of the trading system is also just to resolve the present situation. In fact, it is not much different from the solution of lifting lots, changing floors, or depositing transactions.

Question about time

Investors are most concerned about when the solution to replace the core of transactions, so that the market operates normally without congestion. The timeline set by the parties focuses on a period of three to four months. According to a source knowledgeable about the two-floor trading systems, the current interest market is overloaded and set to be replaced, but the stock market management software system generally includes many different components.

The core part of new transactions revised by FPT is the part that is being used on the HNX and will have to connect with many other technology departments available at HoSE, such as information disclosure, transaction monitoring, as well as connection with the Depository Center and member securities companies. Modifying the systems to connect with each other will take time.

Previously, the solution that HNX would create a separate price list for HoSE stocks, is not much different from this task. Securities companies that were consulted all have said that editing would be costly and many units could not have autonomy in technology. Half the securities companies surveyed said that the adjustment time should be at least two months, while the other half said four months. The solution that FPT offered is similar to the solution to create a separate board for HoSE shares on the HNX, only with a new server system located at HoSE instead of using the existing system on the HNX.

The General Director of a securities company said that his company's policy is to support this solution or any solution to combat congestion, but the difficulties will be put on the company shoulders. The solution is only short-term, since it was identified from the beginning as a temporary replacement until a new system is available. According to the General Director, if the editing takes upto six months, then after a few months, the effectiveness must be reviewed, as this solution was not taken into account at the outset because the efficiency versus time was too little, with the most worrisome being that if something goes wrong then markets will be interrupted and tens of thousands of billion dong can be affected in trading.

Technically, this means that FPT will receive most of the modification of input and output parameters to suit the existing systems on both HoSE and securities companies. FPT can only partially control the progress of this part. However, a smooth, secure and accurate trading system must undergo a rigorous testing process. This in turn depends on the total number of components connected to the system. In particular, the task of monitoring and disclosing information is paramount, as well as the stability of the new system to connect with many other components not in the same system.

The factors that will arise during implementation cannot be calculated first. Another rather subtle thing is that when the KRX system is complete, it is unclear what the temporary system will be used for. FPT believes that this system can be used as a backup system for KRX. However, an opinion in this area says that KRX is an overall system that manages the entire market, from transactions to monitoring, clearing, and custody. The core of transactions is currently only for connection to the Thai system, and cannot be used for the KRX system.

Nguyen Ha

Other news