SSC to prohibit the use of automated order placement

September 15, 2023 - 06:25
This activity carries risks and affects the stability of the stock market.
Investors making transactions at an office of a securities firm in Hà Nội. — VNA/VNS Photo 

HÀ NỘI — The State Securities Commission of Việt Nam (SSC) has requested securities companies review and immediately cease the use of automated order placement, according to its latest announcement.

These firms are also asked to implement technical measures to prevent automated order placement and instruct investors to stop using these practices without prior authorisation from regulatory authorities.  

Via the management and supervision of providing online stock trading services, SSC has identified a phenomenon of using robot technology to place large-frequency automated online stock trading orders. This activity carries risks and affects the stability of the stock market.

In particular, the automated placement causes a sudden increase in orders from securities companies to the stock exchange at the same time, surpassing the design capacity of the entire system and causing system overload. 

Moreover, the activity also poses a risk of chain breakdowns when the stock market faces corrections, negatively affecting the risk management practices of securities companies. 

The commission demands that securities companies strictly adhere to and fully assume legal responsibility for the mentioned issues. 

So far this year, the stock market has recovered with gains in liquidity thanks to the strong return of cash flows, while regulatory agencies have carried out measures to manage and develop the market, ensuring stable transactions for investors. 

Market participants are now paying attention to the testing of the information technology system for managing and operating transactions on the Vietnamese stock market.

The final preparation of the system signed by the Hồ Chí Minh Stock Exchange (HoSE) and the Korean Stock Exchange (KRX), is expected to be completed by the end of December.

The Ministry of Finance has directed units to be determined to complete the project and prepare the system to be ready for operation by the end of this year.

The KRX system is expected to bring new products, trading and payment solutions to the Vietnamese stock market, such as intraday trading (T+0), short selling, shortened settlement time, and option contracts. 

As a result, it will create a premise to address bottlenecks and advance the market from frontier to emerging status. — VNS