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Move to up minimum shares per order at HoSE sparks concerns

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With the minimum trade of 10 shares, investors can join the market with their small capital of between VNĐ5 million (US$217) to VNĐ30 million. Photo laodong.vn

Move to up minimum shares per order at HoSE sparks concerns

The Vietnam Association of Financial Investors (Vafi) objected to increase the minimum trade from 10 shares to 100 shares.

In a document sent to State Securities Commission (SSC) and the Ho Chi Minh City Stock Exchange (HoSE), Vafi said: “The minimum trading lot of 100 shares will prevent the development of the stock market, eliminating the chance of an investment trial up to 10 times, pushing low-capital investors into poor quality shares as the blue-chip shares become too expensive.”

“The minimum of 100 shares per order was introduced since the beginning of the HoSE 20 years ago, however, after the initial period of implementation, the amount proved to be a hindrance to the development of the stock market because new investors with no experience would face a big risk with such a big amount.”

As Vafi considered a block of at least 100 shares would pose a risk to new investors, it signed a proposal to the SSC to propose a 10-fold reduction of the minimum trading lot to 10 shares per order in 2002, which is applied in the current trading.

With the minimum trade of 10 shares, investors could join the market with small capital of between five to 30 million dong ($216 to $1,239).

It said 100 shares will make it much more difficult to join the market, of which they must buy at least five stocks to create a portfolio in the exchange.

According to Vafi, the policy of increasing the minimum trading lot to 100 shares per order from HoSE, which aims to increase the technique of placing orders in many securities firms and local exchanges in the market, hindered the development of the market, causing losses for new investors.

The association said the reason was not valid because the size of the stock market was far smaller compared to other countries in the region and around the world, adding: “In order not to have transmission problems, the local stock exchanges and the custody centre must improve human resources, especially IT [information technology] experts.”

Vafi recommended securities companies pay attention to investing in trading software, with small ones that do not have enough financial resources developing modern software to limit the number of trading customers or restructure the assets for better transmission.



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