Merging stock exchange: reducing costs, increasing the competitive power

Stock exchanges

According to Mrs. Ta Thanh Binh, Director of the Securities Market Development Department, the State Securities Commission, the scheme of merging Hanoi Stock Exchange and Ho Chi Minh Stock Exchange into the Vietnam Stock Exchange - the parent company of HNX and HoSE. The charter capital of the Vietnam Stock Exchange will be 3,000 billion VND, which will be transferred from two sub-exchanges.

Mrs. Ta Thanh Binh said that, currently, the model of segregation of stock exchanges has some disadvantages, such as unclear market delimitation and goods; the trading system of two stock exchanges is independent and different, causing costly social resources and costs for the members participating in the system, and costly for investors. Besides that, many departments have occurrences of overlaps, for example research and development departments, administrative departments, and international cooperation departments,...

The representative of the State Securities Commission affirmed that the merger of the two stock exchanges will overcome the internal problems of the market in order to delineate the market, reduce costs for the system and to investors.

"According to the world trend, the merger of stock exchanges aims at increasing competitiveness on the international level, reduces costs for investors, and increases market size. At the same time, the merger of 2 stock exchanges will maximum facilitation for in-depth development,” said Mrs. Ta Thanh Binh.

According to the State Securities Commission, the Vietnam Stock Exchange will focus on aspects such as product development; acting as a focal point to join international organizations (currently both departments are members of international organizations); management and development of a unified information technology system. Meanwhile, the two stock exchanges will focus on the operation of the stock exchanges for the goods under the roadmap of restructuring and eliminating overlapping tasks.

Illustrating specifically the objectives of the proposed scheme, the representative of the State Securities Commission of Vietnam said, in the past, Japan had Tokyo Stock Exchange (established in 1818) in order to trade large stocks in the Japanese market, and Osaka Stock Exchange (2nd largest) to focus on derivative products. In 2013, the Tokyo and Osaka Stock Exchange merged into the Japan Securities Trading Group (JPX) by following the parent-subsidiary model, in that the Tokyo and Osaka Exchange are still independent units and manage separate market segments.

The model of merging stock exchanges in countries such as Japan, Korea and Singapore has been investigated by the State Securities Commission of Vietnam and applied to the scheme.