The launching ceremony of the derivatives market on August 10, 2017. (Source: tapchitaichinh.vn) Hanoi (VNS/VNA) -After two years of operation, smaller securities firms in terms of marketcapitalisation have beaten big players in derivatives brokerage market share.
In the early stages of thederivatives market, which was launched on August 10, 2017, SSI Securities Corp(SSI) held the biggest market share of 28.28 percent. It was followed by sixother brokerage firms.
As of the end of 2018, three morehad joined the market. VNDirect Securities Corp (VNDS) had the biggest share of23.92 percent, followed by HCM City Securities Corp (HSC), MB Securities (MBS),SSI and VPBank Securities (VPS) with 22.4 percent, 16.57 percent, 14.53 percentand 13.61 percent, respectively.
At the end of the first quarterof 2019, VPS topped the derivatives brokerage market share with a holding of37.50 percent. Following were VNDS (15.16 percent), HSC (13.79 percent) and MBS(12.84 percent).
At the end of the period fromJanuary to March, SSI fell to fifth position with a derivative brokerage marketshare of 9.87 percent.
On June 30, VPS continued leadingthe derivatives market in terms of brokerage market share, holding 51.82 percentof the market. It extended the gap with other firms such as VNDS (12.57 percent),MBS (10.65 percent), HSC (7.29 percent) and SSI (6.8 percent).
It is obvious that HSC and SSI –the two largest securities firms in terms of market capitalisation – have losttheir market shares to smaller firms.
It is believed that leadingsecurities firms in the derivatives market have won over customers by offeringfree or lower trading fees to their clients.
To carry out a derivativestransaction, a customer must bear a number of fees such as a services fee,which is paid to the stock exchange, and overnight position management fee andcollateral management fee, which are paid to the Vietnam Securities Depository.
Therefore, any securities firmsthat provide low or free trading fees for investors will lure the attention ofthose investors especially when a majority of derivatives investors areindividual.
According to the Hanoi StockExchange, 91.35 percent of total traded contracts in June (1.96 millioncontracts) belonged to individual investors.
According to Bui Van Huy, HSCdirector of market strategy department, brokerages seem to gain market shares thanksto their assistance in trading fees, thus increasing the market’s tradingliquidity.
Investors may save a lot ofexpenses if they do a lot of trading. But expense is only a short-term factoras other securities firms can win over customers with their advancedtechnologies and high-quality services and products.
It is important for individualinvestors to save on trading expenses, according to Vu Duc Long, VPS directorof investment consultancy department. But in the long term, securities firmswill have to improve the quality of facilities and technologies to meetinvestors’ demand rather than depending too much on fee cuts.
After two years, more than 36million futures contracts have been traded on the Vietnamese derivativesmarket. In the first seven months of 2019, the average trading volume of theVN30-Index futures was 100,000 contracts in each session. The figure was 1.27times the number made in 2018 and 10 times the number recorded inAugust-December 2017.
There are now seven futures onthe derivatives market, including four VN30-Index futures and three governmentbond futures. The government bond futures were launched on July 4, 2019. Aftermore than one month of trading, more than 100 government bond futures contractshave been traded.-VNS/VNA
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