HOSE to Pilot Market Order (MP)

The Hochiminh Stock Exchange (HOSE) will pilot the market order (MP) trading in three months starting from July 2, 2012 after it obtained the approval from the State Securities Commission of Vietnam (SSC) at the Official Dispatch No. 1658/UBCK-PTTT dated May 22, 2012.

A market order is an order to buy or sell a stock at the best available price.

Generally, this type of order will be executed immediately. However, the price at which a market order will be executed is not guaranteed. It is important for investors to remember that the last-traded price is not necessarily the price at which a market order will be executed. In fast-moving markets, the price at which a market order will execute often deviates from the last-traded price or “real time” quote.

Order-matching principles:

1. When a buy order is entered the trading system, it will be executed immediately at the lowest available price and the sell order will be executed immediately at the highest available price. If the quantity of such a market order is not fully filled, the market order will be the buy order at the next higher price available or the sell order at the next lower price available.

2. If the quantity of market order is impossibly filled out because the counterpart orders run out, the buy market order will become a buy limit order (LO) at the last-traded price and the sell market order will become a sell limit order at last-traded price.

In case the last-traded price of a buy market order is the ceiling price or the last-traded price of a sell market order is the floor price, the market order will become a limit order at ceiling or floor prices, respectively.

Characteristics:

– Market order is applied only to continuous order-matching session.

– Market order will be cancelled if there is no corresponding order at the time of being entered into the trading system.

Notes:

A market order is the default option and is likely to be executed because it does not contain restrictions on the buy/sell price or the timeframe in which the order can be executed. Hence, it is important that investors be careful with this type of order.

Because there is a certain lag in the process of execution, the market order may be rejected if the trading system has not completed the process of determining the opening price or the system is preparing the data at the start of the afternoon session.

Examples:

ABC shares (reference price: 14.0; ceiling price: 14.7; and floor price: 13.3) have the following orders in the continuous trading session:

A marker order to buy 8,000 ABC is inputted into the trading system

Traded results: 6,000 shares are traded at 14.1; 2,000 shares are traded at 14.2 (Market order orderly matches with best available prices of the corresponding order).

The order memo will be:

Then, the market order to sell 15,000 ABC shares is inputted into the system.

Resulted results: 8,000 shares are traded at 14.0; 5,200 shares are traded at 13.9. The untraded volume of 1,800 shares of market order is converted into sell limit orders at a price lower than last-traded price.

The order memo will be

Then, the market order to buy 19,000 ABC shares is inputted into the system.

Resulted results: 1,800 shares are traded at 13.8; 1,300 shares are traded at 14.2; and 2,800 shares are traded at 14.7. The untraded volume of 13,100 shares of market order is converted into sell limit orders at the price of 14.7 because the last traded price is 14.7 (ceiling price).

The final order memo will be