Vu Thi Kim Lien, Deputy Chairwoman of the State Securities Commission (SSC), said that many securities companies have led themselves to the edge of bankruptcy by lending several thousands of billion VND to clients under repo contracts.

In the last three months, the average trading volume of the stock market was VND40bil per trading session. The average transaction fee securities firms collect from clients is 0.3-0.4% per transaction. As such, a small securities firm can collect VND4-5mil a day, and some only VND100mil a month.

On average, every securities firm needs 25-30 staffs, and the average salary of every staff is VND4mil. As such, the income of VND100mil a month would be only enough to pay for staffs.

Most securities firms are suffering losses due to the prolonged market falls. The more loans firms provide under repo contracts and the more money firms spend to trade shares, the bigger losses they have been suffering.

Meanwhile, the firms’ earnings from other services have also decreased as they do not have many clients these days. As the market keeps falling, a lot of enterprises have cancelled their IPOs or plans to issue new shares. As a result, firms do not have new contracts on guaranteeing for securities issuance, giving consultancy on securities issuance or contracts on securities trading brokerage.

As the HCM City Stock Exchange has been closed for the last two days, securities firms have had to earn their livings from the meagre transactions at the Hanoi Securities Trading Centre.

Financial experts say that there are 90 operational securities firms in Vietnam, and the figure proves to be overly high for such a fledgling market as Vietnam. It is indispensable that small firms will go bankrupt or merged into bigger ones. Thailand previously had 200 securities firms, but the figure has decreased to 50. China once had 2,000, and it now has 70 only. The figure of 50 companies would be more suitable for Vietnam.

They said that those firms which are facing difficulties in operation should shift to operate as the agents specialising in receiving orders from clients for bigger companies. In fact, several firms have been going this way, which allows them to cut expenses and staffs, while still being able to keep clients.

As the operation of securities firms is not satisfactory, the prices of securities firms’ shares have been decreasing dramatically. SSI of Saigon Securities Incorporated has lost 80% in value since it shifted to list on the HCM City Stock Exchange. The price of Hai Phong Securities has also dropped from over VND100,000 to over VND20,000/share in the last five months.

However, securities firms still have every reason to keep their normal operation. If they survive the current difficult period, their prestige on the market will be improved. Moreover, the fact that HASTC will bring the OTC market into operation has also brought the hope that they will have more clients, and thus more turnover.