What is U floor? How to trade on the exchange? What is the difference between u and otc market? All will be answered by us in detail along with the experience drawn when trading.
Viewing: What is upcom floor
1. What is U-floor
1.1 The reason why Upcom was born
At the end of 2006, a boom in stock exchanges took place. The reason for this is the wave of initial public offerings (IPOs) of state-owned enterprises and the policy of exemption and reduction of corporate income tax.
Many state-owned enterprises were equitized during this period. However, the total number of equitized enterprises allowed to be listed on the stock exchange at the end of 2006 was also not significant.
The shares of unlisted companies, also known as the free market, have had a hot fever and the risk of a bubble in the market.
The free market at this time has a transaction method that is no different from the real estate market. Traders and investors only need to have an ID card, a transfer contract, and a number of free shares to be able to trade freely. Statistics show that the free market has a capitalization several times larger than the official market.
The Securities and Exchange Commission cannot regulate the free market. Therefore, the securities commission decided to establish the U floor with the expectation that all stocks that are trading on the OTC market can be listed on Upcom.
1.2 What is U-Stock Exchange
UpCom exchange was born with the goal of narrowing the free market, expanding the organized trading market, which is regulated by the state, helping investors to trade securities safely and conveniently. U is managed by the Hanoi Stock Exchange.
However, after Ura stock exchange was born, the volume of shares traded on the floor was very low and hardly many investors were interested. Losing companies that were delisted on HOSE and HNX were transferred to UpCom, making U for many years considered a “junk” floor.
However, UpCom is currently trading very actively. Next, we will learn more about the conditions for registering to trade on Upcom.
1.3 Conditions for listing on Upcom
Pursuant to Decision 108/2009 QD-BTC and Decision 108/2015 QD-BTC, companies that want to register for trading at UpCom stock exchange need to meet the following conditions:
Public companies that are not eligible for listing must register for trading on Upcom.
Public companies that are eligible for listing but not yet listed must register for trading on UpCom.
Public companies that have been delisted but still meet the conditions of being a public company (including cases where the company is delisted due to consolidation, stock swap).
Securities are deposited at a securities depository center.
The company must be supported by a securities company.
The registration file for trading on UpCom is as follows:
Application form for securities trading at the Stock Exchange.
Contract of commitment to support according to the form prescribed by the Stock Exchange.
Securities depository certificate issued by the Stock Exchange.
In the process of registering for trading at Upcom, the steps from registering for securities depository to preparing documents are all prepared by enterprises themselves and are responsible for the transparency of information. There is no third party involved in verifying the authenticity of the information provided by the enterprise. However, the financial statements of the business for the previous year will be audited.
After the enterprise submits the application for trading registration, the Hanoi Stock Exchange (HNX) will have a decision to approve or disapprove the business to be listed on Upcom. This decision is made after 5 days for unlisted public companies and 3 days for delisted public companies.
The reference price of corporate shares for the first trading day is decided by the enterprise itself.
2. How to trade at Upcom exchange
2.1 Transaction time
From 9am to 11:30am: open for trading according to the method of continuous order matching and agreement
11:30 a.m. to 1 p.m. break between sessions.
From 13:00 to 15:00: start trading session 2 with continuous order matching method and agreement
2.2 Trading on the u-floor by continuous order matching method
On the U price list, there will be a buyer and a seller. When investors want to trade, they will enter buy or sell orders. If the buy and sell columns have a price match, the transaction will be automatically matched.
2.3 Transactions by agreement
Put-through trading is a method in which investors agree with each other on prices and conditions related to trading U shares and bonds. After that, investors can go to the Stock Exchange for assistance in recording transactions into the system.
2.4 Instructions for viewing Upcom’s stock price list
Step 1: Access the official website providing U price list at https://banggia.hnx.vn/
Step 2: Select U stock menu as shown below
Step 3: The price list of stock codes will be arranged in order from a to z. You can choose alphabetically to easier to track. For example: You want to see the stock codes that start with the letter d, then you select the DEF section as shown below.
Investors can also view the price list by group of businesses with market capitalization as follows:
Hover over the Upcom stock column, then select ULager to follow the large-cap group of stocks. Other groups of stocks operate similarly.
UMedium corresponds to mid-cap stocks.
USmall corresponds to a group of small-cap stocks.
UIndex corresponds to stocks in the basket of UIndex stocks
Agreement trading: stocks traded according to the put-through method
2.5 Order matching rules
Price priority: sellers and buyers will prioritize matching orders first at high prices.
See also: What is Atc – Order Execution Principles Atc
Priority on time: If both sides have the same price and volume, priority will be given to order matching on the side that has the time to place orders first.
2.6 Trading units
Trading unit for even lots: 100 shares/bonds.
For odd lots with volume from 01 to 99 stocks or bonds. The trading unit applies to both continuous and put-through order matching methods. the result of the continuous matching method.
2.7 Quotation unit
Each unit quoted the share price corresponding to 100 dong.
The quote unit is not applicable for bond and put-through transactions.
2.8 Oscillation amplitude
The daily stock price fluctuation range does not exceed ±15%.
New shares listed at trading price on the first day, stocks that have not had transactions for more than 25 consecutive sessions before trading again, the applicable fluctuation range is ± 40% compared to the reference price.
2.9 Reference price
The reference price is calculated as the weighted average of the transaction price by continuous order matching method of the most recent trading day.
2.10 Trading orders
The trading order applied on the exchange is LO (limit order). The time to apply the order is counted from the time the system confirms the order entered until the order cancels or ends the trading session.
2.11 Change or cancel orders in a trading session
During the transaction process, the modification and cancellation of the order is only valid for the original unexecuted order or the remaining volume of the original unexecuted order.
For bulk repairs: the order of precedence in terms of time is applied since the repair order was entered into the system.
In case the repair volume is reduced, the order of priority will not change.
3. Difference between OTC market and Upcom exchange
3.1 OTC Market
Managed in a decentralized manner.
Investors who want to buy shares must go through the self-negotiation method and must participate in associations and groups.
To set a price for shares, investors must negotiate and agree on their own.
The Otc market does not go through an exchange and has many potential risks.
Because of the nature of self-dealing and not going through an exchange, it is difficult to regulate the over-the-counter (OTC) market.
3.2 Upcom Exchange
Managed in a centralized form
It is easier for investors to trade stocks.
The price setting mechanism includes both continuous order matching and self-negotiation methods.
Transactions must go through the exchange, so the risk is low and easier to manage.
4. Trading experience on Upcom exchange
Investors should use the UIndex before making an investment. Because, this index will help investors have a clearer view of the size of the floor.
New investors, should start with stocks located in ULarge. The stocks in this basket of stocks have large capitalization and good liquidity. This helps reduce risks for new investors.
Investors need to carefully analyze the financial statements of the enterprise and forecast indicators to make a decision to choose and buy Upcom shares.
Should not only rely on the UIndex but need to combine with other indexes such as ULarge Index to avoid falling into the trap of “green shell, red heart”.
5. Upcom’s big events
6. Trading size on Upcom exchange
As of May 2018, the U floor has 738 businesses registered for trading. The market capitalization reached 656,436 billion dong, 3 times higher than the market capitalization of HNX at the same time. In 2016, 2017 market capitalization of the U market recorded a record growth of 397% and 123.4%, respectively.
In the first 5 months of 2018, the liquidity of the exchange recorded a record level of 462 billion dong/session. Stocks on U floor increasingly attract foreign investors. There were times when foreign investors were net sellers on HNX but were net buyers on Upcom.
Trading on the U floor promises to continue to attract domestic and foreign investors. UG market makes an important contribution to providing a convenient trading environment for investors.
See also: What is a Logo – Why is it necessary to have a Logo
Hoclamgiau has just sent you the most detailed information about what u are, how to trade as well as the difference between the U and otc market. From the experiences that we have just sent to you, we hope you will soon join this potential market. Please continue to support us by following the latest articles in stock investing.