Top 10 securities companies prosper amid competition

The competition among securities companies has been stiff in the last 10 years. It has mostly occurred in the brokerage sector.

Analysts note that many businesses which have entered the bourse in recent years are large corporations such as Petrolimex (petroleum product distributor), Vietjet Air (airline), Binh Son (oil refinery), PV Power (electricity) and PV Oil (oil & gas). 

They tend to use services of prestigious securities companies such as SSI and Ban Viet.

However, small securities companies can exist by focusing on certain groups of clients. The companies can provide good transaction platforms at low costs, while clients do not have to pay extra fees for consultancy services.

The securities companies which belong to large financial institutions, including banks or insurance companies, and exploit cheap capital sourced from holding companies, also tend to follow the low-cost operation model to attract clients. These include VCBS, MBS, ACBS and SHS.

VPBS has taken steps to compete with rivals. Its policy on refunding commissions for transactions and exempting fees for derivative transactions has attracted clients.

The securities companies can be classified into two groups. The first has large companies which provide high-quality services with service fees of 0.15-0.35 percent of transaction value. The 0.15 percent fee is only applied to big loyal clients, while the margin lending fee is between 12 and 14 percent.

VNDirect recently set up fees similar to SSI’s and HSC’s. The high fee is associated with high-quality consultancy services and in-depth analysis reports.

The pressure on the securities companies in the first group is not as much as in the second group, which has to force service fees down to scramble for clients.

Financial reports of top five securities companies show a balance in income from brokerage and margin lending. 

Meanwhile, for smaller companies, the incomes mostly come from margin loans to clients, obtained when providing brokerage services. 

In general, most securities companies in the second group act as ‘secondary banks’, or in other words, an intermediary capital channel.

The Vietnamese stock market has been added to MSCI’s watchlist for upgrading from frontier to emerging. If this happens, experts estimate that at least $4-6 billion worth of foreign capital would flow into Vietnam.

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Mai Chi