The effectiveness of securities brokerage activities at phu hung securities corporation current status and the way forward

BANKING ACADEMY THE ADVANCED UNDERGRADUATE PROGRAM FACULTY OF FINANCE GRADUATION THESIS Title: THE EFFECTIVENESS OF SECURITIES BROKERAGE ACTIVITIES AT PHU HUNG SECURITIES CORPORATION: CURRENT STATUS AND THE WAY FORWARD LECTURER: MSc NGO THI HANG STUDENT: DOAN HONG NHUNG CLASS: K20CLCE STUDENT ID: 20A4011192 FACULTY: CORPORATE FINANCE Hanoi, 2021 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014129061021000000 BANKING ACADEMY THE ADVANCED UNDERGRADUATE PROGRAM FACULTY OF FINANCE GRADUATION THESIS Title: THE EFFECTIVENESS OF SECURITIES BROKERAGE ACTIVITIES AT PHU HUNG SECURITIES CORPORATION: CURRENT STATUS AND THE WAY FORWARD LECTURER: MSc NGO THI HANG STUDENT: DOAN HONG NHUNG CLASS: K20CLCE STUDENT ID: 20A4011192 FACULTY: CORPORATE FINANCE Hanoi, 2021 DECLARATIONS I hereby declare that I am the writer of the graduation thesis titled “The effectiveness of securities brokerage activities at Phu Hung Securities Corporation: Current Status and The Way Forward” under the guidance of MSc Ngo Thi Hang All information and data given in my research is authentic to my own work Besides, the materials used in my study have been provided in the references Sign: Doan Hong Nhung Date: i ACKNOWLEDGEMENT I would like to express my deep sense of attitude to people who helped me a lot in finishing my graduation thesis First, I am extremely thankful to Ms Ngo Thi Hang for her valuable guidance throughout the completion of my thesis within the limited time frame Second, I also express my sincere thanks to Phu Hung Securities Corporation for giving me the golden chance to my internship at a wonderful workplace After that, I can open new treasures of knowledge and broaden my experiences to be the best version of me Last but not least, I want to say thanks to my family and my friends who have always willingly helped me out with their abilities Thank you! Doan Hong Nhung ii CONTENTS DECLARATIONS I ACKNOWLEDGEMENT II ABBREVIATIONS VI LIST OF TABLES VII LIST OF FIGURES VIII CHAPTER 1: INTRODUCTION 1.1 Rationale of the study 1.2 Literature Review 1.3 Aims of the study 1.4 Subject and scope of the study 1.5 Research methodology 1.6 Thesis organization CHAPTER 2: THEORETICAL BACKGROUND ON THE EFFECTIVENESS OF SECURITIES BROKERAGE ACTIVITIES IN SECURITIES COMPANIES 2.1 Securities company 2.1.1 Definition and characteristics of the securities company 2.1.1.1 Definition .7 2.1.1.2 Characteristics of the securities company 2.1.2 2.2 Basic operations of the securities company The effectiveness of securities brokerage activities and evaluation criteria 11 2.2.1 Securities brokerage activities and the role of securities brokerage activities 11 2.2.1.1 Securities brokerage activities 11 2.2.1.2 The role of securities brokerage activities 12 iii 2.2.2 The concept of effective securities brokerage activities 13 2.2.2.1 Definition .13 2.2.2.2 Factors impacting on the effectiveness of securities brokerage activities .14 a Internal factors .14 b External factors 16 2.2.2.3 Assessment criteria of the efficiency of the brokerage activities 18 a Quantitative criteria .18 b Qualitative criteria 19 CHAPTER 3: THE EFFECTIVENESS OF SECURITIES BROKERAGE ACTIVITIES AT PHU HUNG SECURITIES CORPORATION 22 3.1 Overview of Phu Hung Securities Corporation 22 3.1.1 General information 22 3.1.2 Organization Structure of Phu Hung Securities Corporation 23 3.1.3 Business Lines 25 3.2 The Effectiveness of the Securities Brokerage Activities at Phu Hung Securities Corporation 26 3.2.1 Quantitative factors 26 3.2.1.1 The total number of accounts 26 3.2.1.2 Service Fee Schedule 28 3.2.1.3 Operating Performance of Brokerage Activities .30 3.2.1.4 Brokerage market share .36 3.2.1.5 Transaction Value .39 3.2.2 Qualitative factors 40 3.2.2.1 Customers’ credit worthiness with service quality 41 3.2.2.2 Quality of the investment consulting service 42 3.2.2.3 Brokers’ qualifications .43 3.2.2.4 Supporting Financial Services 45 iv 3.3 Overall Assessment on the Phu Hung Securities Corporation’s Effectiveness of Securities Brokerage Activities 48 3.3.1 Achievements 48 3.3.2 Drawbacks and the Implying Reasons 50 3.3.2.1 Drawbacks 50 3.3.2.2 The Implying reasons 51 CHAPTER 4: RECOMMENDATIONS TO ENHANCE THE EFFECTIVENESS OF SECURITIES BROKERAGE ACTIVITIES AT PHU HUNG SECURITIES CORPORATION 54 4.1 The development orientation of Vietnam’s securities market in the period of 2020 – 2025 54 4.2 Phu Hung Securities Corporation’s development orientation in the next year 55 4.3 Recommendations to Phu Hung Securities 57 4.3.1 Solutions to expand market share, customer network and to increase transaction value and transaction volume 57 4.3.2 Enhancing capacity management 58 4.3.3 Enhancing the quality of human resources 58 4.3.4 Enhancing the quality of information technology 59 4.3.5 Enhancing service capacity, reliability and customer satisfaction 60 4.4 Proposals on policies of the State Securities Commission 60 CONCLUSION 64 REFERENCES 65 APPENDIX 71 v ABBREVIATIONS Abbreviated name Full name PHS Phu Hung Securities Corporation BSC Bank for Investment and Development of Vietnam SSI Saigon Securities Corporation DAS Dong A Bank Securities Company FPTS FPT Securities Joint Stock Company SEC Securities and Exchange Commission CFTC Commodity Futures Trading Commission SSC State Securities Commission MOF Ministry of Finance FSA Financial Services Agency PPT Proprietary trading VND Vietnam Dong OTC Over The Counter HOSE Ho Chi Minh Stock Exchange HNX Hanoi Stock Exchange UPCOM Unlisted Public Company Market HSC Ho Chi Minh City Securities Corporation VPS VPS Securities Joint Stock Company MSB MB Securities Joint Stock Company KIS KIS Vietnam Securities Corporation VNDS VNDIRECT Securities Corporation VCSC Viet Capital Securities Joint Stock Company SHS Saigon – Hanoi Securities JSC TCBS Techcom Securities Joint Stock Company VDSC Viet Dragon Securities Corporation VCBS Vietcombank Securities Company Ltd EVS Everest Securities Joint Stock Company TPS Tien Phong Securities Corporation KBSV KB Securities Vietnam Joint Stock Company ATSC An Thanh Securities vi LIST OF TABLES Table 1: The total number of accounts at PHS between 2016 and 2020 26 Table 2: Schedule of fees at Phu Hung Securities Corporation 29 Table 3: The comparison of current service fee schedule among securities firms 30 Table 4: PHS’s revenue structure between 2016 and 2020 31 Table 5: Comparing the proportion of securities brokerage’s revenue in total operating profit among securities companies 2016 – 2020 33 Table 6: Brokerage activities’ operating profit and revenue growth rate at PHS between 2016 and 2020 .34 Table 7: Top 10 Securities Firms with the largest market share in terms of stocks and fund certificates in the Vietnam Stock Market 2020 37 Table 8: Top 10 Securities Firms with the largest market share in terms of bonds in the Vietnam Stock Market 2020 38 Table 9: Customers’ value of transactions at PHS from 2016 to 2020 40 Table 10: Criteria to assess “Clients’ credit worthiness with service quality” .41 Table 11: Criteria to evaluate factor “The Investment Consulting Service” 43 Table 12: Criteria to evaluate the factor “Brokers’ qualifications” 44 Table 13: Comparing financial supporting services’ interest rates among securities firms 45 vii LIST OF FIGURES Figure 1: PHS’s Governance Model .23 Figure 2: PHS’s Management Structure .24 Figure 3: Securities brokerage’s revenue and the proportion of securities brokerage’s revenue in total operating profit 2016 – 2020 .33 Figure 4: Revenue, expenses and operating profits from securities brokerage at PHS between 2016 and 2020 35 Figure 5: The debit balance of margin loans at PHS from 2016 to 2020 .46 Figure 6: Cash in advance’s debit balance at PHS 2016 – 2020 47 viii