INTRODUCTION
Rationale of the study
In 2021, the Vietnamese stock market celebrated its 21st anniversary, serving as a vital channel for medium and long-term capital mobilization that boosts investment and supports Vietnam's industrialization and modernization efforts As reported by the Vietnam Securities Depository, the stock market saw significant growth in 2020, with over 2.77 million investment accounts, reflecting a 16.67% increase from 2019, while foreign investor accounts rose by 8.86%.
Securities companies serve as vital intermediaries in the evolving stock market, with domestic firms enhancing their roles by improving the effectiveness of their brokerage services As investors demand higher service quality, the enhancement of these brokerage services not only boosts the profitability of securities firms but also contributes significantly to the growth of the Vietnamese economy.
Phu Hung Securities Corporation (PHS) is recognized as a reputable firm in Vietnam's stock market, evidenced by its successful operations During my internship at PHS, I observed that, like many securities companies, it has yet to fully leverage its internal capabilities to develop a professional and effective brokerage model With numerous competitors in the market, PHS faces significant challenges in attracting customers, achieving sustainable profits, and enhancing its market position Consequently, identifying strategies to improve the effectiveness of securities brokerage activities is vital for the operational success of both PHS and other securities firms.
For above reasons, I decided to conduct my undergraduate research titled:
“The Effectiveness of Securities Brokerage Activities at Phu Hung Securities Corporation: Current Status and the Way Forward”
Literature Review
To enhance the efficiency of securities brokerage services in Vietnam's competitive economic landscape, it is essential to address the intensifying rivalry among securities firms for market share in the stock brokerage sector Consequently, numerous studies have been conducted to evaluate the effectiveness of securities brokerage activities.
M Sadiq Sohail (2017) emphasizes the importance of understanding investor behaviors to enhance the competitiveness of brokerage firms By empathizing with customers, securities companies can improve their brokerage services' efficiency Sohail's research on investor satisfaction highlights the necessity of elevating the quality of securities brokerage activities, which ultimately helps individuals achieve successful investments and generate returns in stocks and commodities.
A study by Chan et al (1991) highlights the significance of understanding customer behaviors, particularly in the context of investors' selection criteria for brokerage firms By analyzing these criteria, the authors reveal insights that can enhance the quality of brokerage activities and enable more effective segmentation by brokerage companies This research was conducted within Hong Kong’s stock market, underscoring its relevance to the region's financial landscape.
Yang and Fang (2004) conducted a content analysis to explore securities brokerage activities, revealing a significant relationship between customer satisfaction and the improvement of brokerage services Additionally, they identified that the quality of information systems is a crucial factor in meeting online investor needs.
The three studies employed quantitative methods and involved a significant number of observations However, they focused on evaluating securities companies in general rather than specific firms, and the authors did not provide detailed measures for their assessments.
Studies undertaken in Vietnam in terms of the effectiveness of securities brokerage activities are both quantitative research and qualitative research
Nguyen Thi Minh Nguyet (2007) conducted a study on the current state of securities services at the Bank for Investment and Development of Vietnam (BSC) Securities The analysis focused on key factors such as the total number of accounts, brokerage market share, brokerage revenue, and securities support services to evaluate brokerage performance The findings indicate the need to enhance the brokerage process, improve human resource quality, and develop suitable ancillary products to optimize services.
Nguyen Nhu Quynh (2011) analyzes the current state of brokerage activities at Rong Viet Securities Company through qualitative methods, highlighting key quantitative metrics that influence the effectiveness of these activities, including revenue, total account numbers, and transaction value Additionally, the author proposes several solutions to enhance the brokerage operations at Rong Viet Securities Joint Stock Company.
Research evaluating the quality of securities brokerage activities at Sai Gon Thuong Tin Securities JSC has been conducted, with Truong Van Tri (2012) providing a comprehensive theoretical framework for understanding securities companies and their brokerage functions The study identifies key challenges faced in brokerage activities and offers targeted solutions to enhance their effectiveness.
Bui Thanh Tra (2013) employs the SERVQUAL model in a quantitative research study involving over 200 investors to assess the quality of brokerage services at Saigon Securities Corporation (SSI) Utilizing SPSS software for analysis, the study identifies limitations and underlying causes affecting service quality Based on these findings, the author proposes measures aimed at enhancing brokerage activities at SSI.
(2020) also carries out a research on the solutions to promote brokerage activities at SSI However, this study is a qualitative research
In her 2014 article, "Solutions to Improve the Quality of Securities Brokerage Activities at Dong A Bank Securities Company (DAS) in the Period 2011 – 2013," Pham Thi Lan highlights several shortcomings in stock brokerage quality, noting that while the number of new accounts is on the rise, only a small fraction engage in frequent trading Additionally, she points out that some brokers lack the necessary qualifications to deliver high-quality service To address these issues, the author proposes various solutions aimed at enhancing brokerage activities at DAS.
The effectiveness of brokerage services at securities firms hinges on factors such as competence, information technology, credibility, and empathy, as highlighted by Tran Thi Nhu Chau (2009) Additionally, Dang Quoc Tu (2007) emphasizes three key components that enhance brokerage efficiency: core service quality, transaction methods, and staff courtesy While these studies primarily focus on the overall operational efficiency of securities companies, they do not specifically address the quality of securities brokerage services.
Through the analysis of quantitative and qualitative indicators, Phan Thi Hong
According to Ha (2016), the quality of brokerage services at FPT Securities Joint Stock Company (FPTS) falls short of expectations due to factors such as insufficient human resources and inappropriate customer policies To address these issues and enhance FPTS's brokerage activities, the author proposes several strategic solutions.
Research in Vietnam highlights the current state of securities brokerage services, aiming to identify effective solutions to enhance brokerage activities within securities firms However, the studies have struggled to pinpoint the appropriate measures to address existing challenges.
Currently, there is a lack of research on the quality of brokerage activities at Phu Hung Securities Corporation (PHS) This study aims to provide a comprehensive qualitative analysis of PHS's brokerage services, with the goal of offering recommendations to improve their effectiveness from 2020 to 2025 The research will assess PHS's brokerage effectiveness by analyzing quantitative factors such as the total number of accounts, service fee structure, customer investment outcomes, revenue, expenses, profits from brokerage activities, market share, transaction value, as well as qualitative criteria including service quality and customer satisfaction.
Aims of the study
This graduation thesis aims for:
- First, systematizing theoretical background on the effectiveness of Securities Brokerage Activities in Securities Companies
This article evaluates the effectiveness of PHS's securities brokerage activities, highlighting its current status and future directions It presents a balanced analysis of PHS's achievements and shortcomings, offering an objective perspective on its competitiveness within the stock market.
- Lastly, recommending resolutions to improve the effectiveness of securities brokerage activities for both PHS and other authorities.
Subject and scope of the study
- The subject of the thesis is the effectiveness of securities brokerage activities
- The scope of the research is Phu Hung Securities Corporation (PHS) during the time span from 2016 to 2020.
Research methodology
- Data collection methods: Data is collected from stock exchange’s reports, business financial statements over multiple years, and articles, websites related to PHS
This graduation thesis employs descriptive statistical tools and aggregation methods to effectively process and analyze data Through a case study, it utilizes data modeling and quantification techniques, presenting findings in intuitive comparison tables and graphs Ultimately, the thesis offers recommendations to address identified issues.
Thesis organization
Beside conclusion and reference sections, the research is structured with 4 chapters:
Chapter 2: Theoretical Background on the Effectiveness of Securities Brokerage Activities in Securities Companies
Chapter 3: The Effectiveness of Securities Brokerage Activities at Phu Hung Securities Corporation
Chapter 4: Recommendations to enhance the Effectiveness of Securities Brokerage Activities at Phu Hung Securities Corporation
THEORETICAL BACKGROUND ON THE
Securities company
2.1.1 Definition and characteristics of the securities company
The securities market is a vital part of the financial market, facilitating the buying and selling of securities among economic participants The growth of this market is driven by entities involved in financial services, commonly referred to as "broker-dealers" in the United States.
Securities companies in Japan and Vietnam, often referred to as intermediaries in the United Kingdom, engage in trading securities both for their own accounts and on behalf of clients.
To ensure the stability of the financial system, the government regulates the establishment and operation of securities firms Regulatory bodies, such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the U.S., the State Securities Commission (SSC) and Ministry of Finance (MOF) in Vietnam, and the Financial Services Agency (FSA) in Japan, oversee securities companies to promote social justice and maintain stringent business operations.
Adopting the Vietnamese Finance Minister’s Decision No 27/2007/QD-BTC:
A securities company is a legally recognized entity involved in various aspects of the securities business, including brokerage, dealing, underwriting, and investment consultancy The growth of securities companies is closely linked to the expansion of the stock market, positioning them as pivotal players in the securities industry and significantly contributing to the development of national financial systems worldwide.
2.1.1.2 Characteristics of the securities company
- Securities companies act as financial intermediaries in the capital market:
Securities firms act as financial intermediaries, connecting the demand and supply of securities through various key activities These include serving as securities brokers, providing investment fund consulting and management, facilitating securities underwriting, supporting mergers and acquisitions, and executing transactions involving stocks, bonds, and other financial instruments.
- Securities companies are conditional business organizations:
Securities companies play a vital role in the financial sector, significantly influencing the overall stability and growth of the economy Their operational conditions are essential for ensuring effective execution within this critical industry.
To safeguard the economy, specific requirements have been established, including obtaining a company license and an operation registration certificate Additionally, businesses must develop a viable project aimed at economic growth, possess unique legal resources tailored to their business type, and ensure they have the necessary technology and infrastructure for effective securities operations.
- Securities companies are business organizations but controlled operation:
Proprietary trading (PPT), also known as self-trading or securities dealing, is an investment activity conducted by financial institutions and commercial banks aimed at generating profits directly from the market, rather than merely executing client orders for transaction fees This trading can involve various financial instruments, including stocks, bonds, commodities, and currencies Institutions such as brokerage firms, investment banks, and hedge funds leverage their own capital and resources from other companies to engage in these transactions, seeking to achieve higher annual returns by capitalizing on their competitive advantages.
However, it should come as no surprise that proprietary trading and brokerage activities would have conflicts of interest To name a few, it could be the situations
To protect clients from potential conflicts of interest, securities firms are incentivized to prioritize their own trading benefits, which may lead to misleading investment advice or the manipulation of order placements Consequently, regulations mandate that securities firms separate their trading functions into distinct departments All transactions must adhere to principles that prioritize consumer needs over the firms’ interests, and any payment transactions involving client funds are strictly prohibited Additionally, regulatory authorities and the Securities Association are responsible for enforcing rigorous oversight to ensure compliance.
2.1.2 Basic operations of the securities company
According to the Constitution of the Socialist Republic of Vietnam, the National Assembly has enacted the Law on Securities No 54/2019/QH14, which outlines the licensing requirements for securities companies These companies can be licensed to engage in various operations, including securities brokerage, proprietary trading, securities underwriting, and investment consultancy Notably, a securities company must hold a brokerage license before obtaining a proprietary trading license, and similarly, a proprietary trading license is required before a company can be licensed for securities underwriting Additionally, fund management companies can also engage in operations such as securities investment fund management and portfolio management.
Securities firms serve as financial intermediaries, charging a fee to facilitate the exchange of securities between buyers and sellers They execute trades on behalf of clients in the Stock Exchange or OTC market, while customers retain full responsibility for the results of their investment decisions.
Today, all securities firms operate brokerage departments that offer essential brokerage services Stockbrokers play a crucial role by providing insights into publicly traded companies and market trends, while also facilitating transactions on behalf of their clients, a process known as “transaction brokerage.” As the stock market continues to expand, stockbrokers are increasingly vital in connecting buyers and sellers of securities, fostering relationships that go beyond mere transactions.
10 clients through their brokerage practices, calming their anxiety and assisting them in making great investment decisions
- Proprietary trading (PPT, self-trading):
Ownership transactions occur via the Stock Exchange or the Over-The-Counter (OTC) market, where specific activities like "making a market" are conducted by market makers These market makers enhance stock market development by improving liquidity However, only a limited number of securities firms engage in these activities, as they must maintain a diverse range of stocks to facilitate buying and selling within the bid-ask spread Consequently, strict regulations, which vary by country, must be adhered to in this process.
In Vietnam, proprietary trading, also known as self-trading or securities dealing, is conducted by securities firms for profit Due to its inherent risks and potential catastrophic impacts on both the firms and market transparency, regulators have established specific requirements for this activity A key requirement is that securities companies must maintain sufficient charter and legal capital to support proprietary trading operations Additionally, successful proprietary trading requires careful consideration throughout several phases, including the design of investment strategies, identification of investment opportunities, evaluation of their quality, effective investment management, and capital recovery.
Securities companies play a crucial role in supporting equitized businesses through public offerings and the sale of securities, as well as stock market underwriting Their underwriting services encompass the preparation of legal documentation prior to the sale of securities, the organization of securities distribution, and the stabilization of stock prices in the initial phases post-issuance These services are widely acknowledged as among the most essential offerings provided by securities firms.
In practice, only a few securities companies supported by holding companies
(particularly banks) with potential capital and available relationships are able to provide this service
The effectiveness of securities brokerage activities and evaluation
2.2.1 Securities brokerage activities and the role of securities brokerage activities
According to State Securities Commission (2006), securities brokerage signifies securities companies operates on behalf of their customers as middlemen when buying or selling securities Securities brokerage has two tasks: supplying
To effectively assist customers in making beneficial transactions, financial institutions must provide comprehensive information and develop tailored products and services (Mui, 2010) According to Parasuman et al (1988), service quality is determined by the gap between customer expectations and actual experiences with products or services As securities brokerage activities fall under service provision, it is essential for securities firms to enhance the quality of their services to better satisfy client needs.
The stock market fundamentally relies on the principle of intermediation, necessitating that all transactions occur through brokerage firms or securities brokers This service is legally recognized and protected, highlighting the crucial role of securities brokerage in the market Securities companies and brokers closely interact with investors, significantly impacting the movement and growth of the Vietnamese stock market Essentially, brokerage activities involve representing clients in buying or selling securities, with brokers earning a commission for their services.
2.2.1.2 The role of securities brokerage activities
Securities companies enhance investment efficiency for clients by minimizing time and transaction costs through their brokerage activities Unlike ordinary goods, where intermediaries can increase costs, the stock market operates differently The stock market's inherent volatility and high risk often lead investors to incur additional expenses or seek extensive information before making decisions However, these challenges can be effectively managed with the expertise of qualified stock brokers A stockbroker acts as a professional trader, executing buy and sell orders on behalf of clients while also offering valuable insights and advice on investment strategies.
Brokerage profitability hinges on trading volume, fees, employee compensation, and fixed operating costs, with high trading volumes allowing for expanded operating and net margins Revenue from brokerage operations typically constitutes the bulk of total earnings for securities firms Professional brokers are essential in improving customer service quality and enhancing company competitiveness, making brokerage activities crucial for establishing a strong business reputation A solid reputation fosters customer trust, ultimately boosting revenue for the firms.
Brokerage activities play a crucial role in developing the stock market by fostering new product creation and enhancing customer service quality, which in turn attracts investment capital They improve the business environment and elevate community awareness of securities Brokers supply essential financial information to clients and encourage them to open trading accounts, contributing to a growing number of investors actively participating in the stock market's evolution.
2.2.2 The concept of effective securities brokerage activities
Vilfredo Pareto, an Italian economist and sociologist, introduced the concept of Pareto efficiency in 1906, which describes an economic state where one individual's circumstances cannot improve without worsening another's This efficiency is achieved when resources are utilized optimally For businesses and securities firms, attaining goals like profitability, growth, customer service, and market share is crucial In the context of securities brokerage, efficiency refers to the optimal use of resources—including technical facilities, human resources, and capital—to enhance the quality of brokerage services.
14 services to retain old customers, attract new clients, support firms’ operation and maximize business profits
Vu Thi Thanh (2008) suggests that the effectiveness of securities brokerage activities contributes in different aspects:
- For securities companies: The efficiency of securities brokerage services is illustrated through the number of new accounts, large market shares and profitable growth, contributing to promote firms’ operation
Investors can enhance their returns by choosing securities companies that minimize transaction costs and expedite transaction times Additionally, utilizing securities investment consulting services can provide consumers with valuable insights and benefits, ultimately improving their investment outcomes.
For publicly traded companies, the success of securities brokerage activities hinges on their ability to attract investment capital, which is crucial for scaling manufacturing operations and improving the company's reputation.
The effectiveness of securities brokerage services plays a crucial role in attracting new investors, highlighting the stock market's significance as a vital channel for capital mobilization in the economy.
2.2.2.2 Factors impacting on the effectiveness of securities brokerage activities a Internal factors
Customer service consultants at securities firms play a crucial role in managing customer interactions, addressing complaints, processing orders, and delivering information about the company's products and services This customer service process is essential for improving brokerage operations, demonstrating the advantages and effectiveness of securities investments to potential investors As a result, this leads to a growth in the number of trading accounts, ultimately enhancing the overall performance of the companies involved.
A securities company's reputation is crucial in shaping customer perceptions of its brand, products, and services, as it fosters trust that cannot be purchased A strong reputation enables the company to attract new investors to open trading accounts, while larger businesses can leverage their financial potential and operational networks to appeal to customers Consequently, both reputation and business scale significantly influence the effectiveness of securities brokerage activities.
- Information system and activity analysis:
Effective investment decisions rely heavily on robust information systems that facilitate the analysis of financial and organizational data A well-structured information system enhances a securities brokerage's operational efficiency, enabling quick problem-solving and faster decision-making This not only streamlines the company's activities but also equips customers with valuable insights to guide their investment choices.
Financial technology, or fintech, represents a significant innovation in finance, striving to enhance and compete with traditional financial services This emerging industry leverages technology to streamline financial activities, making it essential for securities companies to adopt fintech solutions to retain clients By simplifying interactions and improving service delivery, financial technology is crucial for enhancing the efficiency of securities brokerage operations.
A broker acts as an intermediary between buyers and sellers to facilitate transactions, following the client's instructions They earn compensation through a flat fee or a percentage of the sale.
A broker primarily assists clients in solving their financial challenges for a fee, while also engaging in secondary functions such as lending for margin transactions and offering information about trading platform conditions Skilled stockbrokers enhance customer trust and facilitate informed investment decisions, significantly improving the effectiveness of securities brokerage services Additionally, external factors play a crucial role in shaping the brokerage landscape.
THE EFFECTIVENESS OF SECURITIES BROKERAGE
Overview of Phu Hung Securities Corporation
Name: Phu Hung Securities Corporation (PHS)
Headquarters: 3 rd floor, CR3 – 03A, 109 Ton Dat Tien, Tan Phu Ward, District
Phu Hung Securities Corporation is a distinguished foreign securities firm in Vietnam, recognized for its reliable financial services and investment solutions tailored for both domestic and international individual and institutional investors, as well as investment funds.
- November 15, 2006: Au Lac Securities Corporation was established with the initial charter capital of 22.68 billion
- December 14, 2006: The company became a member of the Ho Chi Minh Stock Exchange (HOSE)
- December 18, 2006: The company became a member of the Hanoi Stock Exchange (HNX)
- December 29, 2006: The company increased the charter capital to VND50 billion
- September 05, 2008: The company increased the charter capital to VND100 billion
- January 23, 2009: The company renamed as Phu Hung Securities Corporation
- June 24, 2009: PHS became an official member of the UPCOM
- January 12, 2010: PHS increased the charter capital to VND300 billion
- June 09, 2010: PHS officially traded on the HNX
- November 13, 2012: PHS increased the charter capital to VND347.4 billion
- January 10, 2014: PHS voluntarily delisted from HNX
- March 18, 2014: PHS became a member of the bond market on the HNX
- January 11, 2018: PHS increased the charter capital to VND500 billion
- December 26, 2018: PHS increased the charter capital to VND700 billion
- July 31, 2019: PHS traded on the UPCOM market
- March 04, 2020: PHS increased the charter capital to VND900 billion
3.1.2 Organization Structure of Phu Hung Securities Corporation
Risk Management Committee Internal Audit
The General Meeting of Shareholders serves as the highest authority within the company, electing both the Inspection Committee and the Board of Directors to aid in management The Inspection Committee supports the Board of Directors and the Board of Management in overseeing operations While the General Meeting retains specific jurisdiction, the Board of Directors is responsible for all other operational decisions The Internal Audit and Risk Management Committees report directly to the Board of Directors, and the Company Secretariat handles administrative functions to assist the Board.
Under the supervision of the Board of Directors, PHS establishes its executive framework, led by the General Director who oversees the management of various divisions The Deputy General Director assists in managing key areas such as Finance, Accounting, Trading Services, and Risk Management Additionally, the Internal Control Division ensures adherence to protocols in daily operations Other divisions include Brokerage, Advisory, Research, Dealing, General Affairs, Human Resources, Information Technology, and Legal, all contributing to the company's comprehensive management structure.
Deputy General Director Internal Control
Research IT Legal HR General
Vietnam's securities market has experienced steady growth, reflecting the country's robust economic development Phu Hung Securities Corporation (PHS), established in 2006, stands out as a leading international securities firm in Vietnam With strong financial expertise and a consistent business strategy, PHS remains optimistic about its growth alongside the Vietnamese market The company provides specialized financial and investment services to a diverse clientele, including individuals, institutional investors, funds, insurance companies, and banks.
PHS has been strengthening its financial base since 2008, when it welcomed
CX Technology as a strategic shareholder - a Taiwanese listed company that is the leading supplier of cold forging and plastic injection components and parts PHS has been running following securities services:
PHS offers a comprehensive securities brokerage service designed to enhance customer success in buying and selling transactions Utilizing modern, fast, and secure trading software, along with a team of competent and ethical brokers, PHS ensures a seamless trading experience The brokerage services include opening trading accounts for both domestic and foreign individuals and institutions Additionally, PHS provides various trading modes, such as placing orders at trading floors, E-stock trading, T-stock trading, and M-stock trading, catering to diverse investor needs.
PHS offers expert financial investment advisory services through professional brokers, guiding clients on investment actions, applicable laws, and regulations We provide insights on securities valuation, investment strategies, and risk factor exposures related to specific securities and the overall market Additionally, our team assists in developing investment portfolios and implementing effective hedging strategies to manage risks effectively.
- Securities Depository: Depository shareholder book/ share certificate; information adjustment; securities withdrawal; transfer non-traded securities or closing trading account; transfer securities ownership right under donation,
26 presentation, inheritance; right issue are all available via PHS’s securities depository services
- Securities Dealing: Securities trading consists of spot trading, futures trading, options trading, credit trading and repurchase
PHS specializes in securities underwriting, ensuring successful securities issuance for clients by connecting them with a wide range of potential investors and partners Key activities in this service include assessing the company's business conditions, developing targeted PR and marketing strategies, preparing comprehensive issuance and underwriting plans, conducting business valuations, identifying strategic partners, organizing promotional events to engage potential investors, executing the securities issuance, and providing post-issuance evaluations and advisory services.
The Effectiveness of the Securities Brokerage Activities at Phu Hung
3.2.1.1 The total number of accounts
Table 3 1: The total number of accounts at PHS between 2016 and 2020
Year The total number of accounts Relative change (%)
Source: Author’s collection from PHS’s Brokerage Department internal data-2020
Since its inception in 2006, PHS has consistently aimed to grow its customer base by enhancing the quality of its products and services, even amid stock market fluctuations.
Between 2016 and 2017, PHS experienced a significant increase in customer accounts, rising from 45,680 to 48,420, which represents an addition of 2,740 new accounts This growth is particularly noteworthy given the backdrop of various negative events and regulatory changes affecting the securities brokerage sector, including adjustments to transaction times and stricter stock trading management.
In 2018, positive macroeconomic growth and stock market development led to a 3% increase in accounts opened with PHS, resulting in 4,360 new accounts and a total of 52,780 accounts by year-end.
In 2019, the number of accounts increased to 58,586, reflecting an 11% growth compared to 2018 This rise demonstrates the appeal of PHS and highlights the trust and preference that investors have in PHS's securities trading products and services.
In 2020, the Vietnamese stock market saw a remarkable surge, peaking at 65,129 accounts, despite the challenges posed by Covid-19 Initially, there were fears that the pandemic would severely damage the market; however, interest rate cuts implemented by the government aimed to support businesses navigating the crisis made securities a more appealing investment option compared to traditional savings, which offered lower returns This shift in investment preference was driven by declining purchasing power and the need for more profitable avenues Nonetheless, cash flows into Vietnam's stock market remained cautious due to the unpredictable global effects of Covid-19 on investors' wealth and income.
In conclusion, although the total number of accounts experienced a slight upward trend between 2016 and 2020, the figure increased slowly This could be
The market fluctuations during this period can be attributed to regulatory changes and the unprecedented impacts of the COVID-19 pandemic, alongside increasing competition among securities firms A deeper analysis of the PHS reveals these dynamics in detail.
In addition, the product quality has not met all customers’ expectation
When selecting a securities company to open a trading account, the service fee schedule serves as a crucial factor for investors A lower fee schedule often indicates a more competitive and attractive option for potential clients.
The Vietnamese stock market is known for its high volatility and increasing competition among securities firms In response to these market dynamics, PHS offers flexible service fee adjustments to stimulate transactions during various market periods.
The company has introduced a pricing strategy tailored to specific customer segments, which adjusts fees based on the daily transaction value of their accounts This fee structure incentivizes customers to increase their transaction volume, as higher transaction activity leads to reduced fees.
Currently, the company is maintaining the fee schedule as follows:
Table 3 2: Schedule of fees at Phu Hung Securities Corporation
No Type of service Charge rate
1 Trading fee of Shares, fund certificates, Covered Warrant listed directly at the counter or through account management officer for all customers
Total trading value during the day from 0 to 200 million VND 0.397% Total trading value during the day from over 200 to 500 million VND 0.347%
Total trading value during the day from over 500 million to 1 billion
Total trading value during the day over 1 billion VND Negotiable
2 Trading fee for VIP accounts Negotiable
3 Trading fee of Shares, fund certificates, Covered Warrant listed via trading online channels 0.197%
4 Trading fee of Shares, fund certificates, Covered Warrant listed via Call-Center (T-stock) 0.397%
5 Trading fee of Shares, fund certificates, Covered Warrant listed via Internet Broker 0.147%
From 100 billion to up Negotiable
In the early stages of the securities market, PHS and other companies adhered to a regulated transaction fee ceiling of 0.5% However, the significant growth of Vietnam's stock market in 2017 led to increased market liquidity and a surge in investor transactions, prompting securities firms to revise their fee structures to enhance service quality and attractiveness Prior to 2018, PHS focused on horizontal growth by implementing low transaction fees Since 2018, PHS has shifted towards in-depth expansion to boost operational efficiency As a result, PHS has segmented its customers and introduced a tiered transaction fee schedule, where customers benefit from lower fees as their transaction volume increases.
Nowadays, online share trading facilities make investing more convenient and save investors’ time Instead of having to transact directly at the counter, the trader
Individuals can trade stocks through an online trading platform that offers low transaction fees of just 0.197% Online trading involves buying and selling financial products via the Internet, making it accessible to a wide audience PHS provides these platforms, enabling anyone interested in trading financial securities to participate, which helps attract and retain customers.
Table 3 3: The comparison of current service fee schedule among securities firms
Items SSI HSC VND VPS PHS
Source: Author’s collection from securities firms’ websites, latest updated by
PHS's service fee schedule aligns closely with that of other securities firms in the stock market, reflecting its commitment to high-quality products and professional customer service This well-structured fee schedule fosters customer satisfaction and loyalty, ultimately driving revenue growth and enhancing brokerage efficiency Notably, PHS offers the most comprehensive range of fees among its competitors, effectively catering to diverse client needs.
3.2.1.3 Operating Performance of Brokerage Activities
During the last five years, operating profits of PHS changed in a concrete direction In 2020, PHS’s after tax profit achieved positive results with about VND
In 2023, the brokerage service sector generated $52 billion, reflecting an 11% increase since 2019 This service is crucial to the revenue structure of PHS, demonstrating a consistent upward trend in both absolute value and growth rate over the past five years.
Table 3 4: PHS’s revenue structure between 2016 and 2020
Between 2016 and 2020, the significance of securities brokerage in PHS's revenue surged, with brokerage activities consistently contributing over 90% of total profits from the securities business Specifically, in 2016 and 2017, these activities accounted for 97.3% and 97.8% of profits, respectively The year 2016 posed challenges as PHS began opening new branch offices in Hanoi and Hai Phong to boost its securities brokerage activities and penetrate new markets.
32 contributed to the noticeable results of the brokerage service in aspects of revenue for the following years, 2017-2020 In particular, in 2017, brokerage revenue reached
41,793 million VND, a growth of 27.7% The year 2018 witnessed a surge in the number of customer transactions, contributing to the dramatic rise of brokerage revenue
In recent years, brokerage services have significantly benefited from securities custody and advisory services, which are essential components of PHS's revenue structure.
RECOMMENDATIONS TO ENHANCE THE
The development orientation of Vietnam’s securities market in the
The Prime Minister approved the "Scheme for Restructuring Securities and Insurance Markets by 2020 and Vision to 2025" through Decision No 242/QD-TTg on February 28, 2019, establishing a clear development orientation for Vietnam's stock market.
- The stock market is continuously restructured in order to become the efficient medium and long-term capital mobilization channels in the economy
- Developing a balanced and rational structure between the pivotal markets: the monetary and capital markets, the financial and bond markets, government bonds and corporate bonds
- Improving state-owned enterprise restructures, economic growth models, and the evolution of private economic zones
- Strengthening the openness and integration into the regional and global markets
The securities market aims to reach 100% of GDP by 2020 and 120% by 2025, while the bond market is targeted to grow from 47% of GDP in 2020 to 55% by 2025.
By 2020, the number of publicly listed companies is projected to rise by at least 20% compared to the end of 2017 Additionally, the investor base is expected to grow to 3% of the population in 2020, with a further increase anticipated to reach 5% of GDP by 2025.
55 appropriate structure between individual investors and institutional investors, as well as between domestic and foreign investors, must be ensured, contributing to an efficient stock market system for skilled investors
- Aiming to improve the financial condition, administration capacity, and financial safety index of stock trading organizations by 20% over the current index
To enhance product diversity in the stock market, it is essential to introduce covered warrants, futures contracts, and corporate bond futures based on indexes beyond the VN30 by 2025 Furthermore, the implementation of stock-based options and futures contracts will be conducted continuously, ensuring a more robust trading environment.
- By 2020, the stock market's trading technology and clearing services payment systems will be fully renovated and synchronized
- From now until 2025, Vietnam's listed companies shall achieve an average administration capacity of ASEAN-6
- By 2025, the Vietnamese stock market will be elevated to the ranks of emerging financial markets
The Vietnamese stock market is poised for growth in the coming years, presenting significant opportunities for PHS' brokerage services By implementing effective and suitable strategies, PHS can enhance its performance and address existing challenges, paving the way for future success.
Phu Hung Securities Corporation’s development orientation in the
In 2021, the Company is poised to enter a high-profit growth cycle, driven by a positive market outlook and robust corporate governance PHS aims to expand its market share while concentrating on investment derivative products, advisory services, margin offerings, and online solutions.
56 trading products Additionally, new products will be introduced on a regular basis to diversify the product range and meet the demand of each customer group.,
To improve investment advisory services and recommendations, it's essential to enhance the quality of stock market opportunity reports, portfolio analyses, cash flow assessments, and market liquidity evaluations Additionally, increasing outstanding margin and developing innovative financial products will provide clients with greater leverage The creation of trading instruments, such as covered warrants, will further facilitate the introduction of these new products.
To attract new clients, PHS aims to expand its network of skilled personal brokers, increase the number of brokers, and enhance overall connectivity Additionally, PHS plans to streamline the account opening process significantly, targeting a substantial increase in the number of accounts.
PHS recognizes that sustainable development relies on the quality of its brokers In 2021, the company aims to enhance its broker recruitment to attract new clients while retaining its existing broker workforce Additionally, PHS plans to revise its commission policies to motivate high-performing and promising employees.
In 2021, PHS is focused on expanding its network of institutional clients while also dedicated to enhancing their understanding of the securities market The company aims to provide professional investment consultancy services to better support these institutional customers in the coming year.
In 2021, PHS proactively organized meetings with listed companies in response to requests from institutional investors across various sectors, including Consumer, Real Estate, Mining, Pharmaceutical, Aviation, Agriculture, and Banking Additionally, PHS hosted seminars to present investment opportunities to individual clients at its branches and transaction offices.
Recommendations to Phu Hung Securities
4.3.1 Solutions to expand market share, customer network and to increase transaction value and transaction volume
In 2016, PHS invested significantly in opening new branches to enhance customer transactions, contributing to market expansion and an increased market share This growth has led to a rise in customer accounts and transaction values; however, PHS's branches are currently not favored by many investors in the Vietnamese stock market To address this, PHS must strengthen its brand and implement effective product marketing strategies and incentives to attract customers By focusing on high-quality services and a diverse product range, PHS can further expand its market share, ultimately boosting transaction volumes and values.
To achieve its goal of becoming one of the top ten securities companies in Vietnam, PHS must implement a long-term growth strategy that enhances its strengths and competitiveness Regularly improving and reviewing the skills and attitudes of consulting teams is essential to meet customer expectations for high standards By delivering superior services and demonstrating strong investment performance, brokers can enhance customer service and foster long-term client loyalty.
Regular enhancement of online infrastructure is essential for delivering seamless client experiences Additionally, ensuring a consistent and rapid transaction processing pace is crucial for fostering positive investor interactions.
PHS should develop innovative strategies to attract new contracts from target customers, ultimately increasing their contract acquisition Currently, PHS employees employ straightforward methods to connect with consumers, including direct calls and seeking referrals from existing clients.
PHS could open new channels to communicate with customers in the near future, such as the internet or newsletters, which can be useful and cost-effective
To effectively reach their target audience, PHS should implement a diverse advertising strategy, including weekly workshops showcasing their services, investor meetings, and advertisements in public news outlets This multifaceted approach will ensure that the company effectively engages with potential customers.
The Board of Directors must establish a clear division of responsibilities, assigning specific roles to accountable leaders to ensure synchronized and efficient business management This approach will enhance overall effectiveness and elevate the quality of brokerage services at PHS The company should reorganize its workforce and strengthen its management system to continuously boost labor productivity and efficiency Streamlining the organizational structure and integrating departmental functions will minimize duplication and foster specialization Ultimately, PHS should cultivate a dedicated and professional workforce to drive the company's development.
4.3.3 Enhancing the quality of human resources
Human resources are essential in shaping and evolving an organization's culture, significantly enhancing brokerage services at PHS To boost employee qualifications and skills, PHS should implement comprehensive internal training programs that emphasize both quality and quantity These carefully selected courses should integrate theoretical knowledge with practical applications Additionally, to maintain high training standards, it is crucial to complete objective classifications for each program.
The courses focus on deepening knowledge in corporate financing, data analysis, and international financial reporting standards They also provide training on new stock products like covered warrants and derivatives, while fostering essential skills in negotiation, communication, sales, and management Additionally, the programs emphasize the application of knowledge regarding securities and the stock market.
Creating an effective competence appraisal process is essential for fostering long-term employee growth This process will encompass recruitment, regular evaluations, re-appointment, salary adjustments, and compensation strategies, all designed with rigorous criteria and thorough screenings to enhance staff capabilities.
Offering employees the chance to experience different work environments enhances their practical expertise and broadens their understanding of the company's overall operations This approach effectively maximizes the potential of PHS's human resources.
4.3.4 Enhancing the quality of information technology
Information technology is essential in the securities industry for efficient business operations and timely, accurate transactions that meet client needs, thereby enhancing brokerage services at PHS To elevate its IT quality, PHS must recruit skilled information technology professionals to ensure the smooth operation of its technology systems Additionally, establishing a contingency fund is crucial for upgrading multifunctional tech products Improving online infrastructure is vital, including an online trading system, investor advice and training platforms, and a comprehensive goods and services system PHS should focus on continually enhancing its online trading framework by integrating new utilities and user-friendly functionalities into existing transaction instruments.
PHS should adopt innovative technologies like "smart talk" to enhance online advisory and trading systems, enabling immediate assistance for investors Additionally, improving transaction speed, strengthening information system security, and simplifying transaction processes—such as ordering and money transfers—through smart devices will significantly elevate customer experiences.
4.3.5 Enhancing service capacity, reliability and customer satisfaction
To improve service capacity, reliability, and customer satisfaction in securities brokerage services, PHS should consider implementing the recommendations derived from the client satisfaction survey results outlined in Chapter 3 (Sections 3.2.2.1 to 3.2.2.3).
An effective advisory service is crucial for improving reliability and customer satisfaction at PHS This objective can be achieved by increasing the frequency of advisories and maintaining regular contact with customers through online tools By doing so, customers can perceive the staff's enthusiasm and authentic concern for their experiences and emotions.
Regularly updating and providing valuable knowledge empowers clients to seize lucrative investment opportunities with higher returns, showcasing the Company's professionalism and commitment to enhancing customer benefits.
Proposals on policies of the State Securities Commission
The implementation of Securities Laws 2019 (No 54/2019/QH14) aims to enhance transparency, fairness, and effectiveness in securities trading and business operations By promoting the adaptation of these new laws, authorities can ensure independent supervision and management Strengthening the legal framework will significantly improve the operations and quality of brokerage firms, including PHS.
61 positive impact on the PHS clients’ trust on its performance and operation and their long-lasting relationship with PHS
In parcticular, to increase the effectiveness of applying current statutory regulations, the State Securities Commission of Vietnam should:
To enhance transparency and safety in the stock market, it is essential to expand the list of prohibited activities and increase maximum penalties for extreme behaviors such as market manipulation, insider trading, and the fraudulent use of multiple trading accounts These practices undermine the integrity of the market and negatively affect the operations of PHS and the performance of securities firms.
To enhance fairness and integrity in Vietnam's securities industry, new requirements for foreign securities firms, including PHS, have been introduced This initiative aims to foster investor trust and positively impact PHS's brokerage business performance as foreign companies increasingly enter the market.
The State Securities Commission should continue to assess market demand and conditions in Vietnam to introduce new derivative products, such as futures and options contracts on individual stocks It is crucial to develop and refine legal documents to establish a robust legal framework that supports the growth of derivative instruments in the Vietnamese stock market By launching new products, the commission can attract new investors, thereby increasing transaction volumes for securities companies, particularly PHS.
Short-selling remains restricted in the Vietnamese stock market, prompting an increase in under-the-counter short-selling activities among investors As there are currently no regulations governing short-selling in Vietnam, investors' rights are unprotected The only binding agreement for transactions between parties is the investment mutual.
62 trust It is believed that many Vietnamese investors are in need of short-selling
Implementing this service in the stock market can enhance liquidity, stabilize the market, safeguard investor interests, and foster the development of additional trading tools Establishing a robust legal framework for short-selling activities is essential to attract more investors to engage with securities firms, especially PHS.
To foster a dynamic investment culture, it is essential to expand investors' understanding of securities and the securities market By enhancing community awareness, PHS brokers can improve their productivity and efficiency in the investment consulting process, ultimately increasing the effectiveness of brokerage services.
To achieve these objectives, a comprehensive approach to securities investment education is essential, encompassing programs, websites, short courses, and articles that help investors access valuable information The integration of this strategy is facilitated by advancements in internet and information technology.
The government should consider revising tax policies on the securities market to reduce or temporarily exempt taxes, which would facilitate the successful implementation of the 2021 initiatives This tax reduction is essential for helping PHS increase profits and lower customer service costs, ultimately boosting brokerage activities during the Covid-19 pandemic.
Tax reductions or exemptions are urgently needed to address the challenges posed by the Covid-19 pandemic on the domestic economy and stock market Implementing this measure would provide securities companies, including PHS, with increased resources due to lower taxes and reduced government budget obligations, significantly enhancing their business operations Consequently, investors in the sector would benefit from favorable policies, such as reduced brokerage fees and lower deposit interest rates (margin) from these firms.
63 become more effective, which ultimately leads to significant growth of the stock market
The review of PHS’s securities brokerage activities from 2016 to 2020 was completed with the support of my instructor – MSc Ngo Thi Hang, Phu Hung
Securities Corporation, and other sources of encouragement
This study systematically reviews the theoretical framework regarding the effectiveness of securities brokerage activities within securities firms, establishing key criteria for their assessment It evaluates the efficiency of brokerage activities at PHS from 2016 to 2020, utilizing both quantitative and qualitative factors to highlight achievements and shortcomings The analysis includes a review of underlying reasons, facilitating the identification of potential solutions Finally, considering the market's evolving orientation over the next five years and the Company's strategic objectives in light of the Covid-19 pandemic, targeted recommendations are provided for both the Company and relevant authorities.
However, due to a lack of expertise and the impact of the Covid-19 pandemic,
This study focused solely on evaluating the quality of brokerage services at PHS without considering other securities firms for a more comprehensive assessment The absence of quantitative models in this research limits the ability to provide specific evaluations of PHS's brokerage services, potentially impacting the proposed solutions for enhancing business operations To address these limitations, future research will incorporate quantitative models and broaden the scope to include comparisons with other securities companies, leading to more accurate evaluations and insights.
1 Bach Duc Hien (2008), Giáo trình Thị trường chứng khoán, NXB Tài chính,
2 Bui Thanh Tra (2013), Nâng cao chất lượng hoạt động môi giới tại Công ty cổ phần chứng khoán Sài Gòn – SSI, Luận văn Thạc sĩ, Đại học dân lập Phương Đông
3 Bui Thuy Linh (2020), Các nhân tố ảnh hưởng đến hiệu quả hoạt động môi giới chứng khoán của Công ty Cổ phần Chứng khoán Dầu khí, Khóa luận tốt nghiệp, Học viện Ngân hàng
4 Dang Quoc Tu (2007), Đánh giá chất lượng dịch vụ môi giới của công ty chứng khoán Bảo Việt – Chi nhánh thành phố Hồ Chí Minh: Đại học Quốc gia – Thành phố Hồ Chí Minh
Questionnaire about the effectiveness of securities brokerage activities at Phu Hung Securities Corporation (PHS)
3 How much is your monthly income?
4 What is the value of your investment account?
5 Below are a number of statements regarding attitudes to customer services Please read each one and indicate to what extent you agree or disagree with each statement
(1) Strongly disagree (2) Disagree (3) Neutral (4) Agree (5) Strongly agree
The transaction procedure is simple for customers
The attitude of employees relating to customer service is considerate, cheerful and friendly
Brokers could also provide good customer services
The execution time of a transaction is fast enough
The securities company has a good customer care policy
Feeling satisfied with securities company’s service quality
The securities company meets customers’ service requirements
Stockbrokers put themselves in clients’ position when consulting and solving customer problems
Stockbrokers have influences on customer investment decisions
Stockbrokers give customers detailed information about services
Stockbrokers give advice to customers on using utility services
Stockbrokers are professional enough to respond customer inquiries
Stockbrokers’ know and understand customers’ needs
6 Customer reviews of securities brokerage to improve the service quality:
(You can select more than one choice)
A The effectiveness of brokers’ investment advisory
B The processing time of supporting customer and the quality of customer problem solving
C Securities company’s after-sales services
E Updating online transaction processing applications
F Financial daily news (the market situation)