DECLARATION I hereby declare that the thesis: "Improving the effectiveness of securities brokerage activities at VPS Securities Joint Stock Company" is carried out by myself, under the g
GENERAL ISSUES OF SECURITIES BROKERAGE
Overview of securities company
1.1.1 The concept of securities company
The stock market serves as a vital platform for the buying, selling, and exchanging of securities, playing a key role in capital sourcing by pooling small investments into larger funds It attracts participation from both individuals and organizations involved in trading activities, although transactions are conducted through securities brokers rather than directly by buyers and sellers This brokerage system regulates market transactions, ensuring the authenticity and legality of securities, thereby protecting investors' interests and fostering a stable, efficient market environment.
The growth of the stock market has led to an expansion in the scale and functions of brokerage activities, prompting the formation of securities firms, which serve as organized collectives of individual brokers.
According to Decision No 27/2007/QD-BTC, issued by the Minister of Finance on April 24, 2007, a securities company is defined as a legal entity authorized to engage in securities brokerage, self-employment, underwriting, and investment consulting The growth of securities companies is closely linked to the evolution of the stock market, making them pivotal to the securities industry and essential for advancing the national financial system in various economies worldwide.
1.1.2 The characteristics of securities company
1.1.2.1 Securities company is a financial intermediary
Financial institutions are essential in directing surplus capital to those in need, highlighting the importance of the stock market's development Securities companies play a pivotal role for both issuers and investors, significantly influencing the stock market's growth and activity Unlike direct finance, which involves direct interactions between borrowers and lenders, financial intermediaries serve as essential bridges, facilitating capital flows These intermediaries, particularly securities brokerage firms, arrange transactions for clients, earning commissions while handling the buying and selling of various securities, including debt and equity instruments, warrants, and options.
Conflicts of interest often emerge when brokerage and proprietary trading activities coexist within the same firm To mitigate these issues, many countries mandate that securities companies separate these functions into distinct departments if they engage in both activities, as highlighted by Associate Professor Dr Thai Ba Can in the Textbook of Securities Business Operations.
Securities companies operate under strict regulations imposed by government agencies and the securities association, ensuring that client interests are prioritized over their own Transactions involving client funds are explicitly prohibited, emphasizing the importance of ethical practices in the securities business.
1.1.2.2 Physical infrastructure, personnel, and capital
Securities companies must establish a head office that meets specific requirements for operating in the securities business, as this industry inherently requires a trading floor To effectively facilitate client transactions, these companies need to invest in modern equipment and systems that support order transmission, trade confirmation, and allow clients to easily check their account balances and access relevant information.
Securities companies necessitate a skilled team of employees and management due to the complexities and high risks associated with the securities business, which significantly influences socio-economic conditions These professionals must adhere to strict ethical standards and possess licenses from relevant authorities Furthermore, management personnel are required to have strong management skills, comply with legal regulations, and hold representative licenses issued by competent authorities (Textbook of Securities Business, Associate Professor Dr To Kim Ngoc).
In the realm of production, business, and trade services, companies face no legal capital requirements for establishment However, securities companies must adhere to a legal minimum capital requirement, which varies by country and regulatory period This is outlined in the "Textbook of Securities Business" by Associate Professor Dr To Kim Ngoc.
1.1.2.3 Conflicts of interest between customer interests and securities companies
In the manufacturing and service industries, customer interests typically align with those of the business, minimizing conflicts of interest However, securities companies face unique challenges as they strive to provide optimal service while navigating potential conflicts with clients Activities such as proprietary trading, investment advisory, and brokerage can create these conflicts, distinguishing the operations of securities firms in the stock market from those in other sectors.
1.1.3 The role of securities company
As the stock market grows, securities companies are becoming increasingly vital to the economy They act as intermediaries in securities trading, underwriting new issues, and providing investment advice, leveraging their expertise and structured frameworks By facilitating active stock trading, these firms transform individual investments into significant capital pools However, the roles of securities companies differ based on the market participants they serve.
Securities companies are essential financial institutions in the stock market, facilitating capital formation by efficiently channeling medium and long-term capital to benefit the economy Acting as intermediaries, they connect entities with surplus funds to those in need of capital for growth and development.
Investment funds, economic organizations, and companies actively engage in the stock market, providing valuable securities and financial instruments that unlock new capital sources Securities firms play a crucial role as financial intermediaries, facilitating the issuance and underwriting of these instruments.
The intermediary principle is fundamental in the stock market, requiring buyers and sellers of securities to engage intermediaries rather than transact directly Securities firms act as middlemen between investors and issuers, facilitating transactions This intermediary role enables securities companies to create a robust system that aids businesses in raising capital through the stock market, ultimately benefiting both the companies involved and the overall economy.
- Assisting in researching issues related to issuance and state policies and laws on securities issuance
- Consulting on business valuation and pre-issuance finance
- Advising on handling human resource issues, policies with employees of enterprises
- Advising on the development of issuance plans, issuance quantities suitable to specific conditions of enterprises
- Advising on completing procedures related to the issuance
Not all participants in the stock market possess the time or resources to develop a comprehensive understanding of the intricacies involved Particularly in the Covid-
During the 19th period, there was a significant surge in the number of securities accounts opened, leading to a rise in new investors in the stock market To successfully invest in securities, it is essential for individuals to understand their risk appetite and tolerance for profit and loss.
Overview of securities brokerage business
1.2.1 The concept of securities brokerage business
Securities brokerage involves a securities company facilitating transactions on behalf of customers in exchanges or OTC markets, with customers being accountable for the transaction outcomes This field demands high professionalism, as brokers must possess specialized skills, qualifications, and ethical standards, supported by a diverse range of resources and necessary equipment Key considerations in brokerage activities include the importance of expertise and professionalism in ensuring successful transactions.
- The decision to buy or sell securities is made by the customer and the broker must follow that order
- Accounting for transactions must be done on accounts owned by customers
A developed financial market fosters a thriving brokerage business by creating optimal conditions for brokers to effectively deliver financial services and products.
1.2.2 The functions of securities brokerage business
1.2.2.1 Providing product information and advice to customers
Brokers play a crucial role in facilitating customer transactions by receiving orders and executing trades on their behalf This process encompasses guiding clients through account opening, transaction execution, payment processing, and delivering transaction outcomes Post-transaction, brokers remain vigilant, monitoring market and societal changes to provide tailored solutions and strategies for investors Additionally, brokers offer services in two distinct capacities.
- Connect customers with the investment research department to provide customers with research reports and investment recommendations
As an intermediary between sellers and buyers, we offer a comprehensive range of financial products and services, enhancing investment efficiency for our customers.
When holding a certain number of shares and when the stock falls in price, the investor is faced with a three-choice decision:
- Sell stocks to make a profit or stop loss
- Continue to hold and wait for opportunities when this stock price increases
- Buy more shares to increase the number of shares held (Textbook of securities business, Associate Professor Dr To Kim Ngoc)
To assist clients in making informed investment choices, brokers analyze various factors, including overall market conditions, the performance of specific stock industry groups, and income forecast models They also evaluate financial statements, price trends, and price-to-earnings ratios By leveraging data from trustworthy sources, brokers provide tailored recommendations on optimal buying and holding strategies to maximize investor returns.
The stock market's complexity and constant fluctuations significantly impact investor psychology, making it essential for brokers to address clients' emotional needs By acting as supportive allies, brokers can help alleviate worries and provide timely encouragement When investors experience heightened emotions like greed and fear, brokers play a crucial role in guiding them towards rational decision-making, thereby minimizing investment risks and preventing poor trading choices.
1.2.3 The role of securities brokerage business
In today's markets, buyers and sellers typically meet to assess goods and negotiate prices However, the stock market, which deals with high-level products and services, requires substantial financial investment for buyers to evaluate quality and pricing effectively This investment includes gathering and processing information, honing analytical skills, and executing transactions Only large-scale securities firms can absorb these costs, allowing them to reap the benefits of economies of scale Moreover, the presence of brokers facilitates transactions by acting as intermediaries, significantly lowering costs associated with partner searches and contract management Consequently, the primary function of stock brokerage is to reduce transaction costs and enhance market liquidity.
The profitability of brokerage firms hinges on factors such as trading volume, fees, employee compensation, and fixed operating costs High trading volumes can significantly boost net profit margins and overall operations Typically, brokerage activities generate the majority of revenue for securities companies Professional brokers are crucial in enhancing customer service quality and strengthening company competitiveness Moreover, effective brokerage activities are vital for establishing a robust business reputation, which fosters customer trust and ultimately drives revenue growth.
Stockbrokers leverage their regular client interactions to effectively gather insights and pinpoint potential opportunities and challenges in trading This sensitivity enables them to identify the strengths and weaknesses in transaction processes Consequently, brokers continuously refine their products and services, enhance product diversity, and broaden their customer base, ultimately attracting more idle capital for investment growth.
Consequently, brokerage services contribute to the overall development of market-related activities, while simultaneously enhancing the appeal and attractiveness of the stock market for investors.
The effectiveness of securities brokerage operations
1.3.1 The concept of effectiveness of securities brokerage operations
Effective brokerage activities are characterized by their ability to offer comprehensive, high-quality services tailored to meet the diverse needs of all market investors Additionally, these activities play a crucial role in fostering the overall growth of the stock market and enhancing the performance of securities firms.
1.3.2 Indicators for evaluating the effectiveness of securities brokerage operations
To evaluate the effectiveness of stock brokerage activities of a securities company, we can use the following indicators:
In any business operation, the primary focus is on the revenue it generates Revenue and profit are quantitative measures that are indispensable when evaluating the growth of brokerage activities
Most securities companies primarily generate revenue through brokerage activities, specifically from brokerage fees collected from clients These fees are determined by multiplying the value of traded securities by the brokerage fee schedule Additional income sources include margin interest and customer prepayments related to brokerage services A steady increase in revenue indicates a higher quality of brokerage activities.
When evaluating brokerage revenue, it's essential to assess its share of the total operating revenue of a securities company A high proportion of brokerage revenue indicates that brokerage services are the primary income source for the firm As brokerage fees are determined by the total transaction value, increased trading volume directly correlates with higher commission earnings This relationship serves as a key quantitative metric for gauging the effectiveness of a securities company's brokerage operations.
Brokerage costs encompass all expenses associated with a securities company's brokerage activities, both directly and indirectly These costs include fees paid to the stock exchange, taxes, and operating expenses such as salaries and bonuses for brokerage staff, equipment depreciation, and rent.
When evaluating brokerage costs, it's essential to analyze the ratio of brokerage expenses to brokerage revenue This metric indicates the revenue generated from each unit of currency spent on brokerage services, highlighting the effectiveness of a securities company's utilization of these costs in its brokerage operations.
Effective brokerage operations require efficient management of operating costs
Effective management of operating costs is crucial for securities companies aiming to boost profits Rather than focusing solely on a continuous reduction in expenses, it is essential to strategically control costs and maintain a reasonable growth rate The ultimate objective is to ensure that revenue and profit growth outpace the rate of cost increase, leading to sustainable financial success.
Brokerage profit represents the difference between a company's revenue and the expenses associated with its brokerage operations As a key indicator of operational efficiency, profit is the primary objective for companies, with higher profits reflecting superior performance To achieve maximum profit, a securities firm must focus on increasing revenue while simultaneously reducing expenses.
When evaluating profitability, it is essential to focus on the profit margin derived from brokerage revenue, as this metric reveals the profit generated by the company for every 1 dong of brokerage income.
The higher this ratio, the more efficient the brokerage operation and vice versa Thus, this is a very important metric for evaluating the effectiveness of brokerage operations in a securities company
The brokerage market share is calculated by the Stock Exchange based on the transaction value of member brokerage companies, which is then divided by the total number of transactions A securities company is deemed to be developing its brokerage activities when it holds a larger market share compared to its peers in the industry Analyzing the market shares of securities companies provides a broader perspective on their performance, indicating that firms with a higher market share are likely to have more robust brokerage activities In a competitive economy, this metric serves as a key indicator of the effectiveness of brokerage operations and helps enhance the company's reputation.
1.3.3 Determinants affecting the performance of securities brokerage activities
Securities brokerage operations play a crucial role in enhancing the efficiency and growth of both securities firms and the overall stock market The operational efficiency of these brokerage services is influenced by a combination of objective and subjective factors.
1.3.3.1 Objective factors a) Macroeconomic, political, and social environment
A transparent and growing economy fosters the development of securities companies and the brokerage profession, contributing to overall economic prosperity As businesses experience increased capital needs, the stock market emerges as a highly effective channel for capital mobilization, enhancing market operations Furthermore, a steadily growing economy, coupled with a stable macroeconomic environment and sound legal framework, cultivates a healthy investment climate that attracts abundant foreign investment capital, benefiting both the economy at large and the domestic stock market specifically.
A stable and developed stock market creates an ideal environment for brokerage operations, as it enhances both the supply and demand for securities, along with the participation of market players and financial intermediaries An increase in the number of listed companies and securities heightens the demand for expert advice from brokers and securities firms Consequently, brokers must possess a comprehensive understanding of various industries and be well-informed about the conditions of listed companies to provide accurate and effective guidance to investors.
The development of the stock market is characterized by a diverse range of high-quality financial products, a significant number of active investors, and a well-structured market organization Additionally, a robust stock market fosters a transparent information system for businesses, enhancing investor confidence and promoting informed participation Furthermore, a supportive legal framework is essential for sustaining this growth.
Securities companies are required to adhere to stringent oversight and regulation by state management agencies to ensure a fair and efficient business environment, particularly in brokerage activities This regulatory framework significantly impacts the operations of securities firms, emphasizing the importance of a robust legal environment and comprehensive legal documentation in safeguarding investor interests.
A comprehensive and uniform legal framework is essential for safeguarding the rights of investors, securities firms, and brokers An encouraging legal environment fosters the stability and growth of securities companies, enhancing investor confidence through effective oversight Conversely, a complex and incomplete legal system can stifle the development of these firms and hinder brokerage activities Clear regulations are particularly crucial in brokerage operations, ensuring that new investors feel secure in the stock market while enabling brokers to operate efficiently and effectively Ultimately, enhancing public knowledge and understanding of investment practices is vital for a thriving financial ecosystem.
CONCLUSION
Chapter 1 of the thesis explores the definition, characteristics, and significance of securities companies within the stock and broader financial markets It outlines the nature of stock brokerage activities, detailing their functions and roles while identifying key factors that influence operations Additionally, the chapter establishes criteria for assessing the effectiveness of these brokerage activities, highlighting their crucial impact on the business operations of securities firms.
The article highlights how the company's reputation and brand are prominently showcased to the public It also discusses various strategies implemented by securities firms to enhance the efficiency of their stock brokerage operations.
CURRENT STATUS OF THE EFFECTIVENESS OF
Overview of VPS Securities Joint Stock Company
VPS Securities Joint Stock Company (VPS), established on December 20, 2006, under Decision No 30/UBCK-GPHDKD by the Chairman of the State Securities Commission, has emerged as one of Vietnam's largest securities firms With a charter capital of 3,500 billion VND and total assets amounting to 10,274 billion VND as of June 30, 2019, VPS has solidified its position in the financial market.
VPS, a prominent securities firm, provides a wide range of products and services designed for both institutional and individual clients Its primary business areas include securities brokerage and trading, financial services, investment banking, finance advisory, and research Investment banking serves as the foundation of VPS, offering comprehensive professional advisory services in equity and debt capital markets, mergers and acquisitions (M&A), and corporate restructuring.
VPS aims to provide exceptional financial products and services by bringing together a team of seasoned domestic and international experts in the financial sector, supported by advanced information technology infrastructure This strategic approach has enhanced VPS's reputation in the Vietnamese financial market, establishing it as a leading and trustworthy financial institution both in Vietnam and internationally.
VPS Securities (VPS) operates across a diversified range of business lines, including: Corporate financial consulting, stock brokerage activities, trading of financial service products and securities investment, capital contribution a) Brokerage business
Brokerage activities at VPS encompass individual and organizational customer segments, utilizing a stock transaction management solution from Freewill By prioritizing investment in modern technology and information systems, VPS leads in fostering online trading connections with major stock exchanges Additionally, VPS offers supplementary services for online and mobile trading, enhancing customer experience with flexible utilities Furthermore, VPS provides corporate financial consulting services to support its clients.
Debt instrument issuance consulting services, including two main areas:
- Debt restructuring consulting services, including short-term and long-term secured loans
- Consulting services for issuance of debt instruments including plain and secured bonds, domestic and foreign loans, certificates of deposit
Capital instrument issuance consulting services: VPS's capital instrument issuance consulting capacity includes private placement of shares, issuance of structured products (such as convertible bonds, bonds with warrants, IPO consulting)
VPS offers expert M&A consulting services, leveraging a global network of investors and in-depth knowledge of domestic markets Since 2017, the firm has successfully facilitated numerous M&A transactions valued at up to 5.32 billion VND Additionally, VPS specializes in trading financial products and services, enhancing its comprehensive financial advisory capabilities.
VPS's financial services department plays a crucial role in promoting MGCK activities while cultivating its own customer base It offers a range of products and services to investors, including margin trading, collateral management, and advances Additionally, the department facilitates self-trading securities and capital contributions.
The investment division of the company comprises a highly experienced team specializing in the financial market, dedicated to analyzing and evaluating listed stocks and bonds Their strategic investment decisions consistently generate substantial revenue for the company each year.
Diagram 2.1 VPS company organizational chart
VPS Securities Joint Stock Company is expanding its global presence by establishing subsidiaries abroad, positioning itself for future growth in the international stock market.
VPS has significantly broadened its presence in Vietnam by setting up business locations in various provinces and cities, including key financial hubs such as Hanoi, Ho Chi Minh City, and Da Nang.
- Ha Noi Head office: Office Area 65 Cam Hoi Street, Hai Ba Trung District, Hanoi
- Ho Chi Minh City Branch: 3rd Floor, Building 76 Le Lai, District 1, Ho Chi Minh City
- Da Nang Branch: No 112 Phan Chau Trinh, Hai Chau District, Da Nang City
- Dong Do Transaction Office: 35 Thi Sach, Hai Ba Trung District, Hanoi
- Sai Gon Transaction Office: Pax Sky Building, 144-146-148 Le Lai, District
2.1.5 Executive board and human resources
VPS thrives under the guidance of experienced management boards known for their decisiveness These leaders bring a wealth of stock market experience and possess a robust skill set in essential financial areas, including securities investment, banking, and finance.
Table 2.1 VPS’s full name of Board of Directors
1 Mr Nguyen Lam Dung Chairman of the Board of Directors
2 Mr Indronil Sengupta Member of the Board of Directors
3 Ms Nguyen Thi Thu Hong Member of the Board of Directors
4 Ms Tran Thi Bao Ngoc Member of the Board of Directors
5 Ms Tran Thi Thu Thuy Member of the Board of Directors
Table 2.2 VPS's full name of Control Board
1 Ms Le Thu Minh Head of Supervisory Board
2 Ms Nguyen Thi Phuong Hao Member of Supervisory Board
3 Ms Le Bich Ngoc Member of Supervisory Board
Table 2.3 VPS's full name of Executive Board
1 Mr Nguyen Lam Dung General Director
Source: VPS’S Audited Consolidated Financial Statements in 2023
By the end of 2023, VPS employs 1,670 individuals, emphasizing the importance of employee training and development The company fosters continuous empowerment through team-building activities and a mix of classroom and on-the-job training programs Managers benefit from mentorship and active participation in decision-making, which enhances their leadership skills Additionally, securities brokers receive extensive training that covers both fundamental and advanced skills, ensuring their enthusiasm and commitment to client service.
Despite facing competition from innovative companies and evolving work environments, VPS remains a preferred option for individuals, especially those with international training and recent graduates As the market changes, VPS focuses on hiring high-quality talent that aligns with its core values, emphasizing the importance of attracting new candidates who meet the company's rigorous standards.
VPS Securities stands as a leading securities company in the Vietnamese stock market, handling a vast and complex volume of customer data and transactions daily
To effectively manage this high workload, VPS continuously updates and enhances its information technology systems
VPS boasts a robust technical and technological system with fast processing speeds that meet international standards, as recognized by prestigious organizations like the SSC and HOSE The system is stable, has a high-risk reserve, and remains reliable even during significant market fluctuations, ensuring smooth trading for investors Initially utilizing IBM Power since 2010 for its financial services, VPS has recently upgraded its technology infrastructure to accommodate a growing customer base and increasing data demands This modernization aims to efficiently manage customer transaction data, enhance overall performance, and provide an exceptional customer experience across its service offerings.
VPS boasts well-equipped physical facilities for daily operations, including office spaces and transaction counters with large display screens that enable customers to monitor the stock exchange while placing orders The company also invests significantly in its digital presence, maintaining a user-friendly website, active fan page, and engaging YouTube channel Notably, the website provides timely updates on essential information, such as quarterly and annual financial reports, company news, and product introductions, ensuring easy access to up-to-date information for VPS's clientele.
The current state of securities brokerage activities at VPS Securities
2.2.1 Securities brokerage activities of VPS Securities Joint Stock Company
2.2.1.1 Products and services for brokerage activities at VPS
Currently, VPS Securities Company provides products and services including: Underlying securities and derivatives; Bonds and M&M products
Underlying securities: include sub-accounts of tail 1, tail 6 and tail 3
Trading fees of underlying securities at VPS (Transaction fees are calculated as % of transaction value, margin interest rate is calculated as %/year)
- Sub-account tail 1: also known as regular account, for customers who only use their existing capital without borrowing Margin to invest in securities
- Sub-account tail 3: is also a product that uses margin, but the margin ratio is
1:3, which includes off-site portfolios, and the fee conditions are also different from sub-account tail 6
Derivative securities: include sub-account tail 8
The VPS company charges a transaction fee of 0.1% for bond trades, with fees for large lot transactions determined by prior agreements It's important to note that VPS does not issue bonds; instead, it serves as a third-party provider of information and transaction assistance for customers.
M&M Product: To help customers access a wider range of convenient services,
VPS has launched the M&M (Money Market) product, a form of short-term savings deposit with extreme preferential interest rates
The stock brokerage process at VPS includes the following steps:
Step 1: Client acquisition and account opening
Client acquisition is essential for stockbrokers, and modern methods have evolved to be more efficient and cost-effective than traditional strategies Previously, stockbrokers relied on flyers, individual consultations, and expensive seminars to attract clients However, advancements in technology now enable the use of social media platforms like Facebook, Zalo, and YouTube to connect with a broader audience Furthermore, SMS and tele sales have emerged as popular client acquisition techniques, significantly reducing costs and time while expanding market reach.
Three ways to open an account at VPS:
Method 1: Direct account opening via phone, computer, iPad with eKYC verification
VPS has revolutionized account opening with its fast and convenient method, making it the preferred choice for handling a high volume of account registrations To utilize this efficient approach, simply follow the outlined steps.
Step 1: Install the “SmartOne” application, select “Open account” at the login screen or open an account via the link https://openaccount.vps.com.vn/ and install the
Step 3: Take a photo of your ID card/citizen identification card and verify your face
Step 4: Take a photo of your face according to the instructions on the screen Step 5: Confirm and complete the information
Step 6: Sign the contract by signing on a blank piece of paper and showing it to the camera to complete the procedure
Method 2: Direct account opening via phone, computer, iPad with contract verification
In situations where eKYC verification cannot be completed due to unclear ID cards or notable facial changes, a paper contract becomes necessary After creating an account via the provided link and installing the "SmartOne" app, a broker will send the contract for the client to sign The finalized contract will encompass all required details.
+ Minutes of document delivery and information confirmation
+ Request form to create sub-account
+ Notice about borrowing money and using the system
Method 3: Customers can go directly to the company's transaction office to open an account
To access services at the VPS company, customers should visit the facility in person and present their ID card or citizen identification card They must also adhere to the guidance provided by the service staff at the counter.
There are 3 ways for customers to place orders at VPS securities company:
Method 1: Customers can place orders directly at the company's transaction counter by filling in the order form directly or by phone, email, or fax
Method 2: Customers can place orders directly on the "SmartOne" and
"SmartPro" apps on the company's phone or computer or iPad
Method 3 introduces an innovative approach to ordering VPS services through an investment consultant In this model, the consultant assists customers in placing their orders, allowing clients to simply confirm their orders via the app within 24 hours.
Upon receiving a customer's order, the company thoroughly verifies the customer's information, including transaction date, stock code, transaction method, quantity, and buy or sell price, before submitting the order to the stock exchange for execution via the online trading system.
A securities company is only allowed to execute a customer's order when it is certain that the customer will have enough money to pay for that order
Step 4: Confirm actual results, payment and securities transfer
Upon executing a customer's order, VPS will send an SMS notification to the registered phone number if the order is successfully matched For buy orders, the corresponding amount will be blocked in the customer's account, while for sell orders, the securities will be held The transfer of securities or funds to the customer's account will occur within two business days (T+2), excluding weekends and holidays.
VPS not only stands out for its technological innovations and product offerings but also for its exceptional customer support and advisory services With a dynamic team of young professionals and seasoned analysts, VPS leverages a modern system to enhance its operations The company's appealing compensation policy, offering brokers and partners commission rates between 63% to 70% of total NAV, has attracted numerous skilled individuals, further fueling VPS's rapid market expansion.
2.2.2 Indicators for evaluating securities brokerage activities of VPS Securities
2.2.2.1 Revenue from stock brokerage activities
Table 2.4 VPS's brokerage revenue from 2021 – 2023
Revenue from securities brokerage activities 3,135.10 2,851.58 2,785.26 Total revenue from operating activities 9,518.12 8,440.76 6,373.84 Proportion of securities brokerage revenue/total revenue from operating activities (%) 32.94% 33.78% 43.70%
Source: VPS’S Audited Consolidated Financial Statements from 2021 to 2023
Between 2021 and 2023, the share of stock brokerage revenue in VPS's total operating revenue rose, despite a decline in both stock brokerage and overall operating revenues An illustrative chart is provided to clearly depict this notable trend.
Chart 2.1 VPS’s stock brokerage revenue and total revenue from operating activities
Table 2.4 and Chart 2.1 reveal a decline in both stock brokerage revenue and total operating activities revenue for VPS However, there is an increasing trend in the proportion of securities brokerage revenue relative to total operating activities.
The 2021 – 2022 period marks the initial decline in VPS Securities' revenue Brokerage revenue dropped by approximately 9%, from 3,135.10 billion VND in
In 2022, VPS experienced a decline in net profit, dropping to 2,851.58 billion VND from 2021's 3,200.95 billion VND, while total operating revenue decreased by approximately 11%, falling from 9,518.12 billion VND to 8,440.76 billion VND This downturn can be linked to a shift in the Vietnamese stock market from a bullish to a bearish trend, which likely led to lower trading volumes and reduced brokerage commissions affecting VPS's income Additionally, increased competition within the brokerage industry may have contributed to this revenue decline.
In 2022, brokerage revenue as a percentage of total operating revenue rose to 33.78%, up from 32.94% in 2021 This indicates that, despite an overall decline in revenue, the drop in VPS's income from other business segments was likely more pronounced than that from brokerage activities Maintaining this performance is crucial in a challenging market environment.
From 2021 to 2022, VPS has implemented effective development strategies tailored to market conditions, leading to significant growth in revenue from securities brokerage activities, which has been well-received and positively impacts the company's overall business performance.
Between 2022 and 2023, the downward trend in brokerage revenue continued, with a decline of approximately 2%, dropping from 2,851.58 billion VND to 2,785.26 billion VND Total operating revenue saw a more significant decrease of about 25%, falling from 8,440.76 billion VND to 6,373.84 billion VND This ongoing decline indicates that the challenges affecting revenue in 2021-2022 likely persisted or intensified in the following years Contributing factors may include a prolonged sluggish stock market, increased competition in the industry, and internal issues within VPS, such as management strategy changes and operational inefficiencies, which may have exacerbated the drop in total operating revenue.
The most striking observation for this period is the significant increase in the proportion of brokerage revenue to total operating revenue, jumping from 33.78% in
CONCLUSION
Chapter 2 provides a comprehensive overview of VPS's establishment and growth, detailing the brokerage services offered and the procedures involved It highlights the indicators used to assess the effectiveness of VPS's brokerage operations A key feature is the customer satisfaction survey, which evaluates the quality of services, revealing strengths and areas for improvement The survey findings form the basis for developing strategies and recommendations aimed at enhancing VPS's brokerage effectiveness in subsequent chapters.
SOLUTIONS TO IMPROVE THE EFFECTIVENESS OF
The development directions of the Vietnamese stock market and VPS
3.1.1 For the Vietnamese stock market
In 2023, the Vietnamese stock market encountered numerous challenges yet still delivered positive outcomes, standing out as a bright spot among regional and global markets Guided by the Party, State, Government, National Assembly, and Ministry of Finance, the market has maintained stability and safety, evolving into a crucial channel for capital mobilization in the economy Looking ahead, the Government and relevant agencies are committed to developing strategic initiatives for the stock market that align with overall economic growth objectives Furthermore, the Government pledges to ensure close market management to promote stable and sustainable development of the Vietnamese stock market.
At the same time, in the coming years, the market development orientation will be:
First, continue to improve the legal framework and policy system for market development, focusing on completing the implementation plan of the Stock Market Development Strategy Scheme for the period 2023-2030
Second, link IPO issuance with listing so that issuers can shorten the time and distance from issuance to listing on the stock market
To enhance the integrity of the stock market, it is essential to intensify oversight and inspections of securities firms, fund management companies, professionals, and issuing entities Additionally, it is crucial to enforce strict penalties for any violations within the stock market to ensure compliance and protect investors.
To enhance technological infrastructure, it is crucial to prioritize the modernization and effective application of science and technology This involves collaborating with relevant units to swiftly implement a new information technology system, which will facilitate the introduction of innovative products and services into the market.
Promote timely and official information to public investors regarding the market while also providing training on non-traditional security for practitioners, leaders, and managers in securities and fund management companies.
To enhance the Vietnamese stock market's status from a frontier market to an emerging market, it is essential to bolster international cooperation by organizing investment promotion programs abroad and collaborating with foreign investors and rating organizations.
3.1.2 For VPS Securities Joint Stock Company
In 2023, VPS must navigate the overarching challenges of the stock market by aligning its strategies with the government's development goals Emphasizing the enhancement of product and service quality is essential for establishing a foundation for sustainable growth.
VPS is committed to enhancing its sustainable business strategy by improving customer experience, exploring new products and services to meet evolving customer needs, and diversifying its product and service offerings The company is also investing significantly in technology to deliver modern and high-quality solutions In 2024, VPS aims to further develop its workforce by creating advanced training materials and hosting training sessions, professional events, and competitions to foster employee creativity.
Solutions to improve the effectiveness of securities brokerage activities
3.2.1 Training high-quality securities brokerage personnel
Employees serve as the face of the company, directly impacting customer trust and the overall reputation of the business To enhance service quality, the securities brokerage team must embody qualities such as a serious work ethic, prioritizing customer interests, possessing professional knowledge, and upholding high ethical standards VPS should concentrate on these essential attributes to foster a more effective and trustworthy service environment.
* Expand the staff network with quality
A strong and skilled workforce is essential for any company striving for success A sizable team enables the organization to tap into various customer segments, maximizing market potential As a well-established securities firm with a significant market presence, VPS must cultivate a diverse and high-quality customer base to sustain its competitive edge.
Students possess enthusiasm, passion, and a strong foundational knowledge, making them a valuable resource for companies VPS can implement recruitment programs targeting students still in school, allowing for early training and smoother transitions into the workforce post-graduation This approach not only helps students gain practical experience but also reduces recruitment costs for the company.
* Enhancing professional skills and customer service for brokers
The future of the stock market holds significant potential, prompting securities companies to invest heavily in understanding and meeting customer needs To attract investments, these firms implement appealing policies while prioritizing the retention of existing clients This focus on customer loyalty drives securities companies to enhance the quality of their brokerage staff, ensuring they provide exceptional service and support.
Organizing internal training sessions fosters knowledge exchange among employees, allowing new hires to learn from seasoned staff Additionally, the analysis department can deliver updated reports and weekly insights, enhancing brokers' effectiveness in their roles.
- Invest in training courses: Offer employees courses from experienced market professionals to enhance their knowledge
- Reward outstanding employees: Recognize and reward employees with excellent work performance to motivate them to work more effectively
- Regularly audit procedures: Ensure brokers have a firm grasp of procedures and processes to provide convenient and professional customer support
- Strengthen market research and analysis: The research and market analysis team need to provide more detailed daily market updates and analysis, going beyond just statistical information
- Modernize software and account management tools: Upgrade software and customer account management tools to avoid inconveniences and errors during use
* A Competitive Compensation and Benefits Package
To foster employee retention and encourage professional growth, VPS must establish a competitive compensation and benefits package, which is essential for the company's sustainable development and the engagement of top talent.
3.2.2 Expanding network and operational scope
In the competitive landscape of securities brokerage, the extent and geographical distribution of a company's network are crucial for success According to State Securities Commission regulations, securities firms can set up trading offices and order-receiving agents across the country Currently, VPS operates mainly in major cities such as Hanoi, Da Nang, and Ho Chi Minh City, which limits accessibility for investors in smaller towns To leverage its strengths and increase market share, VPS must focus on expanding its network.
As VPS expands its operational scope, it is crucial to prioritize both quantity and quality through a selective approach to avoid excessive expenses on equipment, infrastructure, and personnel that do not yield adequate returns, which could damage the company's reputation Effective risk management must be integral to any expansion strategy to mitigate potential challenges Furthermore, order-receiving agents should not only accept orders from investors but also proactively seek new clients and broaden their service offerings.
Developing a comprehensive marketing strategy is vital for VPS, as it not only complements improvements in personnel, technology, techniques, products, and customer policies but also significantly enhances the company's image among investors This strategic approach bolsters brand reputation and establishes credibility within the financial market.
In the age of the 4.0 technology revolution, social media has rapidly evolved, with the public increasingly engaging with various platforms To stand out and boost competitiveness among securities companies, VPS must adopt a creative and effective marketing strategy.
- Organize competitions with prizes for outstanding investors at VPS: This will attract the participation of both existing and new customers
- Advertise securities education programs on television and universities: This will increase brand awareness and attract potential investors
- Attract talented students by awarding scholarships: This will not only select outstanding employees but also promote the company's brand to future young investors
Organizing meetings for both VIP and regular clients enhances the company's image and showcases its products and services These gatherings foster trust among clients and provide valuable insights for investors, enabling them to effectively recommend VPS to their friends and acquaintances.
- Post advertising information online through social media channels and well- known websites in the financial and securities industry: This will reach a wider audience and attract potential investors
Many investors often choose to open accounts with a specific securities company without thoroughly researching the advantages and quality offered by other firms Consequently, effective marketing and promotional activities play a crucial role in attracting new customers To achieve lasting impact, these strategies must be developed with care, professionalism, and consistency Ultimately, this approach will strengthen the company's reputation, brand, and position within the Vietnamese stock market.
3.2.4 Upgrading technical infrastructure and improving technology
In the ever-evolving stock market with millions of investors, upgrading infrastructure, technology, and security is essential for a top securities company like VPS Specifically:
Enhancing technological proficiency across the entire system will significantly boost the efficiency of securities brokerage activities This improvement benefits all participants in the stock market, enabling the company to effectively mobilize capital from investors at VPS, affiliated companies, banks, linked enterprises, and shareholders.
To ensure information security and system continuity, VPS must continuously upgrade its information system, enhancing customer satisfaction and trust This involves promptly updating products, services, and vital information through a synchronized and improved IT infrastructure, including hardware, software, and network systems, to accommodate a growing number of online trading customers The company should invest in increasing network connections, modernizing employee computers, and upgrading its securities software Additionally, regular updates to the company website, featuring stock evaluations, product details, and transaction fees, will empower investors in their research Furthermore, developing software to detect information theft and bolster the security of investor data will enhance customer trust, improve the company's reputation, and provide a competitive edge over other securities firms.
Investing in infrastructure and equipment is crucial for enhancing company operations Upgrading standard trading counter systems ensures efficiency, while maintaining a stable network connection and fully equipped computers prevents interruptions during work.
- Establishing contingency plans to promptly respond to emergency situations
3.2.5 Diversifying brokerage products and services
Recommendations
3.3.1 Recommendations to the Government and the State Securities
Enhancing the Legal Framework for the Vietnamese Stock Market:
The Vietnamese stock market, currently in its early development, grapples with challenges from illegal activities like price manipulation and stock speculation These practices undermine market transparency, negatively affecting investor sentiment, diminishing customer trust, and obstructing capital inflow into the market.
I urge the Government and relevant authorities to implement stricter measures and impose substantial penalties to discourage intentional misconduct This initiative aims to improve market transparency and position the stock market as a desirable investment avenue for both current and future investors.
3.3.2 Recommendations to VPS Securities Joint Stock Company
VPS, a leading securities company with nearly 18 years of experience in the Vietnamese stock market, must develop a robust strategic plan that addresses both breadth and depth to enhance its growth and secure its position as a top securities brokerage firm in the market and the wider business environment.
VPS can enhance its objectives by forming strategic partnerships, particularly with Vietnam Prosperity Joint Stock Commercial Bank (VPB), a prominent financial institution in Vietnam This collaboration would enable VPS to market its securities products more effectively to a broader audience through advertising in VPB's branches and creating bundled service packages that combine banking and securities offerings Furthermore, training VPB employees to promote VPS services during customer interactions, such as banking transactions or account openings, would further increase visibility and accessibility for VPS's offerings.
VPS should consider capital expansion opportunities through strategic partnerships with other companies, which may include direct investments or effective capital-raising strategies Securing additional capital is essential for VPS to improve its infrastructure, enhance its competitive advantage, and venture into new business areas A strong capital base is vital for the success of a securities company, making it imperative for VPS to prioritize this element to support its long-term growth.
CONCLUSION
Chapter 3 outlines the overall development direction for the Vietnamese stock market in the coming period and proposes a future direction for VPS Securities
Chapter 3 outlines targeted solutions for VPS to improve its brokerage activities and overall business operations by leveraging the company's strengths and aligning with future trends The thesis also provides strategic recommendations for the Government, the State Securities Commission, and VPS Securities Joint Stock Company to enhance effectiveness in the industry.
1 Associate Professor Dr Thai Ba Can (2013), Textbook of Securities business operations
2 Associate Professor Dr To Kim Ngoc & Dr Nguyen Thanh Phuong (2015),
Textbook of Securities business, Hanoi Polytechnic Publishing House
3 National Assembly of Vietnam (2019), Law on Securities No 54/2019/QH14, issued on 26 th November 2019
4 VPS Securities Joint Stock Company (2022), Audited Consolidated
Financial Statement of 2021, retrieved on 20 th April 2024 from
5 VPS Securities Joint Stock Company (2023), Audited Consolidated
Financial Statement of 2022, retrieved on 20 th April 2024 from
6 VPS Securities Joint Stock Company (2024), Audited Consolidated
Financial Statement of 2023, retrieved on 20 th April 2024 from
7 Vietstock.vn (2024), Thị phần HNX năm 2023: Chứng khoán KB rớt khỏi top
10, retrieved on 20 th April 2024 from