Bond Trading Procedure

Basic Bond Trading Procedure

Account Opening Procedure

Investors must have a bond account and bank account in order to trade in the secondary market. The bank account shall be opened with the correspondent bank and the bond account shall be opened with the member (Securities companies).

Display of Tradable Information and Quotation Board

Bond Quotation Board is a website created by LSX to facilitate investors who need to display their trading information and negotiate with the trading partner.

Currently, LSX allowed an only member to access this quotation board. In case an investor needs to display his/her tradable information, he/she shall contact members in order to input information on the quotation board. Member may display the information of tradable bond as the following on quotation board as follow:

  • Bond name
  • Quantity
  • Price
  • Type of quotation (buy/sell)
  • Contact information
Negotiation before Trading
  • Buying party and Selling party shall negotiate about tradable bonds before submitting an order to the bond trading system;
  • Investors or members can contact each other directly, in order to negotiate about the price and quantity of the bond;
  • For an investor who does not need to display their tradable information or contact another investor directly, the investor shall shift their right to the member in order to negotiate with a trading partner;
  • Moreover, investors can negotiate with each other on the price and quantity that they would like to buy/sell. After the deal, they shall contact members for order entrustment.
Order Entrustment and Price Determination
  1. Order Entrustment

    The investor shall entrust their order to member. When the member receives an entrustment of order from its customers, the member shall collect the good faith deposit in cash (100%) for buying and securities (100%) for selling.

  2. Order Submission

    Member shall input quotation information into the bond system by specifying each of the following details:

    • Investor account number
    • Bond name: before submitting orders, the member shall ensure good faith deposit of their clients
    • Quantity: according to the negotiation between buying and selling party
    • Price: the price shall be “Clean Price” excluding accrued interest rate. Accrued Interest Rate (AI) shall be calculated as of the following formula:
      AI = Coupon payment x Days of Holding Bond Since Last Coupon Payment
      Days Separating Coupon Payment
      Example:Government bond A has its Par value (M) 1,000,000 Kip with coupon rate (C) 10% per year, the bond pays interest 2 times a year. The bond issued date was 30th March 2021 and the trading day is 05th May 2021.

Due to the seller held the bond for 37 days since its issue date, thus AI is equal can be calculated as follow:

AI = (1,000,000 x 10%/2) x (37/181) = 10,220 Kip/unit

  • Type of quotation as buy or sell
  • Execution code (for selling party only)

Data and information on the LSX website are provided for the purpose of improving availability of information for investment, not for trading securities. In spite of the efforts made in ensuring the accuracy of data and information, the LSX recognizes that unintentional and chance errors and delays occur. The LSX is not responsible for any loss resulted from the investments made using the data and information provided on its website.