Deputy Prime Minister Vuong Dinh Hue pressed the button to launch the derivatives market on Thursday, marking an important milestone in the development of Viet Nam’s securities market.
“Today, we have witnessed the birth of Viet Nam’s derivatives market just 17 years since the introduction of the Vietnamese stock market.
“This is an important milestone in the development of Viet Nam’s securities market that has satisfied expectations of the Government, the business and investor communities,” Hue said.
"The launch of the derivatives market in Viet Nam has happened 13 years earlier than is normally expected," the Deputy PM said.
“This is a complex market with sophisticated products that primarily helps investors hedge risks and diversify investment products, thereby increasing attractiveness and opportunities in the securities market,” Hue said and added the derivatives market is usually introduced 30 years after the birth of the primary stock market.
Viet Nam is the fifth country in the ASEAN region that has launched a derivatives market besides Singapore, Malaysia, Thailand and Indonesia.
Viet Nam’s stock market went live in 2000 and the bond market was introduced nine years after that. The inauguration of the derivatives market has added the third important pillar of a modern securities market model.
After over 20 years of operation (since the establishment of the State Securities Commission in 1996), total market cap of the securities market accounts for over 80 per cent of the country’s gross domestic product (GDP), of which the stock market makes up 57 per cent of GDP while the value of the bond market is 24 per cent of GDP.
Total capital raised through the securities market has accounted for roughly 23 per cent of the whole society investment. The local securities market has also attracted a large amount of foreign capital, supporting the country’s development.
According to the Deputy PM the country’s demand for development investment is very large, so the securities market must be developed further to complete its role as an important medium- and long-term capital mobilization channel for the economy.
Hue stressed the importance of the derivatives market in the structural development of the financial market as well as in the development strategy of the securities market in the future.
He asked the Ministry of Finance and the State Securities Commission to study and complete legal framework and policy to put the derivatives market into operation on the basis of prudence, synchronism and accordance with international practices.
The market must work smoothly and stably while ensuring safety, transparency and efficiency, Hue said.
He also assigned the Ministry of Finance to build a development roadmap for the securities market until 2020 with a vision to 2030 and submit the plan of merging the two stock exchanges under the direction of the Government and the amended Law on Securities.
First trading session
Viet Nam’s derivatives market start operation with the VN30-Index future contract set to launch first.
On Thursday, four futures codes were traded including VN30F1708, VN30F1709, VN30F1712 and VN30F1803. 392 transactions were made with 487 contracts worth total VND36.5 billion (US$1.6 million) traded.
Derivatives are a security with price dependent upon or derived from one or more underlying assets. The VN30-Index, the underlying asset of the VN30-Index futures contracts, closed Thursday at 743.42, up 0.28 per cent over the previous session.
In Viet Nam, the current law allows three types of derivative products - futures contracts of shares indexes with the VN30-Index and HNX30-Index as underlying assets, and five-year Government bond future contracts.
After the VN30 futures, the HNX30 futures and Government bond futures will be introduced at an appropriate time in the future. – VNS