VN to run first derivatives market by end of the year

HA NOI (Biz Hub) — The Ha Noi Stock Exchange (HNX) and the Viet Nam Securities Depository (VSD) plan to run the first-ever derivatives market by the end of this year, said HNX on Wednesday.

The exchange said members could test the market in September and October with HNX and VSD, which play the role of market operator and clearing house, before the official launch of the market.

HNX Board of Management Deputy Chairwoman Nguyen Thi Hoang Lan said they would announce a connectivity standard system for members next month.

Nguyen Anh Phong, the exchange deputy general director, said the trading system was designed with three functions: member management, transactions and statistics recording, and risk warning and prevention. It could handle 15,000 payment transactions per minute from at least 600,000 accounts.

HNX said future contracts of share indexes (HNX30 and VN30) and Government bonds with five-year terms will be the first two products to be traded in the market.

FPT information system (FIS) was the system's main developer, while the international clearing solution provider GMEX Group provided technology and local operational expertise for the system.

GMEX Group said derivative contracts would be traded on the HNX and centrally cleared by VSD, adding that the derivatives market was an important step in creating qualitative change for the Vietnamese securities market after a long era of quantitative development.

It would also help investors identify and mitigate risks, and diversify into other investment channels. The market participants will include settlement banks, intermediaries and investors from both enterprises and investment funds, GMEX said.

The initiative would support functionality for stocks, cash settled index futures, warrants, bonds, commodities, cash- and physically-settled equity futures, cash- and physically-settled bond futures, cash-settled commodity futures, cash-settled interest rate futures and contracts, solution-provider GMEX said.

As of last August, there were 892 stocks on three exchanges in the securities market, with total capitalisation equal to 30 per cent of Viet Nam's Gross Domestic Product (GDP) and a daily trading value of more than VND2 trillion (US$88.9 million). The bond market has also developed in the last three years, with total capitalisation equal to 14 per cent of the country's GDP and a daily trading value of VND2 trillion made by 25 bidders and 54 traders, including top financial institutions in the nation. — VNS