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New bond trading system launches
The second version of the Government bond trading system was introduced by the Ha Noi Stock Exchange last week and will be used for the first time next Monday when Circular 234/2012/TT-BTC takes effect.
The system was upgraded in response to provisions in the circular concerning risk management and repurchase agreement (repo) trading. A repo agreement occurs when the selling party agrees to repurchase bonds in the future.
The new version integrates bond and treasury bill trading, information systems and a yield curve.
"The Government bond market has actively contributed to investment resources of both the State budget and financial institutions this past year," said Deputy Minister of Finance Tran Xuan Ha.
In addition, Ha said, the liquidity of the market improved significantly –boosting capital turnover and creating conditions for short-term capital to develop into long-term funding, which would help the domestic economy.
The deputy minister told the exchange to improve the market structure of types of bonds and terms, in addition to boosting market liquidity and transparency.
The performance of bidders should be assessed and issuance plans should be made public, he said.
Ha also called for market operators to coordinate with the State Bank of Viet Nam in implementing fiscal and monetary policies in order to maintain a proper interest rate level.
Government bonds increased in value twice last year, totalling nearly VND67.6 trillion (US$3.2 billion). Bond yields declined over 2011 and were 1-2 per cent lower than deposit rates. The deployment of the first bond trading system in August created an effective link between issuing organisations, managing agencies and investors.
This year, the Government expects to mobilise a total of VND150 trillion ($7.1 billion) through bonds, including VND90 trillion ($4.2 billion) to address the budget deficit. The remainder will go towards investment projects.
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