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Derivatives decree to manage market
The State Securities Commission has completed a decree on derivatives transactions which will be submitted to the Government for approval this year.
According to director of the Market Development Department under the commission Nguyen Son, the domestic stock market was set up thirteen years ago, but a derivatives market had yet to be firmly established.
Currently, only stocks, bonds and fund certificates are commonly traded.
Derivatives transactions became essential in Viet Nam when unpredictable changes in the prices of commodities, interest rates, exchange rates and stocks posed risks to investors.
Several commercial banks provide currency derivatives, but not enough to meet market demand and prevent risks from exchange rate and interest rate fluctuations.
Regarding the commodities market and futures trading, common products including rice, coffee, rubber and steel have been added to foreign trading floors such as the Commodities Exchange (Comex) and the London Metal Exchange (LME).
However, the application of derivatives in Viet Nam remains limited and lacks State management.
The decree would set a legal framework for the derivatives market under State management, according to Son.
For long-term development, derivatives transactions would be opened to stocks, gold, interest rates, exchange rates and commodities.
He said the operation of the derivatives market was complicated and required careful preparations.
The commission also asked the Ministry of Finance to set up regulations for those allowed to participate in the derivatives market, operational licences, taxes and fees to ensure the market operated efficiently and stably.
The establishment of the derivatives market was in line with the restructuring of the stock market and the Stock Market Development Strategy to 2020, said Son.
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