Việt Nam launches government bond futures contract

HÀ NỘI — The Hà Nội Stock Exchange on Thursday officially launched the government bond futures contract, the second derivatives market product in Việt Nam since the index futures in August 2017.

The introduction of the five-year bond futures contract is expected to satisfy the investment needs and risk prevention of investors, through better attracting foreign investment and contributing to the process of upgrading the status for the local securities market.

At the launching ceremony, Nguyễn Như Quỳnh, acting CEO of the Hà Nội Stock Exchange said the launch of the government bond futures was the next development stage in order to complete product structure for derivatives markets, supporting the sustainable development of the government bond market.

Since the inception of the VN-30 Index futures two years ago, the derivatives market has developed quickly with the average trading volume reaching 105,000 contracts per session as of June 2019, rising 10 times relative to 2017.

Open interest (OI) volume, which is the total number of outstanding derivative contracts, increased by 2.7 times from 8,077 contracts at the end of 2017 to 21,718 contracts by end-June this year.

The market showed its role as risk hedging, Quỳnh said, adding that government bond futures contracts were being carried out on the basis of evaluation and experience from the first derivative product, as well as assessment of the management authority.

Deputy Minister of Finance Huỳnh Quang Hải directed two stock exchanges and the Việt Nam Securities Depository to safely operate securities markets, especially new products of covered warrants and bond futures.

He also suggested the management agency keep on researching new products in line with the plan approved by the Government.

The government bond futures contract has underlying assets as a hypothetical five-year government bond issued by the State Treasury which is said to have large listing volume and higher liquidity than other types of bonds. In the early stage, this product is only traded by institutional investors. — LV