Derivative market start likely to be delayed into 2017

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SCIC (State Capital Investment Corporation) Asset Sales to Include Sale of Vinamilk FPT and BMP stakes amongst others

June 2015

The Chairman of the Hanoi Stock exchange, Mr. Tran Van Dung has said the latest timetable to open the stock derivative market is either late 2016 or early 2017 instead of by the end of 2016 as was stated previously. He cited issues with technology and processes to explain the delay.
According to Decree 42/2015/ND-CP, which took effect on July 1, the derivatives market will contain futures contract, listed options, any forward contract where the underlying assets is a securities traded on the stock exchange, and other derivatives based on other types of underlying assets traded on the stock exchanges. Trading will be limited to eligible brokers and banks.

HSC comment – The exchange merger timetable hasn’t been published yet and this may also partly explain why the derivative market timetable is also slipping away. Originally the merger between the two exchanges was expected by the end of this year but now clearly it may not happen for another 12 months or so. The opening of the derivative market is likely to happen only after that. A slipping timetable matters because we assume that allowing for derivative trading is an important proviso for the MSCI before they would consider upgrading Vietnam to emerging market status. Given that it not only increase trading options for investors but also tends to boost underlying market volumes which is definitely a requirement. The most likely time horizon for an MSCI upgrade is somewhere during 2017-2018. A one quarter or so delay isn’t a big deal however the bigger concern is the lack of any clear idea as to when the two exchanges will merge. Until the final plan is approved and published by the Government Office everything else will be held in abeyance.

These submissions are extracted from reports accomplished by Ho Chi Minh City Securities Corporation (HSC)’s Research Division team led by Fiachra Mac Cana, Managing Director, Head of Research

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