Eagerness for the launching of derivative securities market: A playfield for 'big' investors

Trung Ngoc - Aug 11, 2017 | 08:17 AM GMT+7

TheLEADERThe official operation of derivative market has marked a milestone in the development of Vietnam's stock market, meeting the expectations of the Government, the business community and the investors.

Eagerness for the launching of derivative securities market: A playfield for 'big' investors
Derivative securities market officially put into operation. Photo: Government online media

Yesterday, the Hanoi Stock Exchange (HSX), the Ministry of Finance (MoF) and the State Securities Commission held the inauguration ceremony of Vietnam's derivative market.

Accordingly, Vietnam has become the fifth country in the ASEAN region (besides Singapore, Malaysia, Indonesia and Thailand) and the 42nd country in the world having the derivative market.

Deputy Prime Minister Vuong Dinh Hue said that during the development of the stock market in general, the opening of the derivative market is necessary to complete the structure of the financial market and under the strategy to develop the stock market in the future. 

The derivative market will help investors disperse and prevent risks and diversify investment porfolios, increasing the attractiveness and opportunities of the stock market.

Therefore, the derivative market is usually developed after the basic stock market. Countries in the region usually open derivative market after 30 years since the opening of the stock market.

To develop further stock market as the medium and long-term capital resources for the economy, the Deputy Prime Minister requested the MoF to complete the institution, mechanisms and policies on securities and stock market in accordance with international practices and under conditions of economic development in Viet Nam.

The domestic and foreign investors are longing to derivative market because of its advantages. Derivative products can help generate huge profits, create liquidity for the market or prevent risk, thereby contribute to capital mobilization for the economy. However, besides advantages, the investor may be at risks if they do not have sufficient analysis tools or abuse it to manipulate the market.

Currently, 2,000 accounts have been opened for implementing transactions in the derivatives market. To assist in the initial operation, HSX will waive fees on the derivatives market for six months.

According to Investopedia, the world's leading source of financial content on the web, a derivative is a financial instrument whose price is dependent upon or derived from one or more underlying assets. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.