Deputy Chairman of the State Securities Commission, Mr. Nguyen Thanh Long, tells VET the establishment of a derivatives securities market is proceeding on schedule.
Can you tell us about the progress made in establishing and developing a derivative securities market?
The provisions and directions to establish and develop a derivative securities market have been nearly completed. The remaining issue is guiding and detailing the provisions and direction. The State Securities Commission and Ministry of Finance (MoF) are now drafting circulars.
When do you expect the market to open?
Most activities have been implemented on schedule, so we expect it will begin next year.
What will the content of the draft circular focus on?
The draft will have two main contents. The first is specific provisions for organizations providing derivative securities services such as securities companies, fund management companies, and commercial banks. These rules will meet market demand now and in the future, even as more derivatives products are introduced based on different underlying assets.
The second content relates to the product. In the first stage, there will only be two basic derivatives - contracts based on indices and futures contracts based on bonds. In the next phase we will continue to diversify and supplement other products under the development level of the market and market demand.
How many securities companies are eligible to participate in the derivatives securities market?
In my opinion, with the current criteria, the number of securities companies will be about 15 to 20 and nearly 20 commercial banks. I believe that, along with the development of the market, the number of securities companies with sufficient capacity to provide services for the derivatives securities market will continue to increase.
What opportunities for individual investors will there be in the market?
We will design products suitable for organizations but a similar product will also be designed to meet the risk management needs of individual investors. The volatility of the Chinese stock market is a lesson for us in needing a strong system of professional investors that are good at risk management. Derivative securities provide products for better risk management. A lack of derivative securities is a lack of risk management tools. With the structure of small and medium-sized enterprises, which are unstable and have no experience in risk management, the derivatives market must overcome many challenges.