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Hanoi Stock Exchange considers launching single stock derivatives

The move is aimed at diversifying products on offer and boosting market liquidity.

The Hanoi Stock Exchange (HNX) is considering launching the single stock derivatives along with other derivatives products derived from the index.

 The Hanoi Stock Exchange. File photo

The plan was revealed in the HNX’s latest report discussing the development and prospect of the stock market, noting the move is aimed at diversifying products on offer and boosting market liquidity.

At present, while the Ho Chi Minh Stock Exchange (HoSE) is home to the majority of large caps, the HNX houses smaller companies and manages both the Government bonds and derivatives markets.

The report also revealed the plan to set up a capital market specialized for startups, small and medium enterprises (SMEs) in a bid to aid the development of the private sector.

As part of the HNX’s responsibilities in holding auctions for stocks under the privatization scheme of state-owned enterprises, it aims to continue developing the bond market as a main capital mobilization channel for the state budget.

“The HNX would focus on enhancing the efficiency of both the corporate and Government bond markets, at the same time improving the liquidity for the secondary market and support the operation of the primary one,” it added.

To realize this goal, the Hanoi bourse said the priority lies in the development of a modern and open technological infrastructure that is connected with IT systems of international markets.

The HNX would develop new products for the Government bond market and set up the secondary corporate bond market with the goal of ensuring transparency and fairness for investors.

According to the report, this is the Government’s priority for the stock market authority before giving permission for the issuance of corporate bonds, in which only professional investors are allowed to purchase such bonds via private placement.

For the derivatives market, the HNX said this would become a platform providing instruments for investors to mitigate risks and also another investment channel.

Meanwhile, the HNX is also considering the organization of commodity derivatives, focusing on Vietnam’s major farm produce of coffee, cashew, pepper, and natural resources such as gas and oil.

The HNX started operation on March 8, 2005, five years after the launch of the Ho Chi Minh Stock Exchange and nine years since the establishment of the State Securities Commission of Vietnam (SSC), the country’s stock market watchdog.