Hanoi (VNA) - Vietnam’s derivatives market will start operating in May or June in hopes it will improve Vietnam’s securities market and attract more foreign investment, according to the Chairman of the State Securities Commission, Vu Bang.

Bang said at a recent meeting in Hanoi that the legal framework for the derivatives market has been completed. For example, the finance ministry loosened the regulation on investors’ margin deposit accounts, and an amended circular on the matter could be issued this month.

He added that the Hanoi Stock Exchange (HNX) and the Vietnam Securities Depository (VSD) have completed developing regulations on the listing, trading, settlement and membership, and those regulations could also go into effect this month.

The trading and settlement systems have been tested and they are now stable and ready for market operation, Bang said, adding that there are 16 brokerage companies ready for the derivatives market, but only half of them are licensed to participate in the market.

Covered warrants are another product expected to become available in September 2017, allowing holders to buy or sell a specific amount of equities, currency or other financial instruments, usually from or to a bank or a similar financial institution, at a specific price and time.

The legal framework for this product has been developed, Bang said. HNX and VSD are developing instructions and criteria to monitor the trading system and the establishment of the covered warrant market.

According to the SSC, at the end of February 2017, 708 companies and fund certificates were listed on the two local exchanges, and 485 stocks were traded on the Unlisted Public Company Market (UPCoM) with total listing value of nearly 778 trillion VND (34.57 billion USD), an increase of 7 percent from the end of 2016.

The securities market’s capitalisation reached more than 2.26 trillion VND (50.3 percent of Vietnam’s gross domestic product) – the highest since 2000 and an increase of 16 percent from 2016’s year-end figure.

Market trading liquidity also improved, with a daily average trading value of 7.36 trillion VND, an increase of 6.6 percent from last year’s average.

Since the beginning of 2017, foreign investors have recorded net buy values of 1.54 trillion VND in stocks and 5.96 trillion VND in bonds despite the fact that international investors have moved out of emerging markets like Vietnam on expectations that the US Fed will raise its lending rates. The value of foreign investment portfolios in the first two months reached a record 18.4 billion USD.-VNA