Derivatives market flourishing, two years on

Average daily trade in the first seven months of 2019 was nearly 10 times the 2017 average, and 27 percent higher than last year. A total of 36 million futures contracts have been traded since the launch of Vietnam’s derivatives market in August 10, 2017, according to the Hanoi Stock Exchange (HNX).

The daily trading volume of VN-30 derivatives is currently equivalent to 70 percent of the daily trades made for Thailand’s SET50 derivatives, which are futures contracts for its 50 largest market cap stocks, HNX said.

To date, the market operates with seven derivatives, of which four are futures contracts of VN30 stocks, and three are 5-year government bonds.

The volume of open interest (OI), which refers to the total number of outstanding futures that have not been settled for an asset on the market, has grown 2.7 times from 8,077 contracts at the end of 2017 to 20,494 contracts by July 31, 2019.

Even when Vietnam’s stock exchanges experienced steep drops, transactions on the derivatives market remained active, HNX stated. On May 23 OI hit a historical record of nearly 40,000 contracts while the benchmark VN-Index slumped 0.11 percent.

As of July 2019, 78,445 derivative trading accounts had been opened, nearly double the number during the same period last year.  

The vast majority of investors in this market are domestic individuals, making up 91 percent of all trade in futures contracts.