In brief: The Vietnamese Government has issued a new decree that lays the foundations for the trading of derivatives and for the establishment of the first derivative market in Vietnam. This development is expected to diversify securities products in Vietnam and help enhance liquidity on the Vietnam securities market. Partner Robert Fish (view CV), Senior Associate Chi Ha, and Associates Dang Vu and Ngoc Nguyen report.

WHAT DO YOU NEED TO KNOW?

  • A derivatives market is to be established for the trading of futures, forwards and options where the underlying assets are shares, bonds and units traded on a Vietnam stock exchange. It is expected that the first two products to be launched in 2016 and traded on this market will be index-linked futures and Government bond futures.
  • The new decree 42/2015/ND-CP (Decree 42) contains general provisions setting out the role of the different players in the planned derivatives market.
  • Decree 42 is the first of a series of legal instruments to be issued this year to provide a detailed legal framework for derivative securities trading in Vietnam. Investors should continue to watch this space as it develops in 2015.

BACKGROUND

Derivative instruments have been recognised as a concept by Vietnam law since 2006 under the Law on Securities. However, the green light for the development of a regulated market for such products was not given until early last year. Under Decision 336 of the Prime Minister, dated 11 March 2014, Vietnam proposed to develop a derivatives market in phases, with the goal of full integration with international practices after 2020.

Decree 42 is the first of a series of regulations to be issued this year under that roadmap, which will lay out the essential legal framework for the Vietnam derivatives market that is scheduled to commence operations in 2016.

Please click http://www.allens.com.au/pubs/asia/cuviet15may15.htm for more information.