SSC and HOSE executives reply to questions on covered warrants from participants at a meeting held in HCM City on June 24. — VNS Photo Xuân Hương

HCM CITY — Covered warrants will be listed and traded on the Hồ Chí Minh Stock Exchange from June 28, Phạm Hồng Sơn, vice chairman of the State Securities Commission of Việt Nam, announced at a meeting in HCM City on Monday.

Covered warrants are securities that have collateral assets issued by securities companies. The owner will have the right (not the obligation) to buy or sell the underlying stock (including shares, bonds or other securities) at a predetermined price, before or at a specific time in the future.

According to Sơn new products such as CW are part of the stock market development roadmap to 2020 approved by the Government, and another new product is expected to be rolled out in July.

The preparatory works for introducing covered warrants, including the legal framework, regulations, processes, facilities, human resources, and publicity, have been completed.

Bùi Hoàng Hải, head of the SSC’s securities trading management department, said 16 securities companies would be eligible for CW issuance and 26 shares would qualify as underlying securities for the covered warranties.

Seventeen applications for licences to sell covered warrants based on six underlying securities, MBB, HPG, MWG, FPT, PNJ and VNM, had been received from eight securities companies.

The SSC had approved 16 applications from seven securities companies to sell 28.9 million warrants for a maximum value of VNĐ104 billion (US$4.67 million).

The SSC was scrutinising applications to continue licensing other securities companies.

Hải said over 8.6 million warrants had so far been sold for VNĐ15.1 billion ($648,484), with four products selling out completely. "But there are also products that remain completely ignored," he said.

Nguyễn Thị Việt Hà, a member of HOSE’s board of directors, said: "Covered warrants is one of the products HOSE has been preparing for many years. With support from stock exchanges in Asia and foreign securities companies, we have invested a lot of time and resources to ensure that we can bring to the market a good and reliable product.”

Therefore, "HOSE expects the warrants to be positively received by investors," she said.

Sơn said this year the derivatives market had been strong, with average trading volumes of over 106,000 contracts per session, up 35 per cent from 2018. — VNS