Lê Hải Trà, acting chairman of the Hồ Chí Minh Stock Exchange, speaks to the media during a review of the covered warrants market in HCM City on Friday one year after they were introduced. — VNS Photo

HCM CITY — One year after they were introduced on the Hồ Chí Minh Stock Exchange, covered warrants have had a positive impact on the market, helping increase liquidity for their underlying stocks.

The State Securities Commission of Vietnam (SSC), the exchange and securities firms issuing covered warrants (CWs) comprehensively reviewed the issuance of CW products and transaction situation at a press conference held in HCM City last Friday.

According to the exchange, 134 CW codes issued by eight securities firms with a total volume of 410.2 million CWs had been listed and traded as of May 29.

Over 990.32 million CWs have totally been traded so far for VNĐ1.48 trillion (US$63.8 million), with the highest trading volume being in May 2020 (15.92 million CWs) and the highest transaction value being in November last year (VNĐ221.1 billion), it said.  

Hoàng Phú Cường, deputy director of SSC’s securities business management department, said a large number of local and foreign investors have welcomed CWs and made profits from them, and they have proven safe at every stage from depository and issuance to listing and transacting.

Trịnh Hoài Giang, general director of the HCM City Securities Corporation (HSC), one of eight CW issuers, said, “I think this is a potential market and we are gradually improving our activities related to CW such as issuance, market creation and hedging.

“Despite severe volatility recently, especially when the market fell sharply, we were able to operate this product well.”

He suggested that the regulator and the exchange should simplify CW issuance procedures, improve the trading system and develop new CW products that are based on the index rather than just stocks.

“I believe that CWs trading will become better in future.”

Lê Hải Trà, acting chairman of HOSE, said the exchange would co-ordinate with market members to make a thorough review and evaluation of issuances, transactions and market feedback on CW products, so that it could improve and perfect the CW products.

The Securities Law was passed last year and the SSC is drafting documents and circulars for its implementation, and more new products would be launched in the market including CWs, he said.

The exchange is installing a new generation of IT system, and the huge and complex project that would cover the entire trading, information disclosure, clearing, payment, and depository systems is expected to be finished by year-end, he added.

Trần Văn Dũng, the SSC chairman, said the CW market has been developing well, but there are plans to amend their mechanism and issuance procedures to make the market more attractive.

“[With] the new IT system … there will be many modern technical tools … to meet the needs of market members and investors. By that time, when the market is sufficiently developed and risk management is ensured, the SSC will seek to allow the issuance and trading of put warrants.”

Currently, only call warrants are available in the market. — VNS