DECISION

APPROVING THE PLAN ON FORMATION AND DEVELOPMENT OF VIETNAM’S DERIVATIVE SECURITIES MARKET

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 29, 2006 Securities Law and the November 24, 2010 Law Amending and Supplementing a Number of Articles of the Securities Law;

Pursuant to the November 29, 2005 Enterprise Law;

Pursuant to the Prime Minister’s Decision No. 252/QD-TTg of March 1, 2012, approving the Strategy for development of Vietnam’s securities market during 2011-2020;

Pursuant to the Prime Minister’s Decision No. 1826/QD-TTg of December 6, 2012, approving the Plan on restructuring of the securities market and insurance businesses;

At the proposal of the Minister of Finance,

DECIDES:

Article 1. To approve the Plan on formation and development of Vietnam’s derivative securities market with the following major contents:

I. VIEWPOINTS AND PRINCIPLES

1. To form and develop the derivative securities market in Vietnam in conformity with international standards and practices and the country’s actual conditions and socio-economic development orientations.

2. To develop the derivative securities market after the centralized model which operates under the State’s management, without permitting its free formation and spontaneous operation.

3. To select and standardize derivative securities traded on the stock exchanges being futures contracts and option contracts based on underlying securities which are stock exchange indices, government bonds and listed stocks. Derivative securities shall be traded on the stock exchanges under a roadmap from simple to complex products in step with the development of the securities market and its demands. To initially focus on developing the market for trading derivative securities based on stock indices, government bonds and stocks.

4. To form and develop the derivative securities market in line with the Strategy for development of Vietnam’s securities market during 2011-2020, ensuring the principles of: (i) Conformity with orientations for development of Vietnam’s securities market and restructuring of the securities market, particularly synchrony and compatibility with basic products (underlying securities), conformity with the restructuring of stock exchanges and determination of basic stock and bond markets under the strategy for development of the securities market to 2020; (ii) Gradual establishment of a reasonable structure for the securities market, assurance of sustainable development of the basic and derivative securities markets; (iii) Public, transparent, effective and safe operations of the market; (iv) Strict management and supervision to protect the interests of investors; (v) Gradual alignment with securities markets in the ASEAN region; and (vi) Intensive development of the market to improve its capacity and competitiveness against regional markets.

II. OBJECTIVES

1. General objectives

- Forming the derivative securities market is a step toward completing the securities market structure, facilitating the sustainable development of basic securities markets (stock market and bond market), contributing to promoting the development and enhancing the role of the securities market in the financial market in particular and in the economy in general, and turning the securities market into a channel for safe and long-term raising of capital for economic growth;

- The formation of the derivative securities market aims to gradually diversify products for trading, conform with the financial market’s development process, meet investment and risk management demands of investors and issuing organizations, raise the competitiveness of Vietnam’s securities market and integrate more deeply into regional and world securities markets.

2. Specific objectives

The formation and development of the derivative securities market must follow a roadmap of developing derivative products from simple to complex, ensuring management and monitoring of market risks, specifically through the following phases:

- 2013-2015: To create a legal framework and complete physical and technological infrastructure, including the system of derivative securities trading, clearing and settlement, the system of information monitoring and disclosure at the stock exchanges, securities depositories and market members, ensuring compatibility with basic derivative products, and prepare all necessary conditions for putting the market into operation;

- 2016-2020: To operate the derivative securities market, initially for derivative products based on securities indices, government bonds and stocks;

- After 2020: To improve and raise the operational quality of the derivative securities market, and gradually diversify traded products. To expand market participants, improve technological infrastructure and quality of investor base, proceeding to forming a unified derivative securities market based on underlying assets in conformity with international practices, which will operate publicly, transparently and effectively, contributing to the development of the financial market.

III. PLAN ON FORMATION OF THE DERIVATIVE SECURITIES MARKET IN VIETNAM

1. Organization of the derivative securities market

- The derivative securities market shall be organized as a unit of the stock exchange;

- The derivative securities clearing and settlement center after the model of central counterparty clearing house shall be organized as an affiliated unit of Vietnam Securities Depository - the only organization permitted to register, deposit, clear and settle securities in Vietnam.

2. Model of organization of derivative securities transactions a/ Types of traded derivative securities and underlying assets:

- In the initial development of the market, derivative securities eligible for trading on the stock exchanges will be futures contracts based on stock exchange indices and futures contracts based on government bonds. Trading in stock-based futures contracts and option contracts based on stock exchange indices, government bonds and stocks will be organized when the market develops stably;

- In the long run, derivative financial instruments which are futures contracts and option contracts based on underlying assets being stocks, bonds, and currency and commodity futures contracts will be traded uniformly on the stock exchanges.

b/ Derivative securities trading system

The derivative securities trading system shall operate independently from the stock and bond trading systems in the trading systems of the stock exchanges. The stock exchanges shall organize and operate the derivative securities trading system.

3. Payment model

Vietnam Securities Depository is the only organization clearing and settling derivative securities after the model of central counterparty through the Center for Derivative Securities Clearing and Settlement which is a unit of Vietnam Securities Depository.

4. Trading members, clearing and settlement members

a/ Members of Vietnam’s derivative securities market include:

- Trading members, which are securities companies and commercial banks which are approved by the State Securities Commission to operate in derivative securities trading and meet criteria of derivative securities trading members of Vietnam Stock Exchange;

- Clearing and settlement members, which are securities companies and commercial banks which meet criteria of members of the Center for Derivative Securities Clearing and Settlement of Vietnam Securities Depository.

b/ Members of the Center for Derivative Securities Clearing and Settlement include: (i) Clearing and settlement members, which are securities companies eligible to provide the derivative securities brokerage service and clear and settle derivative securities brokerage and dealing transactions; and (ii) Clearing members, which are commercial banks clearing and settling derivative securities dealing transactions when acting as direct members of the derivative bond trading market.

5. Supervision model

Supervision of the derivative securities market covers: (i) Supervision conducted at the State Securities Commission; (ii) Supervision conducted at the stock exchange and Vietnam Securities Depository. The State Securities Commission shall supervise the entire operation of the derivative securities market. The stock exchange shall supervise operations of members and derivative securities transactions on the stock exchange. Vietnam Securities Depository shall supervise operations of clearing and settlement members and derivative securities clearing and settlement operations.

IV. ROADMAP FOR DEVELOPMENT OF THE DERIVATIVE SECURITIES MARKET IN VIETNAM

- Phase 1 (2013-2015): Formulation of a legal framework and completion of physical and technical foundations for the operation of the derivative securities market.

- Phase 2 (2016-2020): Organization of trading of derivative securities based on underlying assets being securities (securities indices, government bonds, and stocks).

- Phase 3 (after 2020): Development of the unified derivative securities market based on underlying assets in conformity with international practices.

V. ORGANIZATION OF IMPLEMENTATION

1. The Ministry of Finance

a/ To assume the prime responsibility for, and coordinate with ministries and sectors in, drafting a decree on derivative securities and the derivative securities market and submitting it to the Government for promulgation;

b/ To promulgate circulars guiding this decree;

c/ To direct the State Securities Commission, stock exchanges and Vietnam Securities Depository in formulating regulations and rules on products, listing, trading, clearing and settlement of derivative securities and supervision of these transactions;

d/ To direct the State Securities Commission, stock exchanges and Securities Depository in developing an information technology system for the derivative securities market;

dd/ To coordinate with related ministries and sectors in guiding the implementation of this Decision according to their competence.

2. The Ministry of Justice, the Ministry of Planning and Investment, the State Bank and the Ministry of Industry and Trade shall coordinate with the Ministry of Finance in creating a legal framework on the derivative securities market and a uniform roadmap for centralized trading of derivative instruments on the stock exchanges.

Article 2. This Decision takes effect on the date of its signing.

Article 3. Ministers, heads of ministerial-level agencies and government-attached agencies, chairpersons of provincial-level People’s Committees and heads of related agencies shall implement this Decision.-