The new investment product covered warrant could start trading on the HCM Stock Exchange in November, according to the State Securities Commission. (Photo pif.vn)
Hanoi (VNA) – The new investment tool, covered warrant, will
start listing and trading on the HCM Stock Exchange (HOSE) in November,
according to the State Securities Commission (SSC).
According to Vietnam’s securities market regulator, HOSE has completed the
trading system for the new product.
Covered warrant is expected to become a new investment tool for investors to
reduce the chance of risks, and to provide more options at a lower cost, as
compared to common stocks and fund certificates. It allows the holder to
buy or sell a specific amount of equities, currency or other financial
instruments from the issuer, usually a bank or a
similar financial institution, at a specific price and time.
Covered warrants can have a wide variety of underlying financial products such
as company’s stocks, market indices and fund certificates that meet the
requirements of the SSC.
According to HOSE, the first covered warrant products will be the large-cap
stocks that are listed in the VN30 and the HNX30 indices as they meet the
requirements on market capitalisation, trading liquidity and the percentage of
free-float shares.
The trading of covered warrants is similar to that of stocks, as investors are
allowed to use their stock trading accounts to buy and sell covered warrants.
Investors must ensure that they have enough cash and covered warrants for
trading if they want to make purchase or sale transactions. In addition, margin
lending is not eligible for trading of covered warrant.
Issuers of covered warrants are securities companies and they must meet some
standards, such as no accumulated losses, charter capital and ownership equity
of at least 1 trillion VND (roughly 44 million USD), as reported in the latest
annual and half-year financial reports, and fully licensed securities
operations.
As of mid-2017, some 10 securities firms have charter capital and ownership
equity of more than 1 trillion VND, including Saigon Securities Inc (SSI),
VNDirect Securities (VNDS), ACB Securities (ACBS) and VPBank Securities (VPBS),
as well as HCM City Securities (HSC) and Việt Capital Securities (VCSC).
Some others have charter capital of between 800 billion VND and 1 trillion VND,
such as FPT Securities (FPTS), Vietinbank Securities (CTS), BIDV Securities
(BSC) and MayBank Kim Eng Securities (MBKE).-VNA