Mar 17, 2013

Vietnam - Hanoi Exchange introduces new bond trading system

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The Hanoi Stock Exchange has introduced the second version of the Government bond trading system, which will be used for the first time from March 18 when Circular 234/2012/TT-BTC takes effect.

The system was upgraded in response to provisions in the circular concerning risk management and repurchase agreement (repo) trading. A repo agreement occurs when the selling party agrees to repurchase bonds in the future.

The new version integrates bond and treasury bill trading, information systems and a yield curve.

The Government bond market has actively contributed to investment resources for both the State budget and financial institutions this past year, said Deputy Minister of Finance Tran Xuan Ha.

In addition, the liquidity of the market improved significantly, boosting capital turnover and creating conditions for short term capital to develop into long-term funding, which will help the domestic economy, Ha said.

Government bonds increased in value twice last year, totalling nearly VND67.6 trillion ($3.2 billion). Bond yields declined over 2011 and were 1-2 per cent lower than deposit rates. The deployment of the first bond trading system in August created an effective link between issuing organisations, managing agencies and investors.

This year, the Government expects to mobilise a total of VND150 trillion ($7.1 billion) through bonds, including VND90 trillion ($4.2 billion ) to address the budget deficit. The remainder will go towards investment projects.

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