Commodity Exchange for Vietnam

Nguyen Duy Phuong

Could you give us some brief introduction to VNX?

The Vietnam Commodity Exchange is the first of its kind in Vietnam licenced by the Ministry of Industry and Trade (MoIT) to trade on coffee, rubber and steel products. The VNX structure consists of three parts: a trading floor, a payment centre and a commodity transaction and appraisal centre. Besides, VNX also handles futures contracts, supervision, settlement and goods delivery activities.

What VNX will do to support investors?

VNX is teaming up with several banks, which will help us in payment activities. At the same time, some banks are preparing records to join VNX as its members. Accordingly, banks will provide diversified services from account management, payment to credit and trade finance to VNX investors (customers). We are working with some banks such as BIDV and Techcombank to get through on our system.

What are your expectations for the performance of VNX?

We look to make it popular among individual and corporate customers right in 2011. VNX is also planned to join hands with commodity exchanges worldwide such as those in London, Japan and Singapore.

What are the advantages and disadvantages for making transactions on the VNX initially?

There are numerous difficulties as this is quite a fresh investment model. However, the most important thing is to have the exchange in place and promote it to customers.

One problem is seen with human resources as we lack experienced staff in this field, meanwhile various kinds of risks exist such as risks associated with account-based and physical transactions’ balances, prices and system performance. As a forward-looking system, we will do our utmost to ensure VNX’s effective performance.

How can individuals and organisations perform transactions on the VNX?

VNX will provide derivatives financial tools (through futures contracts) to investors. To participate in transactions, investors need to deposit five per cent of total transaction value. For futures contracts, investors need to complete some certain procedures before embracing on transactions each day.

Some commodity trading floors were opened in Vietnam and generated poor results. What solutions does VNX take on to address the situation?

We have gained a lot of experience during the year we prepared. Compared to existing commodity exchanges VNX is bigger in scale with more functions. As the first licenced exchange in Vietnam VNX seeks to shorten the price gap for commodities between Vietnamese and work market.

VNX will soon present core products and services to investors and businesses such as futures and swap contracts, commodity brokerages, forwarding services, investment consulting and trade finance.