Covered warrants officially traded

Covered warrants officially traded

The official start to covered warrants trading marks the birth of the second derivative product, after the futures contract. At the opening ceremony on June 28 at the HSX, Le Hai Tra, in charge of the Board of Directors of HSX, affirmed that, "This is an important milestone for the Vietnamese stock market and is a collective achievement for all market members."

The first 10 covered warrant codes are based on six stock codes serving as the base security, including FPT, HPG (Hoa Phat Group), MBB (MBBank), MWG (Mobile World), PNJ (Phu Nhuan Jewelry JSC), and VNM (Vinamilk). Most of the covered warrants have two maturities of three and six months.

At the end of the first session, code CFPT1901 for a three-month term matched more than 650,000 CW orders. The CW currently stands at VND2,050 ($0.1), higher than the VND1,900 ($0.08) per CW issued by VNDirect Securities.

Meanwhile, HPG is a stock issued by three companies (MBS, VPS, and KIS) with the total amount of 6.5 million shares in circulation and serves as the basis for the issuance of the CHPG1902 CW. Foreign investors bought 50,000 and sold 110,000 covered warrants coded CVNM1901 (six months, based on VNM) and sold 120,000 CHPG1902 (six-month term, based on HPG) CWs.

The six-month CMBB1902 issued by HSC was the highest issued CW with VND3,200 ($0.14). Meanwhile, code CMWG1902 (MWG, six-month term) issued by VNDirect has the highest trading price on the floor, up VND3,500 ($0.15) per CW, 17 per cent higher than the issuing price.

Covered warrants are issued by securities companies, and are listed and traded on the HSX like similar stocks. Also according to the HSX, in the first stage, covered warrants are implemented as a right to buy and carried out according to European-style rights.

Chairman of the State Securities Commission Tran Van Dung said that covered warrants are welcomed by domestic and foreign investors and will boost the attraction of capital and improve market liquidity.