On July 16, 2018, Vietnam Mercantile Exchange will officially be put into operation to connect with other global mercantile exchanges.
On July 16, 2018, Vietnam Mercantile Exchange will officially be put into operation to connect with other global mercantile exchanges.
Vietnam’s first Mercantile Exchange was licensed by the Ministry of Industry and Trade in 2010, however, it will not be operated until July 16 due to Decree 158, Commercial Law (12/2006) which regulates the trading of goods through the commodity exchange that causes difficulties for the operation of enterprises.
After 8 years, Decree 51 has amended and adjusted a number of articles of Decree 158, effective from June 1, 2018 with many breakthroughs which can make Mercantile Exchange of Vietnam become a bonding factor between Vietnamese enterprises with other commodity exchanges in the world.
Mr. Nguyen Ngoc Quynh, General Director of Mercantile Exchange of Vietnam said that this office will help connecting the sellers and the buyers in domestic and even in the world to take a lot of advantages about commodity information, price and market assessment.
Operating mechanism:
Operating mechanism of Mercantile Exchange of Vietnam is similar to that of the world including trading floors, clearing centers and commodity trading centers.
Trading floors are responsible for trading and order matching, order management from investors and those who need to buy and sell goods. Clearing Center cooperates with banks to ensure the liquidity and the risk of payment when they conduct goods transactions. The Center for Inspection and Commodity Trading assures the quality of goods for manufacturers and traders on the market, especially overseas markets, whereby they will reduce the costs of warehousing and inspection
Members:
Banks: The Bank for Investment and Development of Vietnam (BIDV), Techcombank and banks that have been allowed to conduct derivative transactions for Vietnamese businesses on foreign mercantile exchanges.
Agricultural associations such as: coffee, rubber, steel ...
Businesses, farmer households, small producers
There will be 40 items that have export advantages and high-demand import items for processing such as: rice, sugar, coffee, rubber, pepper, aluminum, copper, iron and steel.
Challenges for Mercantile Exchange of Vietnam:
According to Ms. Nguyen Phuong Dung, Deputy Head of the Department of Trade Infrastructure, the Domestic Market Department under the Ministry of Industry and Trade, and many economists, trading through commodity exchange is difficult due to the business habits of the Vietnamese, most of which are small producers with non-standard goods and prefer trading through traders rather than through commodity exchange.
In addition, this model is relatively new which may not attract many Vietnamese investors and enterprises. Therefore, the commodities are not diversified.
