Derivatives

1.    BASIC KNOWLEDGE ON DERIVATIVES

•   Definition of Derivatives:

-  Derivatives is a financial security that includes numerous financial instruments with a value that relies upon or derived from an underlying asset (non-financial assets such as commodities, metals, energy, weather etc. or financial assets such as stocks, market indexes, bonds, currencies, interest rates etc.).

-  Strike price and maturity date are defined when Both Parties agreed to the contract.

-  When contract ends at maturity date, there are two methods of payment between Both Parties: cash payment or exchange of physical goods at pre-determined Strike price.

-  Derivatives are traded on the Stock exchanges (contracts are standardized according to criteria set forth by the SSC) and on the OTC (no standardization, high flexibility and high risks).

•   Financial instruments of derivatives

-  Currently trading on the HNX Stock exchange

   +  Futures contracts of VN30 Indexes

   +  Futures contracts of Government Bonds

-  Currently trading on the HSX Stock exchange

   +  Covered Warrant (long position) of pre-determined underlying assets (VN30 Index or HNX30 Index) by the SSC

-  Currently trading on the OTC

   +  Forward contracts on interest rates

   +  Swaps

   +  Forward contracts on currencies

   +  Options

   +  Etc.

-  Please note: when trading derivatives, investors need to settle all profits/losses derived from open positions daily.

2. FUTURES CONTRACTS

•   Definition of futures contracts

-  Futures Contracts belong to the derivatives category. A futures contract is a standardized legal binding agreement between the buying and selling parties to buy or to sell of an underlying asset at a pre-determined price, at a specified time in the future.

-  Differences between Basic Stock & Futures Contracts

•  VN30 Index Futures

-  VN30 Index Futures: A type of Futures contracts with the underlying asset ~ VN30 Index

-  Each futures contract has 4 different maturities “months” including the current month, the following month and 2 last months of closest 2 quarters. For example: In the current month of August, 2019, there are 4 contracts including: matured month of August, 2019 (current month):

·         VN Index Futures with expiration month in August, 2019

·         VN Index Futures with expiration month in September, 2019

·         VN Index Futures with expiration month in December, 2019

·         VN Index Futures with expiration month in March, 2020

-  VN30 Index Multiplier – is 100.000 VND

-  Types of investors allowed: Individuals and institutional investors

-  Details of VN30 Index Futures can be summarized as follows:

•   Futures contracts on Government bond

-  It is a variation of futures contracts with the underlying asset as an assumed Government bond, with characteristics similar to a Government bond in terms of principal, interest, and specified time based on the reference price of trading Government bonds.

-  Each futures contract of Government bond has 3 different maturity “months” based on quarter cycles, they are on March, June, September, and December. At the listing date, Government bond futures has 3 different maturity dates which are based on the latest 3 quarters. For example: On the current month of February, the Stock Exchange lists futures contracts on Government bonds that will mature on the following months, March, June & September.

-  The multiplier is 10,000 VND

-  Contract size is 1,000,000,000 VND

-  Allowable types of investors: Professional investors and Institutional investors

-  Please note: Method of settlement will be via the transfer of assumed physical Government bond into an actual trading Government bond converted via a pre-determined set of conversion coefficient calculated on the last settlement date.

-  Details of Government bond futures can be summarized as follows:

 

3.    STEPS OF TRADING AT KBSV

 

Step 1: Open derivative trading account at KBSV

•   Please open a derivative trading account at KBSV's branches or contact Phone number 1900 1711, or call for brokers (if have) for instructions.
•   Note: To open a derivative trading account, customers need open a stock trading account at KBSV. In case the customer does not have a stock trading account at KBSV, please register to open an online account click here or visit KBSV's branches.

Step 2: Deposit to a derivative trading account at KBSV

1. Deposit/Transfer funds to the derivatives trading account

• Customers can deposit/transfer funds to the following banks: 
• At Bank: BIDV - Ha Thanh Branch
• Beneficiary account number: 12210000660068 
• Beneficiary name: KB Securities Vietnam Joint Stock Company Description: "Deposit funds into derivatives trading account number [091Cxxxxxxx] [Account holder's name]"

2. In order to place an order on a derivative trading account, the customer needs to deposit to the derivative trading account at KBSV in 3 ways:

•   Customers can trade via KBSV’s branches.
•   Customers call via number: 1900 1711 and follow the instructions
•   Customers can transfer money via KB Buddy/ KB Buddy Pro

Detailed instruction click here

Step 3: Deposit to VSDC

After depositing to a derivative trading account at KBSV, customer need to deposit into VSDC in 3 ways:

•  Customers can trade via KBSV’s branches.
•   Customers call via number: 1900 1711 and follow the instructions
•   Customers can transfer money via KB Buddy/KB Buddy Pro

Detailed instruction click here

Step 4: Derivative trading at KBSV

Customers can place orders to buy and sell via KBSV's trading channels as follows:

1. Online trading (KB Buddy WTS)

Please click here

2. Derivatives trading via mobile (KB Buddy/KB Buddy Pro)

Please download the KB Buddy/KB Buddy Pro app on the phone

Click here to download App

3. Trading via KBSV’s branches

Please visit KBSV’s branches for trading as following addresses:

•   HO branch: Level 16 & 17, Tower 02 Capital Place Building, 29 Lieu Giai, Ngoc Khanh Ward, Ba Dinh District,  Ha Noi.
•   HN branch: Level 1, Office Building, 5 Dien Bien Phu, Ba Dinh, Hanoi
•   HCM branch: Level 2, TNR Tower Nguyen Cong Tru, 180-192 Nguyen Cong Tru, District 1, Ho Chi Minh
•   SG branch: Level 1, Saigon Trade Center, 37 Ton Duc Thang, Ben Nghe Ward, District 1, Ho Chi Minh City  

Step 5: KBSV settles daily profit/loss

•   VSDC và KBSV will daily calculate and settle profit/loss on customer’s derivative trading account.
•   In case the account has a gain position, KBSV shall settle profit on customer’s trading account.
•   In case the account has a loss position, Customer needs to deposit into his/her account at VSDC to ensure the transaction rate as prescribed by the management agencies.

Step 6: Customer withdraws from a derivative trading account

Customer makes a withdrawal from VSDC's deposit account à Derivative trading account at KBSV à Stock trading account à Cash / Customer’s bank account

Detailed instruction click here

Note: Customers can only withdraw from VSDCwhen the balance of derivative account ensures the regulated ratios of KBSV and VSDC.