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WHAT IS GOVERNMENT BOND FUTURES CONTRACT?

Government bond futures contract (GBFT) is a Vietnamese Government bond purchase/sale agreement in the future with a predetermined time, price, payment method, payment time, etc.

Hedging

Arbitrage

Speculation

Investors can open short positions to hedge interest rate risk and to avoid having to sell government bonds. On the other hand, if investors borrow government bonds to sell, they can open long positions to minimize the risk of price increases when buying government bonds to repay the loan.

 Conduct a transaction to enjoy the difference between the price of the bond and the price of the GBFT, or the difference between the price of the 2 different GBFT with different maturities.

Gain profits from the correct prediction of the price fluctuation trend of GBFT based on bond interest rate movements.

WHY IS VNDIRECT THE BEST, WHEN IT COMES TO GOVERNMENT BOND FUTURES CONTRACT TRANSACTIONS?

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GOVERNMENT BOND FUTURES CONTRACT FORM

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TRANSACTION PROCESS

Step 1: Open an account at VNDIRECT
VNDIRECT consultants will contact and guide investors on the procedures and required documents

Step 2: Deposit before the transaction
Deposit money directly into the derivative securities account or transfer from the underlying securities account

Step 3: Place buy/sell orders through VNDIRECT system
See transaction instructionsHERE

Step 4: Gains and losses are recorded at the end of the trading hours
Net interest: Interest will be posted to the account no later than 11 am the following morning
Net loss: All losses must be paid before 9 am the next morning

FREQUENTLY ASKED QUESTIONS

Question 1: Currently, whom GBFT product is applied to?
According to the regulation, since July 4, 2019, GBFT product only applies to institutional clients.

Question 2: What is the initial margin (IM) ratio for GBFT?
The IM ratio at VNDIRECT is 2.8% (based on the IM ratio of VSD of 2.5%).

Question 3: What is the total initial margin ratio?
With the safe threshold of the rate of using collateral assets is 80%, the total margin required for clients to be able to trade at VNDIRECT is 3.5% of the value of the GBFT.

Question 4: Is the payment process due for GBFT in cash or physical delivery?
According to the regulations of HNX and VSD, when maturity date comes, GBFT is paid by physical delivery (government bonds).

Question 5: When requesting proof of solvency for a Buy and hold position to maturity, can a Bank client issue a letter of guarantee to prove its solvency?
Yes, the Bank may issue a letter of guarantee itself

Question 6: If the Client has a position to sell before maturity and must carry out the bond delivery, can Client directly deliver the bond to an existing margin account at VSD instead of going through VNDIRECT?
No, the Client is required to deliver bonds into the Client’s deposit account opened at VNDIRECT, so that VNDIRECT – acting as a clearing member, can act as an intermediary to deliver bonds to VSD’s margin account for the payment.