The State Bank had just approved the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VietcombankCode: VCB) of Vietnam (SBV) to supplement the operation of ‘Supplying derivative products with commodity prices’ to the Establishment and Operation License of the bank complying with the Decision No. 2447/QD-NHNN of SBV, effective from November 25, 2019.
According to Circular 40/2016/TT-NHNN, the derivative product with commodity price was financial instruments provided by commercial banks to customers to prevent commodity price risks. Base commodities in derivative transaction prices of goods were very diverse and abundant, including agricultural products, fuel, energy, metals, except for gold and goods banned from trading, and banned from export and import according to current law provisions.
The provision of commodity price derivative products was a commercial bank’s implementation of one of the following forms.
Commercial banks entered into and performed non-standard contracts on the derivative price of goods with customers in unfocused markets to prevent commodity price risks for customers. Commercial banks must complete reciprocal transactions with foreign partners to balance risks from non-standard contracts on derivative prices of goods that had been entered and performed with customers. Commercial banks had to form and conduct the contract of receipt and execution of the standard purchase and sale contract on commodity derivatives with customers.
