(KTSG) - If designed correctly, the Law on Derivative Commodity Trading will not only serve the purpose of risk prevention for domestic enterprises but also gradually help form a commodity trading center with regional influence.
The Ministry of Industry and Trade earlier this year proposed building a separate Law on Derivative Commodity Trading instead of just supplementing a number of provisions in the 2005 Commercial Law, and for good reason.
The derivative commodity market is a place to buy and sell financial contracts whose value depends on price fluctuations of underlying commodities (such as agricultural products, metals, energy). Participants trade based on price forecasts to seek profits or hedge against price volatility. Regulations on derivative commodity trading in Vietnam were already mentioned in the 2005 Commercial Law and its guiding documents, but the market context at that time was still very rudimentary and mainly focused on commodity trading through the Vietnam Commodity Exchange.
To date, Vietnam's legal system has not fully regulated many core components of a modern derivatives market. Over-the-counter (OTC) transactions almost lack a separate legal framework. The legal status of the clearing house has not been fully established. Regulations on position limits, market risk management, information transparency, and international connectivity still have many gaps. Many opinions suggest that the derivative commodity market in Vietnam is mainly financial speculation, but this reflects only a very small part of reality.
In developed economies, the majority of derivative commodity transactions are used as a risk management tool. For steel producers, fluctuations in iron ore prices can significantly change input costs. For coffee exporters, a sharp drop in commodity prices at harvest time can wipe out most profits. For airlines or logistics companies, fuel prices are always an unpredictable variable.
In such cases, futures, options, or swaps allow businesses to lock in future prices, thereby being more proactive in production and business planning. The core economic function of the derivatives market, therefore, is not to create risk but to help disperse and manage risk more effectively.
Vietnam is one of the world's major producers but has yet to have a voice in the formation of global market prices. Currently, when facing global commodity price volatility, domestic enterprises can only access these price risk management tools through foreign organizations or exchanges. This paradox leads to Vietnamese enterprises incurring higher transaction costs and having more limited access, while Vietnam also misses the opportunity to form a market that can directly support the domestic economy. Therefore, the Law on Derivative Commodity Trading truly creates an opportunity for enterprises and the economy as a whole to legitimately participate in the role of "determining international market prices." The question is which development model for the derivative commodity market will we choose?
Lessons from Three Development Models in the World
International experience shows that there is no single model suitable for all countries.
In the US, the derivative commodity market is managed in a centralized and very tightly supervised manner. Major exchanges like CME Group or ICE operate under the supervision of a specialized agency with a multi-layered risk management system. Most transactions are guaranteed through a central clearing mechanism. Requirements for margins, position limits, and information transparency are applied at very high levels. The US risk management mechanism and real-time trading supervision capacity are what Vietnam can study and learn from.
Singapore, on the other hand, chose a different approach. Instead of relying on the size of the domestic market, the country focused on building a trading hub and regional connectivity. The legal framework was designed to be open, facilitating international participation while maintaining strict risk management standards. The biggest lesson from Singapore is the ability to connect international liquidity through a transparent and stable institutional system.
Meanwhile, China developed its market along a more cautious path. The country prioritized building exchanges tied to strategic commodities such as iron ore, energy, soybeans, and industrial metals. Only when liquidity was large enough and the supervision system strong enough did the scope of operations gradually expand. Notably, China's derivatives market has always been closely linked to the development strategy of the country's key economic sectors.
A Unique Path for Vietnam
Looking at current conditions, Vietnam can hardly adopt the US model wholesale. The market size is still small, the number of participating enterprises is limited, and management capacity is insufficient to operate a system as complex as the world's leading financial centers.
However, fully choosing Singapore's open model also entails considerable risks when the domestic market lacks depth and the supervision mechanism is still being perfected. Therefore, the most reasonable choice for Vietnam at this time is probably a hybrid model, combining China's caution with Singapore's level of integration.
In the initial phase, the focus should be on developing products linked to Vietnam's advantages or actual needs, such as coffee, rice, rubber, pepper, steel, and energy. These are all commodities important for exports or heavily affected by international price fluctuations.
In the next phase, efforts should concentrate on perfecting the central clearing mechanism, standardizing the margin system, and building real-time market supervision capacity. Only when these foundations are consolidated can international connectivity expansion and OTC market development be carried out safely and sustainably.
Central Clearing - The "Heart" of the Market
In the entire legislative dossier, one of the most notable contents is the proposal to establish a Central Clearing House. This can be considered the "heart" of the modern derivative commodity market.
Without this mechanism, each trading party directly faces counterparty risk. If one party becomes insolvent, a chain effect can spread throughout the system. Conversely, when a clearing house stands between buyer and seller, risk is centrally managed, margin mechanisms are standardized, and the likelihood of systemic collapse is significantly reduced.
The 2008 global financial crisis demonstrated the severe consequences of derivatives markets lacking appropriate control mechanisms. Therefore, if a priority must be chosen in the legislative process, establishing a central clearing mechanism should probably be placed at the top.
In Lieu of a Conclusion
If designed correctly, the Law on Derivative Commodity Trading will not only serve the purpose of risk prevention for domestic enterprises. Further, it could be the foundation for Vietnam to gradually form a commodity trading center with regional influence for commodities where Vietnam holds competitive advantages such as coffee, rice, or rubber.
International experience shows that the most successful markets are not those with the largest trading volumes, but those that help enterprises manage risk most effectively. That should also be the most important measure when building the Law on Derivative Commodity Trading in Vietnam. If designed correctly, this new regulation will not only fill the legal gaps that have existed for many years but also contribute to upgrading market infrastructure, enhancing the economy's resilience to external shocks, and gradually deepening Vietnam's participation in the formation of commodity prices in the region and the world.
(*) HM&P Law Firm
(1) https://baochinhphu.vn/de-xuat-xay-dung-luat-giao-dich-hang-hoa-phai-sinh-102260225144614255.htm, accessed on May 31, 2026.
