1. What is derivatives? Derivatives are financial instruments whose values are based on an agreed-upon underlying assets. Common derivatives include: Forwards:

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During a trading day, profits/losses will fluactuate with real-time market price (mark – to – market)

At the end of a trading day, all profits/losses of closed and open positions are realized and paid to investors.

For open positions, VSD will calculate profits/losses as followings:

Positions opened in the trading day:
Profits/losses = (Daily settlement price – Executed price) * Multiplier * Number of contracts
Positions opened in previous days:
Profits/losses = (Daily settlment price – Previous-day settlment price) * Multiplier * Number of contracts

Leverage refers to using little amount of outlay to control large positions in derivatives trading.

For example, investor A decides to BUY 10 index futures contracts at price 700 and maturity date December 2017:

Contract code


Executed price



10 (LONG)




If initial margin rate is 10%:

  • Trading amount = 700 * 10 * 100,000 = 700,000,000 VND
  • Initial margin = 10% * 700,000,000 = 70,000,000 VND
  • Leverage effect = 700,000,000 / 70,000,000 = 10 times


If initial margin rate is 15%:

  • Trading amount = 700 * 10 * 100,000 = 700,000,000 VND
  • Initial margin = 15% * 700,000,000 = 105,000,000 VND
  • Leverage effect = 700,000,000 / 105,000,000 = 6.67 times

Initial margin refers to the minimum collateral values that investors must have to trade a specific derivatives contract. Initial margin rate can be used to calculate leverage effect of the contract.

Account ratio is the proportion of collaterals used for derivatives trading. Investors can use this figure to calculate the remaining values of collateral assets for next transactions.


Account ratio = Margin Requirements / Total Eligible Collateral amount

In which:

Margin requirements = IM + VM + SM + DM

IM = initial margin
VM = variation margin (net loss = unrealized profits/losses + realized profits/losses)
SM = spread margin (currently, not applicable)
DM = delivery margin (initial margin applied for physical delivery)

Total Eligible Collateral amount = Cash + Eligible securities

Account ratio will vary real-time with market prices of derivatives contracts

For example:

Step 1. An investor deposits 240 million VND in cash and 100 million VND in stock as collaterals for derivatives trading.

To ensure the minimum proportion of cash collateral is 80%, Total Eligible Collateral will be: 240 million + min (100 million; 25% * 240 million) = 300 million VND

Step 2. The investor expects the market will go “up”, thus he decides to BUY index futures contracts matured at December 2017

Contract code


Executed price


IM rate


10 (LONG)




Step 3. VSD checks Initial margin requirment of the transaction

Contract code

Initial margin

Margin requirements

Total eligible collateral


10 * 700 * 100,000 * 10% = 70,000,000 VND

70,000,000 VND (Initially, VM = 0)

300,000,000 VND

Step 4. VSD checks Account ratio of the trading account




First trading day

The first day listed in stock exchange

- The first day listed in stock exchange

- The number of listed contracts does not vary: new contracts will be automatically listed after a contract is matured

Listing volume

Limited by issuing amounts of stocks


Number of contract codes

Each stock code is corresponding to an individual stock/bond/fund certificate

Each contract has different codes corresponding to contract months


Not allow to short sell

Allow to short sell

Final trading day

The day before that stocks are unlisted

The final day that futures contracts have value

Payment period


Daily settlement

Payment method

Physical delivery

Cash settlement and physical delivery

Payment mechanism

Exchange stocks and cash

Central Counterparties (CCP)


Not compulsory (a facility that brokerage firms provide to customers)

Compulsory to ensure payment ability

Subjects of margin


Buyers and sellers

Open account Equity market Derivatives market Price board