Derivatives market sees liquidity rise in July
Derivatives market sees liquidity rise in July
Transactions on the derivatives market in July increased compared to June with average trading volume up by 18.59 per cent to about 212,623 contracts per session, according to statistics from the Ha Noi Stock Exchange (HNX).
The session on July 29 had the highest trading volume during the month – also the highest level since the inception of the derivatives market – reaching nearly 356,033 contracts.
The open interest (OI) – the total number of open or outstanding options and futures contracts – surged by 40.43 per cent from the previous month. By the end of July 31, the OI volume of the market reached 38,001 contracts.
The number of derivatives trading accounts continued to increase. At the end of July, the figure reached 132,274 accounts, up 4.86 per cent over the previous month.
In April, transactions carried out by individual domestic investors accounted for a large proportion and stayed at the same level as previous months, at 85.94 per cent of total derivatives trading volume.
The proportion of transactions carried out by domestic institutional investors, excluding self-trading, also stayed almost flat, reaching 13.47 per cent.
As for self-trading, the trading value of this group slumped compared to June, reaching only 0.66 per cent.
Transactions by foreign investors in July decreased according to the general trend of the stock market, accounting for 0.59 per cent of the total trading volume of the whole market.
The trading volume of derivatives rose in July, in contrast to the sluggishness of the underlying market.
When the underlying market falls, investors theoretically seek opportunities to make a profit on the derivatives market, because it allows them to earn profits even as the underlying market declines.
The liquidity of the derivatives market often soars when the underlying market fluctuates. Thus, the derivatives market is an effective solution to retain investors, helping avoid a situation in which they withdraw from the stock market and cause collapses.
