Currency derivatives products of banking sector the case of bidv,

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty - - GRADUATION THESIS Currency derivatives products of banking sector: the case of BIDV Lecturer Student Class Student Code : Nguyen Thi Hien Hanh (M.A) : Ton Thi Thanh Mai : K14-ATCB : 14A7510153 20th May 2015 Graduation Thesis Banking Academy DECLARATION I declare that this thesis is the product of my own work and has not been previously submitted for degree or examination of any university Signature: Ton Thi Thanh Mai Date : May 20th, 2015 Ton Thi Thanh Mai i K14ATCB Graduation Thesis Banking Academy DEDICATION This thesis is dedicated to my beloved family, my sincere friends for their tremendous spiritual support and encouragement, as well as Banking academy of Vietnam for its precious knowledge support Ton Thi Thanh Mai ii K14ATCB Graduation Thesis Banking Academy ACKNOWLEDGEMENTS I would like to express the profound gratitude to my supervisor M.A Nguyen Thi Hien Hanh for giving me great support, encouragement and constructive feedback to accomplish the paper I also wish to extend my heartiest thanks to all Banking Academy’s lecturers, who have equipped me with sufficient knowledge and my family as all of those who has supported me wholeheartedly in any respects for the completion of this thesis Because of time constraint and limited capacity of the writer, this thesis will certainly not be free from flaws Therefore, I hope that lecturers and readers will sympathize and offer further contributions to my graduation thesis Ton Thi Thanh Mai iii K14ATCB Graduation Thesis Banking Academy EXECUTIVE SUMMARY The paper studies the status of currency derivatives in commercial banks and case of BIDV It goes ahead to understand theoretical underpinnings relating to currency derivatives in commercial banks before critically analyzing the status of currency derivatives products of BIDV and benefits themselves for this bank, primarily using data from financial reports of BIDV from 2010 to 2014 The theory mentions five fundamental aspects of currency derivatives, including definition, characteristics, functions, categories and participants in derivative contracts It suggests that currency derivatives can help banks as well as enterprises not only to hedge against exchange rate risk but they also make profits for the banks Particularly, BIDV has provided almost the kinds of currency derivatives products for customers They also help BIDV to prevent risks and make profits for this bank However, there are some limitations in currency derivatives operations in this bank as well as in other commercial banks in Vietnam In an attempt to make Vietnamese currency derivative market more robust, some recommendations are proposed to the banks, such as diversifying the currency derivatives products, enhancing the quality of staff and investing in modern tools for this field Besides, several recommendations for SBV and the Government in legal documents and policy are proposed Ton Thi Thanh Mai iv K14ATCB Graduation Thesis Banking Academy LIST OF ABBREVIATIONS Abbreviations Explanations ACB Asia Commercial Bank ANZ Australia and New Zealand Banking Group AUD Australian dollar BIDV CAD Bank for Investment and Development of Vietnam Canadian dollar CBs Commercial banks CCS Cross currency swaps CD Currency Derivatives CHF Swiss Franc DI Derivatives instrument FC Foreign currencies FOREX Foreign exchange GBP Great British pound HKD Hong Kong dollar HSBC Hong Kong Shanghai Bank of commerce IFRS International Financial Report Standards JPY Japanese yen MB Military Bank OTC Over the counter SBV State Bank of Vietnam SGD Singapore dollar US United States USD United States dollar VAS Vietnam Accounting System VCB Vietnam Commercial Bank for Foreign trade VIB Vietnam International Bank VND Vietnamese Dong WTO World Trade Organization Ton Thi Thanh Mai v K14ATCB Graduation Thesis Banking Academy LIST OF TABLES AND FIGURES List of tables Table 1.1: Comparison between forward contract and futures contract 11 Table 2.1: Maturity and volume of CCS transactions .25 Table 2.2: Differences between CCS and IRS in BIDV: 26 Table 2.3: Derivatives product categories in some banks 27 Table 2.4: Participants in Currency Derivatives contracts in BIDV 28 Table 2.5: Total sales of currency derivatives in BIDV from 2012-2014 29 Table 2.6: Revenue and profits from gold and foreign currency trading 31 Table 2.7: Cost for currency derivatives in BIDV 35 Table 2.8: Revenue from currency derivatives in some commercial banks .36 List of figures Figure 1.1: Payoff from forward contracts 10 Figure 1.2: Payoff from option contracts 12 Figure 2.1: Total sales of currency swap and currency forward contracts in BIDV 30 Figure 2.2: Proportion of revenues from currency derivatives, gold, spot contracts 31 Figure 2.3: Exchange rate in Vietnam from 2008 to July 2013 32 Figure 2.4: Exchange rate in Vietnam from Jan 2013 to Mar 2015 33 Figure 2.5: Profits from currency derivatives, gold and spot contracts 34 Figure 2.6: Revenue, cost and profits of currency derivatives in BIDV 35 Figure 2.7: Factors affecting banks and bank officers 40 Ton Thi Thanh Mai vi K14ATCB Graduation Thesis Banking Academy TABLE OF CONTENTS DECLARATION i DEDICATION ii ACKNOWLEDGEMENTS iii EXECUTIVE SUMMARY iv LIST OF ABBREVIATIONS v LIST OF TABLES AND FIGURES vi TABLE OF CONTENTS vii INTRODUCTION .1 Research rationale Purposes and research questions .2 2.1 Purposes of research .2 2.2 Research questions .2 Scope and limitations Research methodology Structure of the thesis .3 CHAPTER 1: OVERVIEW OF CURRENCY DERIVATIVES IN COMMERCIAL BANKS 1.1 Definition, characteristics, roles of currency derivatives .4 1.1.1 Definition of currency derivatives .4 1.1.2 Characteristics of currency derivatives .4 1.1.3 Roles of currency derivatives 1.2 Currency derivative categories .9 1.2.1 Currency forward contract .9 1.2.2 Currency future contract 10 1.2.3 Currency option contract 11 1.2.4 Currency swap contract 13 1.3 Participants 14 Ton Thi Thanh Mai vii K14ATCB Graduation Thesis Banking Academy CHAPTER 2: CURRENCY DERIVATIVE PRODUCTS IN JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM .18 2.1 Overview of BIDV 18 2.2 Framework for Currency Derivatives in Vietnam 20 2.3 Currency derivatives in BIDV 21 2.3.1 Currency derivative product categories 21 2.3.2 Participants 28 2.3.3 Turnovers from currency derivatives contracts .29 2.4 Evaluate the efficiency of currency derivatives in BIDV 36 2.4.1 Achievements .36 2.4.2 Limitations and the reasons .38 CHAPTER 3: RECOMMENDATIONS AND SOLUTIONS TO THE DEVELOPMENT OF CURRENCY DERIVATIVE PRODUCTS IN BIDV 43 3.1 Solutions to Joint Stock Commercial Bank for Investment and Development of Vietnam 43 3.2 Recommendations to Government and SBV 45 3.2.1 Recommendations to the Government 45 3.2.2 Recommendations to the State Bank of Vietnam 46 CONCLUSION 48 REFERENCES 49 Ton Thi Thanh Mai viii K14ATCB Graduation Thesis Banking Academy INTRODUCTION Research rationale After entering WTO, Vietnamese enterprises have more and more chances to implement export/import activities However, risk of exchange rate when making payment to imported goods or receiving payment for exported goods reduces enterprises’ profits Moreover, because of business cycle, from 2008 crisis to now, enterprises have not found out another effective way to invest, which leads to slow disbursement in banks Therefore, banks in Vietnam have to resort to new operation called “currency derivative tools”, which have been popular worldwide for many decades, especially in developed countries such as the US, Great Britain or even developing countries like China, India Nonetheless, the achievement in this field is still modest Besides conventional activities, foreign currency trading has been one beneficial operation which accounts for a considerable proportion in total profit Nevertheless, this activity also contains risk of losses, but concerning parties can minimize this risk In fact, in Vietnam, unforeseeable fluctuation of exchange rate in 2008 influenced too much on profit of commercial banks This also relates to risk management, an operation that is directly involved in derivative products However, in the scope of this report, I will just mention to currency derivative instruments BIDV has developed fast in recent years and especially becomes one of the two banks receiving increasing credit rating from Moody’s for domestic and foreign currency deposit issue In the area of currency derivative products, BIDV has also announced significant achievement Realizing the pressing of this products as well as situation of this in BIDV, I chose the topic “Currency derivatives of banking sector – the case of BIDV” as topic of my graduation thesis Ton Thi Thanh Mai K14ATCB Graduation Thesis Banking Academy Table 2.7: Cost for currency derivatives in BIDV Unit: mil VND Year 2010 2011 2012 2013 2014 Revenue 152,482 190,383 168,293 1,176,509 680,054 Cost 195,893 133,533 97,096 922,098 1,121,433 Profit -43,411 56,850 71,197 254,411 268,395 Source: Annual reports of BIDV Figure 2.6: Revenue, cost and profits of currency derivatives in BIDV 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 -200,000 Year 2010 Year 2011 Year 2012 Year 2013 Year 2014 -400,000 -600,000 Source: Annual reports of BIDV Figure 2.6 and table 2.7 shows that the operation of CDs in BIDV is not very effective because of the numerous costs for CDs, especially in 2014 Besides, it only brought about small profits for BIDV Although profits from CDs increased each year from -43,411 million VND in 2010 to 254,411 million VND in 2013, profits decreased significantly up to - 440, 929 million VND in 2014 Based on the figures above, it can be concluded that profits in foreign currency trading mainly come from the spot transactions, especially in 2014 when the cost for currency derivatives is too high Ton Thi Thanh Mai 35 K14ATCB Graduation Thesis Banking Academy Comparing turnovers from currency derivatives in BIDV and some commercial banks in Vietnam: Table 2.8: Revenue from currency derivatives in some commercial banks 2010 2011 2012 2013 2014 Eximbank -106,886 158,033 84,182 -200,209 -342,412 MB -31,383 -101,758 22,637 -25,093 -18,773 BIDV -43,411 56,850 71,197 254,411 -440,429 Techcombank -33,913 31,913 25,182 47,970 10,415 Source: Annual reports of Eximbank, MB, BIDV and Techcombank At the first year of the period (2010-2014), after nearly 10 years since derivatives appeared in Vietnamese banking operations, almost all commercial banks in Vietnam, including BIDV were failed in this new instrument This was proved by the losses of some CBs mentioned in table 2.8 Eximbank has the highest loss with -106,886 mil VND BIDV lost at medium level at -43,411 mil VND However, as can be seen from the table that BIDV developed currency derivatives strongly from 2011 to 2013 In this period, BIDV made profits from currency derivatives with the number shown in table 2.8 In details, profits of BIDV in 2011 and 2012 were 56,850 and 71,197 mil VND, respectively Significantly, in 2013 this was the successful year of currency derivatives of BIDV, the profit reached 254,411 mil VND However, in 2014, this bank lost a big amount of money compared to profits earned from currency derivatives 2.4 Evaluate the efficiency of currency derivatives in BIDV 2.4.1 Achievements In our country, BIDV is one of the most famous and prestige banks Its foreign currency trading in general as well as currency derivatives products in particular have gained some considerable achievements: Ton Thi Thanh Mai 36 K14ATCB Graduation Thesis Banking Academy Firstly, in recent years, BIDV has not only maintained but this bank also sped up derivatives products as currency trading to deserve one of the biggest banks in Vietnam In the field of foreign currency trading, the bank has diversified its products and services to make benefits for the enterprises, and the economy; to create and develop the sustainable relationship between the bank and customers, especially the relationship with export/import companies to motivate export/import growth; to stabilize exchange rate and to make the economy stable Secondly, the main customers of BIDV are traditional customers They are big enterprises in the area of petrol, post and telecommunications, aeronautics, export/import companies and foreign banks… With this number of clients, BIDV has affirmed its position in international market Thirdly, under the rules of derivatives set up by SBV, currency derivatives products including foreign currency forward, foreign currency option, foreign currency swap and CCS have joint banking operations; this helps to decrease stress in spot market Facing imbalance between foreign currency supply and demand, scarcity of foreign currency- foreign currency demand is always greater than the supply of foreign currency, it is necessary to deploy forward contracts, swaps contracts in order to reduce the speculation of foreign currency and then guarantee foreign currency for import demand Next, because of the increase in the foreign currency demand and environmental pressure from fierce competitions, BIDV always researches and makes more new products to meet the demand of customers The introduction of new products in the field of forex trading becomes meaningful for the import-export business and the bank itself For businesses having revenues or legal foreign currency demand, these transactions generate additional business tools to hedge against exchange rate and have foreign currency certainly in the future Credit institutions including banks are allowed to trade FCs with the purpose of serving the needs of customers, hedging of exchange rates and lucrative business Ton Thi Thanh Mai 37 K14ATCB Graduation Thesis Banking Academy Fifthly, the currency derivative operations in BIDV in recent years actually show the development in both number and size The forward and swap derivatives have gradually developed operational efficiency, increased diversity for forex trading activities of banks, risk reduction and helped exporter/importer as international investors get acquainted with the new foreign currency trading transactions of international market BIDV also constantly improves the quality of business operations in general and foreign exchange currency derivative transactions in particular; they also diversify the business transactions Sales transactions are increasingly expanding and growing at a faster rate Therefore, through the currency derivatives transactions and foreign currency trading, BIDV is more prestigious with their customers Enterprises are more and more believe in currency derivatives of BIDV In 2013- 2014, BIDV received the rewards of “best bank in capital and currency trading in Vietnam” by Asiamoney Finally, the boards of BIDV are highly qualified, experienced, enthusiastic, dynamic, and knowledgeable in the field of Forex trading than other banks Cooperating with BIDV, customers can be assured of quality service and efficient work of their staff Therefore, foreign exchange operations, as well as currency derivative operations of VCB are increasingly attracting more customers to the transactions 2.4.2 Limitations and the reasons 2.4.2.1 Limitations Although currency derivatives in BIDV have brought about quite good results, there are still some limitations in this field: Firstly, the quantity of currency derivatives contracts in BIDV is still very small compared to the quantity of spot contracts executed Options transactions have been introduced, but the number of customers used this kind of products is modest, not worth considering Currency forwards and swaps have developed, but Ton Thi Thanh Mai 38 K14ATCB Graduation Thesis Banking Academy they only accounted for a small proportion, therefore, they brought a minor part in total profits of the bank Secondly, the deployment of currency derivatives is still slow and not effective The bank itself has not had the active strategy in currency derivatives in foreign exchange trading Thirdly, foreign currency trading of BIDV in international market is not effective It is shown by the number of foreign exchange transactions are still modest and the profits in foreign exchange trading accounted for a minor part in total profits of BIDV Because the information the bank takes from foreign exchange market is not sufficient and the analysis standard is not good enough, currency derivatives products have not been developed Lastly, BIDV as other commercial banks in Vietnam, still trades foreign currency mainly by USD When the USD/VND rate fluctuated, it will influence foreign currency trading of this bank 2.4.2.2 The reasons of limitations 2.4.2.2.1 Objective reasons - Side of banks and bank officers A survey had been conducted among bank officers by PhD, Dr Nguyen Thi Mui and her assistants and here is its result (from to 4: accelerating level of constraint on derivatives development): Ton Thi Thanh Mai 39 K14ATCB Graduation Thesis Banking Academy Figure 2.7: Factors affecting banks and bank officers Source: PhD, Dr Nguyen Thi Mui and assistants, 2007, developing derivatives market in Vietnam nowadays, Vietnam culture and information publisher + Forex policy lacks of flexibility: This now is based on average exchange rate in interbank market Every day SBV announces weighted rate on the basis of sales of the previous day Commercial banks will base on this rate to quote bid-ask price in permissive range (not higher than 2% for 2014 as announced by Nguyen Van Binh, SBV governor, 24/12/2013) Therefore, exchange rate is still controlled by SBV Whereas exchange rate is quite stable, commercial banks as well as SBV will not see the necessity of using derivatives products to hedge from risks + Under law documents have been mended but not kept pace with the development speed of market Through diversified, derivatives products not serve enough needs of corporate customers due to constraint from policy For example, customers are required to exercise contract at maturity but not allowed to refuse making payment Options contracts may have more benefits for clients, but are restricted or just for foreign currencies while the majority of domestic enterprises use VND to trade on foreign currencies Ton Thi Thanh Mai 40 K14ATCB Graduation Thesis Banking Academy + Many problems exist in accounting and cost: the lack of high quality accounting standards to evaluate value of financial instruments in general and derivatives instruments in particular leads to adverse impacts on measurements on business results and risk management Simultaneously, banking- financing inspecting agencies will not have enough exact information to supervise the market and system in each financial institution Today, accounting and auditing put focus on real net income/loss while projected income/loss is ignored When enterprises buy a derivatives contract, real value of the contract changes according to market rate fluctuation However, bookkeeping does not reflect this change, the noted value if the initial value of the contract This shows “real loss, fake income” and vice versa in financial reports of corporates + Tax: Many bankers reckon the tax policy on derivatives transactions not suitable, so constraint the implementation of this market + Perception of customers: this is the core problem in derivatives market Though they have lots of transactions with foreigners and face too many of exchange rate risk, they find such products not familiar and not want to engage in them - Sides of customers: Nowadays, the number of customers knows and uses derivatives increased compared to the past However, this only accounts for a minor part of total clients of banks Moreover, many corporates customers have never known about this type of instruments 2.4.2.2.2 Subjective reasons - Introducing currency derivatives as well as other transactions in foreign currency trading to customers is not executed comprehensively Therefore, understanding about in these products is limited Besides - BIDV only concentrated on big enterprises Services for customer are not perfect The staff only helps customers to execute the transactions, but not give Ton Thi Thanh Mai 41 K14ATCB Graduation Thesis Banking Academy advices to customers to choose suitable method of transactions As a result, export/import enterprises often use spot contracts instead of currency derivatives - Derivatives are new and complicated products in Vietnam To develop derivatives strongly, it is necessary for commercial banks to have tools to measure the fluctuation of exchange rate and professional staff However, in BIDV, although the bank has system to research on exchange rate fluctuation, the system is simple and cannot satisfy the development of new and complicated transactions Moreover, staff is not high-qualified enough in the field of foreign currency trading Another reason is that tools to gather information and to measure exchange rate is lacked such as Reuters… Therefore, currency derivatives contracts between BIDV and its customers are still low Ton Thi Thanh Mai 42 K14ATCB Graduation Thesis Banking Academy CHAPTER RECOMMENDATIONS AND SOLUTIONS TO THE DEVELOPMENT OF CURRENCY DERIVATIVE PRODUCTS IN BIDV Integration has created both opportunities and challenges for Vietnamese economy More foreign investors come into our market More external transactions with foreigners both inside and outside our country through USD or other foreign currencies and VND, and more foreign banks enter our market It is true that foreign companies and banks understand well about risk management and hedging, but Vietnamese enterprises and banks alike have not yet It places pressing problem for both economic entities and banks in Vietnam to utilized derivatives as well as other modern financial instruments to protect themselves from risks as effectively as their foreign counterparts 3.1 Solutions to Joint Stock Commercial Bank for Investment and Development of Vietnam - BIDV bank managers should perceive necessity of derivative products in today economic situation and have strategies to develop necessary instrument Because in Vietnam, DI are still new and strange terminologies for bankers as well as bank staff These operations are quite difficult in technique but have big meanings for banks in risk management in banking business This requires all levels of management to indeed acknowledge and deploy these products - The bank should form derivative operation business: There are two suggestions for banks The first solution is to establish a separate derivatives product department in big and potential branches because, now in BIDV, there is only a professional group of derivatives named: “derivative group” in “Capital and foreign currency trading department” in head office Another is to interline derivatives staff in different departments Because derivatives market in Vietnam is developing, the second solution is quite suitable In this way, derivatives staff will be divided for capital department, foreign currency department, gold department,… Ton Thi Thanh Mai 43 K14ATCB Graduation Thesis Banking Academy this operation have advantage in transferring information among specialized dealers, from which banks will reduce transactions cost Therefore, if derivativesspecialized officers are in charge of derivatives operations, risks will be minimized and efficiently controlled, then highly profitable - BIDV should promote derivatives marketing: Most of the respondents said they did not know or find their not appealing, so BIDV as well as other commercial banks should foster propaganda about these operations Banks sell these products for customers, so if customers not need them, they have to come to customers - Another solution is human resource training One of the hugest difficulties in commercial bank system is the low level of development in operations as well as products, especially in such new areas as derivatives Therefore, bank officers are often reluctant to “new” and “change” If BIDV want to provide flexible and diversified products in derivatives, their staff should have enough knowledge and be willing to study to boost their initiative BIDV should pay attention right from recruitment to attract the talented, thus filter productive human resource for its own - Technique equipment is also an important element Derivatives operations require modern technique with high level of exact Technique hugely influences on product development, product quality and delivery method as well as management skills in banking business Therewith, BIDV has to have certain amount of money for investment in technique such as Reuters, Thomson or Dow Jones - This bank should pay attention to internal control intensity Risks inflicted by lack of control tend to increase when the market become more complex BIDV need to ensure that planned or real risks are all independently measured in regulated range on regular basis - Broadening relations with foreign banks is also necessary DI are quite new for Vietnamese bankers but familiar with foreign banks, so BIDV as commercial banks in Vietnam should foster relations with foreign ones to learn the way they operate the DI - Finally, the bank should consider developing new DI and expand kinds of currency traded In this situation, DI are of new terms for Vietnamese, suitable DI Ton Thi Thanh Mai 44 K14ATCB Graduation Thesis Banking Academy should be studied and introduced in accordance with perception of Vietnamese and economic status in Vietnam Besides, the more types of currencies are traded, the more customers come to the bank 3.2 Recommendations to Government and SBV 3.2.1 Recommendations to the Government In the trend of globalization, foreign trade activities and foreign currency operations contribute in creating profits and ensuring hedging losses due to exchange rate fluctuations for banks and Export-Import businesses In order to create favorable conditions for the development of currency derivatives, in side of our Government, there are some recommendations as bellow: First, Government should ensure stable economic environment in the longterm policy on economic developing orientations The Government should perfect accounting and tax regulations: - Harmonize VAS and IFRS on fundamental principles, clear out inessential sections - Concretize fundamental contents which are still not concordant with low development of derivative market - Corporates should comply with VAS, also collate with IFRS to amend important adjustments - In order to minimize cost and time for corporates in terms of accounting, auditing, Government should allow those whose financial reports not have differences between VAS and IFRS to register and apply IFRS directly Second, completing legal system, relatively stable macroeconomic policy management is necessary They should study the old policy to amendment inadequate and restrictive elements, set up new policies and create favorable conditions for businesses and banks in foreign currency operations Ton Thi Thanh Mai 45 K14ATCB Graduation Thesis Banking Academy Third, with the open policy of the economy nowadays, our Government should provide a variety of mechanisms, incentivize and create favorable conditions for banks in general and foreign currency business in particular Fourth, continue to strengthen the external economic relationship with foreign countries, create large projects to promote Commerce to maintain stable growth Finally, Government enables enterprises to exploit and update information related to currency derivative contracts through the establishment of offices in the country specializing in collecting missions and provide information for businesses, securities market development Therefore, banks can actually see the financial situation of enterprises and to promote their reputation 3.2.2 Recommendations to the State Bank of Vietnam To increase the efficiency of business operations in general and foreign currency derivative operations in particular at commercial banks, in addition to efforts from the bank itself and the policies of state support, the SBV should have created new positive policies to banks Therefore, in the future, SBV should have the following adjustments:  Perfect legislation system concerning derivatives instruments Legal system concerning DI should be stipulated specifically in official under law documents, not instruction documents High popularized documents help derivatives market operates thoroughly and DI become prevalent  Strengthen the role of SBV in macroeconomic management of monetary policy and exchange rate policy SBV should offer reasonable interest rate policy that is flexible with the economic situation in each period, to avoid affecting the psychology of depositors, affecting long-term raising capital, adversely impacting funds used in forex trading by commercial banks  Improve the regulation of futures transactions, swaps, options and forwards to the future market development in order to diversify the forms of Ton Thi Thanh Mai 46 K14ATCB Graduation Thesis Banking Academy hedging exchange rates in foreign currency trading activities of commercial banks Therefore, this can make it easier for banks to deploy currency derivatives quickly and efficiently Ton Thi Thanh Mai 47 K14ATCB Graduation Thesis Banking Academy CONCLUSION Derivative market is a very potential market in Vietnam According to the status of derivatives as well as foreign currency trading in BIDV, the paper proposes some solutions to improve and motivate foreign currency operations in general and currency derivatives transactions in BIDV in particular, then to enhance the prestige of the bank in the market Besides, the paper also proposes some recommendations to SBV and authorities to help currency derivatives develop effectively SBV and authorities should work hand in hand with commercial banks to help them propagandize their products to their customers; of course, customers should realize their benefits to equip themselves enough knowledge to get profits from DI Ton Thi Thanh Mai 48 K14ATCB Graduation Thesis Banking Academy REFERENCES Peter S Rose, (2003), Commercial bank management, 4th ed National Economy University Publisher Nguyen Van Tien, (2008), Foreign currency trading transaction, Statistics Publisher Dr Nguyen Thi Loan, (2013), Developing currency derivative instruments in Vietnam, tapchitaichinh.vn Jeff Madura, 2006, Financial Markets and Institutions, 7th edition, Mason Jeff Madura, 2008, Options, futures & other derivatives, 7th edition, Pearson Nguyen Kim Anh, 2007, Solutions to develop derivatives market in Vietnam, Vietnam culture and information publisher PhD, Dr Nguyen Thi Mui and assistants, 2007, Developing derivatives market in Vietnam nowadays, Vietnam culture and information publisher BIDV Financial reports (2010- 2014), retrieved from http://www.bidv.com.vn/ Garman, M.; and Kohlhagen, 1983, S Foreign Currency Option Values Journal of International Money and Finance, 2, 231-237 Hull, John, (2006), Options, Futures and Other Derivatives Pearson International Edition Ton Thi Thanh Mai 49 K14ATCB