For Viet Nam, developing commodity exchanges has become an urgent priority in the process of completing a modern economic institutional framework. However, the issue is not how many more exchanges should be established, but rather how to build a market system with substantive trading exchange that attracts large numbers of producers, businesses, and investors. This would help enhance the efficiency of circulation and boost the value of Vietnamese goods.
International experience: No single model suits every market
The history of commodity exchanges around the world is closely linked to the need to expand production and trade and manage commercial risks. As direct and fragmented trading methods revealed shortcomings in price information, product quality, contract performance, and exposure to market fluctuations, centralised trading hubs gradually emerged, laying the foundations for exchanges operating under unified rules.
One of the forerunners of modern commodity exchanges was the Dojima Rice Market in Osaka, Japan, which was officially recognised by the authorities in 1730. Alongside physical rice trading, merchants there developed forward transactions and rules governing membership and settlement. In 1848, the Chicago Board of Trade (CBOT) was established in the US to organise grain trading and gradually develop standardised futures contracts.
These models marked an important shift from fragmented commodity trading to organised markets, where price formation, contract execution, and risk management were conducted under increasingly stringent principles.
During the 20th century and the early 21st century, globalisation and technological advances drove commodity exchanges towards electronic platforms, expanding their scope from agricultural products to metals, energy, and many other sectors. Three prominent models can be identified from this development.
The first is the highly developed derivatives exchange model, represented by CME Group in the US. This model focuses on futures and options contracts, forward price formation, and the provision of risk-hedging instruments. Its key characteristics include a high degree of standardisation, centralised clearing, professional risk management systems, and the ability to attract participants from around the world. Prices set on major exchanges have also become benchmarks for global commodity trade.
The second is the electronic spot trading platform model linked to the physical commodities market, represented by India's e-NAM, launched in 2016. Rather than replacing the entire traditional market system, this model connects wholesale agricultural markets through a digital network, combining information disclosure, quality inspection, auctions, and payments. As a result, competition between buyers and sellers has expanded, while trading activities have gradually been standardised.
According to the Indian Government, e-NAM had connected 1,656 wholesale markets across 23 states and four union territories by March 2026, with cumulative trading value since 2016 reaching approximately 4.84 trillion INR. This demonstrates the potential to develop spot markets by linking existing physical trading infrastructure, rather than having to build an entirely new system.
The third is the specialised commodity exchange model, which has been adopted in Malaysia, Indonesia, and China. Malaysia has developed crude palm oil futures contracts on Bursa Malaysia Derivatives, making them an important tool for risk management and price benchmarking in the sector. Indonesia organises tin trading through a domestic exchange, linking it to trade and export management policies. Meanwhile, China has established several exchanges specialising in agricultural products, metals, and energy, with trading and delivery mechanisms tailored to the characteristics of each commodity group.
Instead of focusing solely on establishing more exchanges, efforts should aim to develop spot and derivatives markets in a coordinated manner. Priority should be given to addressing the shortcomings of the physical commodities market while expanding businesses' access to instruments for hedging against price risks.
Prof. Dr. Hoang Van Cuong
These experiences demonstrate that there is no single optimal exchange model for every country or commodity sector. Success depends on market size, product characteristics, actual trading demand, the degree of standardisation, warehousing and logistics infrastructure, the ability to generate liquidity, and the quality of the institutional framework.
This is also a valuable lesson for Viet Nam. Instead of focusing solely on establishing more exchanges, efforts should aim to develop spot and derivatives markets in a coordinated manner. Priority should be given to addressing the shortcomings of the physical commodities market while expanding businesses' access to instruments for hedging against price risks.
Completing the institutional framework and developing commodity exchanges in a coordinated manner
The development of commodity exchanges in Viet Nam should aim to build modern, transparent market infrastructure that connects buyers and sellers, improves circulation efficiency, and helps businesses manage price risks. The goal is not to increase the number of exchanges or nominal trading value, but to establish markets with genuine liquidity, reduce transaction costs, and strengthen the position of domestic producers and businesses.
First and foremost, the institutional framework must be completed to establish a comprehensive legal basis for physical commodity and derivatives trading. Legislation should clearly define the legal status, organisational principles, and management mechanisms of centralised spot exchanges, while also setting out regulations on derivatives, clearing and settlement, margin requirements, and risk control.
In particular, a clear distinction should be made between the role of the Mercantile Exchange as a legal entity responsible for organising and operating market infrastructure and that of its constituent trading platforms, where specific buying and selling transactions take place.
The process of amending legislation should avoid creating regulatory gaps in the regulation of centralised spot markets. Consideration should be given to developing a legal framework covering both physical and derivatives trading, while clearly defining the responsibilities of exchange operators, inspection bodies, warehouses, payment institutions, and intermediary organisations.
The state should play an enabling role by establishing the institutional framework, issuing standards, and exercising oversight, while product selection and trading organisation should be driven by actual market demand.
At the same time, centralised electronic trading infrastructure should be built to connect producers, cooperatives, businemerchantsssmen, processing businesses, importers and exporters, and distributors.
The system must publicly disclose buying and selling offers, prices, volumes, and quality information, and be linked to networks of warehousing, inspection, logistics, payment, and electronic documentation.
This would give producers more opportunities to reach a wider range of partners and reduce their dependence on middlemen, while enabling businesses to choose more competitive sources of supply.
Building on shared infrastructure, specialised exchanges should be developed for individual commodity sectors, with priority given to products in which Viet Nam has competitive advantages, such as coffee, rice, rubber, and pepper.
Trading rules must be tailored to the characteristics of each commodity. For coffee, these should cover varieties, grades, and certified warehouses; for rice, varieties, quality, and processing specifications should be distinguished; while rubber and pepper trading should prioritise inspection, standards, and traceability. An exchange should only be established when there is sufficient supply, independent buyers and sellers, and the capacity to generate sustainable liquidity.
Another important requirement is to standardise commodities and integrate trading data with quality management and traceability systems.
Listed commodities must have clearly defined grades and specifications, identification codes for growing areas or production facilities, inspection results, and delivery conditions.
Electronic warehouse receipts must authenticate ownership rights over commodities, limit fraud, and provide a basis for developing credit services and trade finance.
When price data accurately reflect quality, transaction location, and delivery time, Viet Nam can gradually establish reliable benchmark prices for sectors in which it has a competitive advantage.
Alongside infrastructure development, efforts are needed to expand market participation and strengthen links between physical and derivatives markets. Cooperatives and intermediary organisations should be encouraged to aggregate goods from small-scale producers into batches that meet trading standards, while large businesses should help generate initial supply, demand, and liquidity.
At the same time, consultancy and training services on futures contracts, options, and price risk management should be developed to help businesses combine physical commodity trading with instruments for hedging against market fluctuations. Trading through exchanges should be based on commercial demand and not imposed before costs and benefits have been fully assessed.
In addition, research should explore a domestic secondary exchange model for spot commodities traded on international markets.
The development of commodity exchanges in Viet Nam should rest on three pillars: completing the institutional framework, building centralised trading infrastructure, and developing specialised exchanges for individual commodity sectors.
Prof. Dr. Hoang Van Cuong
Accordingly, primary trading enterprises that meet legal conditions would purchase commodities on international markets and then bring the goods, or the lawful rights to take delivery of them, onto domestic exchanges for transactions.
This model would enable businesses that do not meet the requirements for direct participation in international markets to access supplies through a competitive and transparent mechanism. It would also help domestic prices reflect global market fluctuations more promptly, while taking into account exchange rates, taxes, transport costs, and warehousing expenses. For commodities subject to specific business conditions, such as petroleum and gold bars, implementation must comply with specialised regulations.
Thus, the development of commodity exchanges in Viet Nam should rest on three pillars: completing the institutional framework, building centralised trading infrastructure, and developing specialised exchanges for individual commodity sectors.
Within this structure, spot markets organise the circulation of goods and generate price information; derivatives markets support risk management; while systems of standards, warehousing, logistics, payments, and data ensure connectivity. Coordinated implementation, based on actual demand and the principles of competition and transparency, will help enhance the efficiency of production and circulation and increase the value of Vietnamese goods.
