Vietnam is to allow the introduction of exchange-traded funds on the country’s stock market next year, according to the State Securities Commission.

Developing ETFs is seen as a must by Ha Noi Stock Exchange deputy director Nguyen Anh Phong.

Currently only stocks, bonds and closed-end fund certificates are traded on the exchange and Phong believes this is restricting the ability of fund management companies to create new products.

"These companies need a more flexible and effective tool," he says. "Fund management companies, brokerages and investors are all eager for ETFs."

According to the exchange's general director, Tran Van Dung, the first fund certificate to list is likely to be based on the HNX30 Index.

"Picking the HNX30 as the basis for the initial fund is aimed at establishing a legal framework," says Dung. "After this framework is complete, other qualified indices can be considered as a basis for an ETF."