Vietnam’s gold exchange: Achieving transparency and safety must initiate from physical spot trading and centralized clearing

Abstract

This paper examines the rationale for establishing a gold exchange in Vietnam as a transition from an ad hoc regulatory approach to a market-organizing framework based on standardized infrastructure, data transparency, and trading discipline. Drawing on an assessment of current shortcomings in the gold market - particularly persistent price differentials, fragmented reference pricing, counterparty risks, and the lack of standardized post-trade processes- the paper argues that, in the initial phase, a fully backed physical spot exchange (i.e., spot trading of physical gold fully supported by existing underlying assets) combined with a centralized clearing mechanism represents the most appropriate model. Accordingly, the paper proposes a cautious and phased roadmap for developing a gold exchange, in which market discipline, systemic safety, and supervisory capacity are treated as fundamental prerequisites.