In brief
On 19 January 2026, Vietnam’s Government issued Decree No. 29/2026/ND CP (“Decree 29”), establishing an operational framework for a centralized domestic carbon exchange. The Decree directly affects businesses subject to greenhouse gas (GHG) emission quotas, project developers generating carbon credits, and institutions involved in registration, depository, trading and settlement activities. Affected companies should promptly assess readiness for compliance, including account setup, internal controls, data integration, and eligibility of GHG emission quotas and carbon credits. Securities firms and banks should evaluate licensing, infrastructure and operational requirements to participate as depository members, trading members or settlement banks.
Decree 29 took effect immediately upon its issuance, with a pilot market phase running through 31 December 2028 (no exchange services fee will be charged during this period), ahead of full commercialization starting 1 January 2029.
Recommended actions
The following actions are recommended in light of Decree 29:
- Assess eligibility and market readiness: Companies subject to GHG emission quotas and project developers generating carbon credits should review whether their assets qualify for trading. They should also ensure comprehensive understanding of the trading process under Decree 29, including registration, coding, depository, trading, settlement and ownership transfer of GHG emission quotas and carbon credits on the domestic carbon exchange.
- Strengthen compliance governance: All market participants (including among others, companies subject to GHG emission quotas and project developers generating carbon credits, relevant securities firms and relevant commercial banks) should review their compliance frameworks in light of enhanced obligations related to registration, depository and trading rules, market conduct, and reporting and disclosure requirements. Processes should be updated to support real time settlement and synchronized delivery versus payment mechanisms.
- Plan for phased implementation: Ahead of full commercialization, companies should factor the pilot market phase (by end of 2028) into business planning, including its potential impacts on internal workflows, asset management strategies and financial processes.
In more detail
Market structure and participants
- Ministry of Agriculture and Environment (MAE) manages the national registry system, including registration, coding and ownership updates for GHG emission quotas and carbon credits.
- Hanoi Stock Exchange (HNX) operates the carbon trading system.
- Vietnam Securities Depository and Clearing Corporation (VSDC) operates the carbon depository and settlement system.
- Securities firms approved by Vietnam Stock Exchange (VNX) can participate in the carbon trading system as trading members. Those approved by VSDC can participate in the carbon depository and settlement system as depository members.
- Commercial bank(s) approved by the State Securities Commission of Vietnam can provide payment services for GHG emission quotas and carbon credits trading as settlement bank(s).
- Entities eligible for trading GHG emission quotas and carbon credits are those defined under Decree No. 06/2022/ND CP (as amended), including facilities allocated GHG emission quotas, and agencies and organizations within the territory of the Socialist Republic of Vietnam, respectively.
Eligible assets for trading
- Eligible assets for trading are those defined under Decree No. 06/2022/ND CP (as amended), including GHG emission quotas allocated to relevant facilities and carbon credits awarded for GHG emission reduction results from 1 January 2021 of programs and projects under the domestic and international carbon credit exchange and offset mechanism.
- MAE notifies and updates the list of eligible assets for trading, the first and last trading dates to HNX and VSDC.
Registration and coding
- All GHG emission quotas and carbon credits must be centrally registered in the MAE’s national registry system, including ownership details, before being deposited and traded on the exchange.
- MAE issues domestic codes for GHG emission quotas and carbon credits, which are used consistently across registry, exchange, depository and settlement systems.
Depository and trading
- All GHG emission quotas and carbon credits must be deposited with VSDC before trading.
- Trading of GHG emission quotas or carbon credits is permitted only on the carbon trading system, except for limited cases specified by the MAE.
- Trading entities may only maintain: (i) one securities depository account at a depository member for deposit and settlement purposes (one additional securities depository account may be used only in the limited case where the entity is transferring from its depository account at one depository member to its depository account at another depository member); and (ii) one securities trading account at a trading member for trading, separated from all securities trading activities.
- Trading entities must have sufficient funds when placing purchase orders and sufficient GHG emission quotas or carbon credits when placing sale orders.
- Trading members must monitor the balances of GHG emission quotas or carbon credits and funds, verify order details, notify trading entities of the trading results immediately after execution, and provide account statements to trading entities monthly or when requested.
- Market manipulation, misinformation and system abuse are expressly prohibited and subject to administrative or criminal sanctions.
Settlement and transfer
- Carbon transactions are settled by VSDC on the same trading day through the carbon depository and settlement system, based on trading results provided by HNX, using a real time, transaction by transaction settlement method. No central counterparty clearing mechanism is applied.
- The settlement bank processes cash payments through its payment-account system, based on settlement obligations determined by VSDC and the authorization given by depository members.
- Transfers of GHG emission quotas or carbon credits between accounts are carried out simultaneously with the corresponding cash payments, ensuring synchronized delivery and payment.
- For transfers on the carbon trading system, VSDC updates the ownership of GHG emission quotas or carbon credits immediately after settlement is completed.
- For transfers outside the carbon trading system, MAE will provide guidance and carry out the ownership transfer of GHG emission quotas or carbon credits. If the GHG emission quotas or carbon credits have been deposited with VSDC, MAE may only perform the transfer after the quotas or credits have been withdrawn from the carbon depository and settlement system.
Reporting and information disclosure
- Depository members and trading members are required to submit periodic and ad hoc reports to VSDC and VNX in accordance with their rules.
- VSDC, HNX and VNX are required to disclose, on their websites, certain information within 72 hours from the occurrence, including, among others, VSDC’s suspension or resumption of the depository and settlement operations, HNX’s end-of-day information on daily trading results, HNX’s suspension or resumption of the carbon trading services.
- Trading entities that have an account on the national registry system must disclose information in accordance with MAE’s guidance.
For specific advice on any issues and transactions related to trading GHG emission quotas and carbon credits on the domestic carbon exchange, please do not hesitate to contact us.
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Hoang Anh Vu, Trainee, has contributed to this legal update.
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