A major shift on the equity front is Asia turning from a net importer of equity underlying from other regions for derivative contracts to being a net exporter. Justin Kennedy, managing director in Asia-Pacific equity derivatives at Citigroup in Hong Kong, told attendees this has in part been driven by the craze for BRIC (Brazil, Russia, India and China) products from investors in Europe and the U.S. "If someone doesn't know what that stands for they must have been asleep in '05," he intoned.
Other key equity derivative developments in the region include a deep variance swap market, dividend swaps, exotic retail warrant products, synthetic convertible bonds and aggressive short-dated structured trading products for private banking clients.
In a documentation panel, Tim Hailes, managing director and associate general counsel at JPMorgan, noted the region's equity business has had a boost from new documentation in the past year. For instance, Asia's variance swap docs are now ahead of Europe, which is also lagging the U.S. too.
