JPMorgan has launched the first tradable index linked to Asian regional currencies and plans to structure products referenced to the instrument. "As Asia becomes more in focus people are looking for products that offer exposure on the region as a whole from an fx perspective," said Erik Herzfeld, head of fx options at JPMorgan in Singapore.
The index, dubbed the Emerging Asia Currency Index and listed on Bloomberg, tracks currency spot levels of 10 Asian currencies. The weightings are determined by import and export trade data and liquidity. "Now you can express a view on the region in one go," said Herzfeld.
The bank plans to offer non-deliverable forwards as well as options referenced to the index, according to Herzfeld. JPMorgan will initially offer over-the-counter options ranging from one-month to one-year in contracts of USD10,000, but Herzfeld expects trading sizes to average around USD20-50 million per deal. "Down the road we'll introduce more exotic products," he added, noting once customers are comfortable with the concept JPMorgan will rollout structures such as knock-ins/outs and range bets. These could come as soon as year-end.
