Merrill Lynch is considering increasing it onshore Korean derivatives operation next year by pushing either into local credit or equity products. "We're now deciding whether to upgrade our securities license or open a full-fledge branch," said Joonkee Hong, managing director and head of Korea debt markets in Hong Kong. Hong spearheaded the development of Merrill's Seoul office which became the first foreign securities branch to be awarded an fx derivatives license, which was previously limited to banking branches (DW, 6/21).
Hong said the firm is now studying either upgrading its derivatives license permitting it to trade interest rate and equity derivatives, or instead obtain a bank branch license allowing it to offer interest rate and credit derivatives, which are seen as banking products, but not onshore equity derivative products. Merrill and other international securities houses currently market and trade U.S. dollar-based credit and equity derivative products on Korean names offshore. "For credit or equity products, these will not take off immediately, but we need to look for the impact in two-to-three years from now," said Hong.
Firm management is considering the options and no conclusions have yet been reached. However, Hong said a decision should be reached by year-end and the application could take six-to-nine months.
