ING is keeping its Asian equity derivatives operation even though it is selling its cash trading, sales, research and equity capital markets business in the region. Late last week the firm announced it is selling the business--which encompasses 10 regional markets including Japan, Hong Kong, Korea and Taiwan--to Australia's Macquarie Bank.
"[Derivatives] remains a very core business," said Sheel Kohli, spokesman at ING, commenting on retaining its Hong Kong-based derivatives desk. Kohli added, "It represents a value-added product and is part of our regional strategy." In addition to offering market access and structured products regionally, ING also offers its European clients derivatives to take on Asian exposure.
A rival equity derivatives head in Hong Kong said pulling out of the cash business will likely hinder the derivatives operation. "There will be a question of commitment and relevance to this market," he said, adding that with a cash business in place it is easier to hedge transactions and there is greater access to clients. Société Générale, however, pulled out of cash trading in Hong Kong over a year ago and has remained profitable by focusing on structured retail equity notes.
Kohli denied that selling the cash business would have a major impact on its derivatives desk, adding that it is fully committed to equity derivatives. "It's a specialized team that's been run separate from cash for some time." Because its focus is more on access products and structured notes rather than options there is not the same requirement for cash hedging, he explained.
