The nascent onshore credit derivatives market is gaining momentum with Standard Chartered Bank and HSBC recently stepping into the ring, alongside local institutions. The domestic market kicked off at the start of the year with Deutsche Bank, BNP Paribas and Credit Lyonnais obtaining licenses for credit derivatives (DW, 1/26). JPMorgan is in the application process and Citigroup completed its first transaction in Taiwan in recent months (DW, 5/25).
Officials at Standard Chartered said the bank received its license last month and is looking to concentrate its effort on expanding its line of structured products to include credit-linked notes and deposits. "It's going to be a very good market here," said an official at HSBC, who noted that he expects the bank to receive a license within two months, pending completion of internal and external approvals in the coming weeks. The official expects strong demand for the products in Taiwan as the market matures, due to the presence of fixed income funds and investment trusts. The bank may add one or two marketers by year-end, depending on demand. Marketers at ABN AMRO, which also has an onshore banking presence, declined comment.
As for domestic banks, officials at Chinatrust Commercial Bank said it has just received a license and rivals at Industrial Bank of Taiwan said it will likely apply in the first quarter of next year as it is now focusing its efforts on launching such products as asset-back securities and synthetic collateralized debt obligations (DW, 12/8).
