The Philippines regulator is examining allowing derivatives houses to trade foreign exchange products onshore for the first time since the Asian crisis of 1997/8. Firms, including ABN AMRO and HSBC, are getting ready as they expect the products to prove popular with importers and exporters. "We have an atmosphere of liberalization toward these kinds of products," said Ciriaco Dator, head of banking group sector two, which regulates foreign banks, at the Bangko Sentral ng Pilipinas in Manila. The regulator could allow banks to trade the products in the coming months.
"This gives clients another way of hedging their exposure," said John McGowan, treasurer at HSBC in Makati City. "My guess is that in six months we may see a small onshore dollar/peso options market," said McGowan, noting that at first, short-dated instruments will be introduced, likely out to three months.
Paul San Pedro, treasurer at ABN in Manila, said next year's presidential election should bring volatility and in return, a need for hedging currency risks. ABN expects to get its expanded derivatives license in the coming months and will look to offer FX options once the market begins. The firm plans to hire an additional trader and marketer next year for the expansion.
