Derivatives houses in Hong Kong listed equity-linked instruments for the first time last week as the new rules came into effect (DW, 7/21). The instruments are expected to become a major investment product for the domestic retail market. "We launched several ELIs on the first day," said George Ngan, head of marketing at KBC Financial Products, who have been looking at listing the product for some time, along with capital guaranteed notes (DW, 2/3). Ngan added that along with KBC, Société Générale and Credit Suisse First Boston have also issued similar instruments.
Dealers have been preparing for the first wave of issuance as a number of firms in Hong Kong have submitted applications with the Securities and Futures Commission of Hong Kong in recent weeks. "With volatility increasing, this is a good time to issue these products," said Darin Lester, associate director of equity derivative sales at Macquarie Equities (Asia), who is also preparing to launch equity linked products. Lester added that there has been strong demand for such products in Hong Kong, noting that approximately HKD40 billion (USD5.12 billion) per year is traded in over-the-counter equity-linked notes. The products could range anywhere from six weeks to two years in maturity and could range from less than HKD100,000 to millions of dollars in size.
