HSBC plans to begin issuing warrants in Hong Kong for the first time, as the warrant market re-launches on the Stock Exchange of Hong Kong this week. "This is a reasonably profitable area of business," said Franklin Heng, head of Asian derivatives in Hong Kong. Heng, who will spearhead the effort, noted that the bank will look to become a big player as it looks to leverage its strong local banking presence, for example it can market the products to its private banking clients. "We'll focus our existing capability for this," added Heng, noting that the bank's current equity derivatives operation is sufficient for handling the product.
In the first few weeks, the bank will look to issue around 10 warrants per week, noted Heng, declining to comment on the underlying equities. He declined to comment on reasons why the bank was not previously involved in the products but added that the new regulations make it easier to list warrants.
"Clearly HSBC has a big customer base but we haven't seen them before," said a trader at BNP Paribas in Hong Kong, adding, "it's too early to tell if they'll be successful."
