HSBC plans to set up an equity derivatives proprietary trading desk in Asia as part of its expansion in equity derivatives. The bank recently transferred Stephane Chaboureau, head of index arbitrage trading, and Stephane Leleu, head of single-underlying volatility trading, from Paris to Hong Kong as trading mangers of volatility products in equity derivatives.
"Globally our strategy is to strengthen our presence in equities and equity derivatives is a strong pillar of that expansion," said Chaboureau (DW, 2/9). John Flint, head of regional fixed income and derivatives trading in Hong Kong, said, "Clearly we see the potential is significant, given our recent[ly] articulated strategy for our equity business and our own desire to create new products for clients."
Flint continued that the bank will have an index arbitrage book in place by April and an options trading book running six-to-eight weeks after. In addition to running its own prop books, one of the desk's primary clients will be HSBC's wealth management group. Previously the firm, a major issuer of retail structured products in Hong Kong, partially sourced the instruments from other houses. With extended capabilities, HSBC will now be able to minimize revenue leakage by handling such trades internally.
The bank obtained qualified foreign institutional investor status for China's 'A' share market last year and will begin products referenced to these shares later this year, noted Flint.
