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Derivatives

Taiwan Security Houses Prep I-Rate Dealing

Grand Cathay Securities Corp. and Yuanta Core Pacific Securities Co. recently separately received licenses from the Securities and Futures Commission to act as market makers in Taiwan dollar interest-rate swaps, a move that officials believe will bolster the market. Grand Cathay and Yuanta are the first domestic securities houses to receive such licenses. "This should boost volumes by 20-30% within six months", said Samuel Wang, manager of the derivatives department at Yuanta in Taipei.

An official at HSBC in Taipei estimated that monthly trading volumes in the Taiwan dollar interest-rate market are currently around TWD25 billion (USD714 million). "We're the first to do this," noted Tony Ko, assistant v.p. of fixed income at Grand Cathay in Taipei, on receiving the license from the SFC.

Ko continued that Grand Cathay, which applied to the Securities and Futures Commission early last year (DW, 1/14), will be able to offer the products to its corporate clients on the back of bond issues as well as take proprietary positions in the interbank market. Ko noted that the firm has signed up with Prebon Yamane to list Taiwan dollar interest-rate swap quotes. An official at Prebon in Hong Kong declined comment.

Vivian Tsai, an official at the SFC, said derivatives deregulation is intended to boost the competitiveness of local securities houses against international players.

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