Hong Kong-based ICBC (Asia), a subsidiary of the largest state-owned commercial bank in China, is planning to launch an interest-rate derivatives trading operation. Benny Lam, deputy treasurer in Hong Kong, said the bank intends to trade Hong Kong dollar and U.S. dollar interest-rate derivatives, primarily to hedge exposure on the bank's investment portfolio, but will also execute customer flow business. He declined comment on a timeframe for the plans or the details and composition of ICBC's investment portfolio. Lam said ICBC wants to set up an interest-rate derivative desk to meet customer demand and because it regularly uses interest-rate derivatives for hedging.
Lam said the bank would not seek to become a market maker in the already competitive interest-rate market. The interest-rate trading operation would likely be part of the bank's treasury department and the bank will train traders internally to staff the department. He declined comment on the size of the operation.
