The huge potential of the mainland Chinese derivatives market was a major talking point at the International Swaps and Derivatives Association's Asia-Pacific Regional Conference last Monday. One of the most significant developments is the liberalisation of firms that can trade derivatives. How-Chih Lee, director of fixed income and credit structuring at Credit Suisse First Boston in Hong Kong, said, "Following the introduction of new derivatives measures, foreign banks will be able to apply for derivatives licenses."
As a result of the new laws, foreign derivatives houses are likely to cooperate with local banks--rather than compete against them--to expand the market, Lee told DW. For example, the international houses will hedge risks the local banks take on and offer them investment and diversification products structured with derivatives. "This will have a positive impact," said Tao Xiuming, senior partner at Jun Ze Jun Law Office in Beijing.
The China Banking Regulatory Commission released a draft of impending guidelines earlier this month and derivatives officials expect this will be passed by year end. "People are eager to have this finalized," said Robert Pickel, ceo of ISDA in New York. He said ISDA has been working with the regulator in regard to the guidelines.