JPMorgan has received a license to deal renminbi--making it one of only a handful of bulge bracket players to do so. Aaron Poon, Hong Kong head of rates trading, said the firm can now offer traditional banking activities onshore. It will likely take a year or so before there is a functioning derivative market, he said, adding that regulatory guidelines are expected to be introduced in the coming months. Once permitted, JPMorgan will look to offer renminbi derivatives, he added. Market players believe that the upcoming regulations will present a clearer picture of uses and procedures for derivatives, which will aid in the development of the market (DW, 9/1).
Poon continued that the Mainland will likely trace the development of Taiwan's onshore derivatives market, whereby forwards would be the first product permitted, followed by short-term interest rate swaps. JPMorgan and other firms market non-renminbi derivatives to Mainland clients. "The offshore market will exist for a long time," added Poon.