Waiting for the big one

Investment banks see Asia as the next big market, so the largest ones have all established derivatives operations in the main centres. That means fierce competition but it's a fight for relatively thin demand. Regulators in some countries restrict use and local exchanges are undeveloped. But growth has come in surrogate markets and such instruments as covered warrants in Hong Kong. Antony Currie reports.

Just off Lan Kwai Fong in the Central district of Hong Kong is a bar called Midnight Express. Its yellow canopy sports the words: “Sponsored by MeesPierson Derivatives Clearing”. It’s an unusual piece of advertising for an investment bank, and only serves to reinforce the impression that Asia’s derivatives business is faced with bottlenecks.

All the main western banks are in town now; some indeed are concerned there are too many for current conditions. Regulations in some countries restrict or prohibit derivative use.

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Waiting for the big one

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