UBS Opens Currency and Rates-Linked Derivatives Business in China
Posted by Colin Lambert. Last updated: February 24, 2022
UBS (China), the wholly-owned bank subsidiary of UBS in China, has established a new team to offer focused coverage of exchange rates and interest rates linked swap derivatives in China’s financial institution market.
The bank says the new team will fully leverage UBS’s position in the derivatives market globally and in particular broaden its offering to better meet the needs of domestic financial institutions.
Under the local derivatives legal framework, UBS will offer structured solutions to local financial Institutions to hedge their exposures to foreign currencies and interest rates, thus managing their risk exposures. The scope will cover the seven most commonly traded currencies in the market (US dollar, euro, pound sterling, yen, Australian dollar, Swiss franc and Canadian dollar). It will also cover linked interest rates, which includes the main foreign currency benchmark interest rates that are traded in the market, such as the US dollar fixed term swap agreement rate (CMS).
“China is a key market for UBS and we are committed to continue investing strategically,” says David Chin, head of Investment Bank Asia Pacific and China country head, UBS. “By tapping into our multi-entity platform in China, we have added this new business division to further strengthen our status as the go-to global bank for domestic clients.”
Qiong Zhang, president of UBS China, adds, “As we continue to invest in UBSCL, this new addition would allow us to better leverage our banking platform and benefit from our global expertise for more business opportunities.”
The use of derivatives in China has rapidly grown in recent years, but there remains plenty of potential for their further adoption. “In 2021, the trading volume of China interbank OTC derivatives reached RMB 158.7 trillion, up 15.6% year-on-year, representing the most significant part of the total OTC derivatives market in China,” says Thomas Fang, head of China global markets at UBS. “The trading volume of exchange-traded derivatives was RMB 582.1 trillion in the same year, up 33% from 2020.”