Seminar revisiting the development of derivatives markets in asia – recommendation for viet nam (THỊ TRƯỜNG PHÁI SINH SLIDE)
Bạn đang xem bản rút gọn của tài liệu. Xem và tải ngay bản đầy đủ của tài liệu tại đây (229.09 KB, 14 trang )
Revisiting the Development of
Derivatives Markets in Asia –
Recommendation for Vietnam
Outlines
Most Common Products
Derivative Markets In Asia
Key Success Factors
Case Studies
Policy Issues
Recommendations
Conclusion
Most Common Products
Equity derivatives:
ETDs in Korea, India, and Hong Kong
Index futures, Index options
institutional investors, significant foreign participation.
Commodity derivatives:
China, Japan
Soybean, wheat, rubber, gold, and oil etc.
Interest rate derivatives:
Tokyo, Singapore
Migrating trend from OTC to ETD
Recent fixed income derivatives
Most Common Products (cont.)
Foreign exchange products:
Major currencies traded in Tokyo, Singapore, and Hong Kong
Mostly in OTC derivatives,
Offshore markets in Singapore for minor and non-convertible currencies.
Credit derivatives
Tokyo, Hong Kong
Credit default swaps
Unregulated markets, hence, less transparent and highly leveraged.
Summary:
Equity derivatives are the fastest growing products on exchanges
Growing rapidly, partially migrating from OTC to ETD markets
Foreign exchange turnover substantial in the main OTC markets
Started from commodity and local interest rate derivatives
Added foreign exchange, credit, and equity derivative products
Derivative Market In Asia
Tier 1: Japan, Australia, Hong Kong, and Singapore
Demutualized, among 16 listed exchanges worldwide
Large variety of interest, FX, equity, and commodity products
TSE promotes integration of specialized exchanges via new laws
ASX provides interest futures, equities, options , FX
SGX trades currency contracts, foreign interest rate derivatives but been
stagnated
HKEx started on commodity derivatives, but now on trading equity derivatives
Tier 2: Korea, India, China, and Malaysia
In the process of being demutualized
KRX largest future exchange in terms of trading volume; offers 9 types of
derivative products, low transaction costs, very advanced IT & internet trading
NSE focuses on retail trading of equity derivatives. After strengthening
underlying cash market, equity futures started in 2000, interest rate futures
introduced in 2003, OTC in 2004.
Derivative Market In Asia (cont.)
China closed 27 out of 30 exchanges in 90’, allows commodity futures
trading only.
Malaysia merged 03 exchanges into the Malaysian Derivatives Exchange
(now BM), trades commodity and equity futures. The holding company
demutualized in 2004 and the participation of foreign institutions has
increased to over 40%.
Tier 3: Thailand, Indonesia, and the Philippines
Allow OTC derivatives trading by banks; recently considered to (re)introduce
ETD markets
TFEX setup 2004, trades index futures, interest rate derivatives
JFX trades equity index futures in 2001. However, less developed market
infrastructure & investor interest led to very low trading volumes
Manila Futures Exchange allows OTC derivatives trading but closed in 1997
Key Success Factors
I.
II.
III.
Market liquidity, including fixed income benchmarks,
Solid accounting and regulatory standards, including a
derivatives law,
Modern infrastructure at exchanges (central counterparty),
and
IV.
A tax regime that creates a level playing field.
Summaries:
Best practices in underlying infrastructures exist: Australia, Hong
Kong, India, Japan, Korea, and Singapore
Existing obstacles: China, Indonesia, Malaysia, the Philippines, and
Thailand
Case Studies
HK Futures Exchanges bankrupted in 1987 &
Moscow Central Stock Exchange failed in 1994 due
to weak clearing house + poor margin system
Shanghai Stock Exchange:World’s largest
exchange traded 4 million government bond futures
in one day on February 23, 1995; then collapsed
where price manipulation caused over $10 bn of
losses in few minutes
=> Many valuable lessons on the preconditions that
need to be met for the trading of derivatives.
Case Studies (Cont.)
Lessons learnt from history:
FX derivatives brought down the Thai and Indonesian currencies
Total return swaps were used to speculate on cross-border interest
rate differentials
Structured notes were used to circumvent accounting rules,
disclosure requirements, and prudential regulations.
All these instruments were traded in OTC markets with international
banks.
Need for stronger regulation, with more emphasis on risk management,
and sound infrastructure at organized exchanges with CCP clearing.
As FX forwards used to undermine fixed exchange regimes
=> Derivative products should NOT be launched unless their cash markets
have been well developed with market-determined prices.
Policy Issues
Liquidity
Economic rationale for hedging needs
Liquid cash market
Market determined prices, interest/FX rates
System stability, no moral hazard risks
Regulation
Lead regulator, capital rules, reporting standards
Legal clarity: ISDA standards, enforceability
Accounting rules, transparency, disclosure
Level playing field, tax harmonized, integration
Policy Issues (cont.)
Infrastructure
CCP, ISDA master agreement, close-out netting
Demutualized exchanges, strong capital, margins
SRO rules enforced, with limits, monitoring
Certified investors, code of conduct
Recommendation for Vietnam
I.
Cash Markets: liquid, efficient, integrated; benchmarks in bond
markets
II.
Regulation & Legal Framework: derivatives law, SRO function
III.
Repo Markets: effective short, margin trading; security lending
IV.
Intermediary Licensing: qualified participants, proper training
V.
Taxes level playing field: avoid transaction tax
VI.
Exchange: platform, links, capital, margins, first index futures
VII.
Design CCP: close-out net, ISDA master, enforcement
VIII.
Accounting: adopt IFRS, Mark-To-Market, IAS39, full disclosure
IX.
X.
OTC License: regulatory approval, counterparty credit risk,
swaps IR&FX
Investor Base: hedging needs, products, IT, lower costs
Conclusion
Key Success Factors for the development of
sound derivative markets in Vietnam:
Liquid cash market,
Solid product design,
Strong regulation, and
Sound market infrastructure
Thank you for your attention!
