HSBC plans to structure the first local currency interest rate options in the Philippines in the next two months and JPMorgan is not far behind, according to officials. "It's part of the natural evolution of the market," said Dalmacio Martin, head of derivatives trading in Makati City. He continued that the bank will look to market caps, floors, and swaptions to clients as hedging tools as well as embedding the options in structured notes. "Yield-enhancing structures are good as rates are low here," Martin added. "It's in the pipeline," said an official at JPMorgan, adding, the firm will likely start offering the options by year-end. He declined to elaborate.
"This is part of our regional mandate," explained HSBC's Martin, noting that it is gearing up to offer a wide-array of derivatives in emerging Asia. For example, the bank is also looking to offer ringgit interest rate options in Malaysia (DW, 7/28).
HSBC had received an expanded derivatives license from the Philippines' regulator, Bangko Sentral ng Pilipinas, which permits it to offer the products as long as there is no foreign exchange component.
