Singapore-based OCBC Bank plans to offer equity derivatives, credit derivatives and exotic interest-rate and currency derivatives for the first time next year. The bank currently offers plain-vanilla foreign exchange and interest-rate derivatives. Yap Tsok Kee, v.p. of global treasury, said the bank will look to offer and trade the products within six months, after it has dealt with the time consuming integration of Keppel Capital Holdings.
"Products such as credit derivatives are definitely a growth area for global treasury", said Yap. He continued that the firm will look to hire teams for this effort, though the exact size and specifics will not be determined until after the dust settles on the acquisition, likely in the first quarter of next year. The firm wants to wait until after the acquisition because it takes a lot of managers' time and the firm will be able to review their staffing needs more accurately.
OCBC, which currently handles interest-rate and foreign exchange trading, is looking at the expanded product range to increase profit. "Margins in traditional products and services are becoming even tighter. We want to diversify our product base and grow revenues in areas such as exotics," said Yap. The product range will likely also encompass structured products such as equity-linked notes and credit-linked notes.
One credit derivatives trader in Singapore said it is good news for the market as it could boost liquidity, adding, "there's always room here for one more player." He continued that OCBC services medium-sized corporates and banks, many of which are off the radar screens of offshore players.
