Best Commodity Derivatives Provider
Australia's Macquarie Group finances producers of a wide variety of commodities and has a reputation for producing the most astute research on commodities, particularly on metals and mining in Asia. Two years ago the bank found that its larger competitors had all but vanished from the commodities derivatives space in Asia in the depths of the global financial crisis. Macquarie was quick to snap up new business with institutional investors by offering them cutting-edge investment ideas and competitive pricing on a full range of derivatives from vanilla options, swaps and futures in the OTC market to tailor-made transactions. That helped the bottom line in 2009, when Macquarie's net income from commodities trading alone rose 14% from the year before. "It is not all about who has the biggest prime brokerage or the biggest balance sheet," says Walter Pye, senior managing director for fixed income, currencies and commodities at Macquarie in New York. "We have deployed capital and significant research resources for so many years in the commodities sector that we understand what the true marginal costs of production are, and that is interesting information for a hedge fund."
Best Credit Derivatives Provider
Deutsche Bank has built its credit derivatives business in Asia in tandem with its cash and bank loan businesses in China, Hong Kong, India, Singapore and Taiwan. The linkages between these businesses have helped Deutsche Bank provide institutional investors with innovative products and keep up with changing demand since the global financial crisis. In 2008 and 2009, Deutsche Bank's credit flow derivatives business grew rapidly before leveling off and giving way to demand for derivatives of Asian bank loans, a business where Deutsche Bank added resources in March this year. With some loans it has made to companies that have issued bonds, Deutsche Bank packages the exposure through credit default swaps on the underlying bank guarantees. Demand for such "lightly structured" credit-linked notes, which are denominated in Asian currencies, is driven by investors who "are looking for additional means of generating returns" in a low-yield environment, says Chetankumar Shah, Deutsche Bank's head of global credit trading for Asia. Shah expects Deutsche Bank's private bespoke business to play a bigger role in the future.
Best Equity Derivatives Provider
The Hong Kong-based equity derivatives operation of BNP Paribas took business away from its competitors during the financial crisis in Asia primarily by keeping its pricing consistent—and by being the first dealer to return a call asking for a quote. When investors feel they are being overcharged by another dealer, the French bank helps them get out of the trade through a product known as a novation. BNP offers a market in 200 of the most frequently traded stocks in the region, offering up to $50 million in notional amounts in options on some of those stocks. BNP came out of the crisis with the flexibility to launch such new products as a volatility swap in single stocks, which was a spin on a variance swap that was too risky to trade, says Valery Bloud, head of flow equity derivatives sales for Asia Pacific at BNP Paribas in Hong Kong. The bank created a market for the new product by calling several other dealers, one by one, and proposing that they provide it as well.
Best FX Derivatives Provider
HSBC's foreign exchange derivatives business is present in every market in Asia, onshore and offshore. Such diversity gives the bank greater access than its competitors to liquidity across the region, enabling the bank to continue providing liquidity to institutional investors when they need it most, as they did during the global financial crisis. Founded in Hong Kong in 1865, this British bank works closely with local regulators to develop markets for derivatives where none exist. Those relationships helped the bank emerge from the crisis with new FX derivative products in hand, such as FX options on offshore deliverable Chinese renminbi in October this year. Now the bank is focusing on "south-south" investment flows between emerging markets, which do not pass through global hubs like New York or London or Tokyo. The type of client the bank is now looking to serve might be a Chinese importer who wants to hedge directly against the appreciation of the Brazilian real against the renminbi—a type of FX transaction that presents a demand for new FX hedging products that HSBC is working on, according to an HSBC spokesperson.
Best Interest Rate Derivatives Provider
Standard Chartered's interest rate derivatives business has grown six-fold since the onset of the financial crisis, and the bank's local currency swap business alone has seen an uptick of about 25% since early 2009. Part of the reason for the growth in business is that the bank's branch network across Asia stayed open for business throughout the recent crisis and continued to work with old customers while many foreign and local banks recoiled. In the past 18 months, demand has surged for plain vanilla flow swaps as Standard Chartered's clients shied away from relatively complex derivatives in a low-rate environment. In the search for yield, some clients are extending loan tenors—beyond 10 years in India, Malaysia and Thailand—which "would have been a stretch a couple of years ago," says Nitin Gulabani, global head of rates & FX at Standard Chartered. The bank is also making strides in Islamic shariah-compliant finance—for example, executing a 4.5 billion Malaysian ringgit ($1.5 billion) carry-capped barrier Islamic swap on which the full exposure is hedged.