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According to Brexit – Hong Kong and Singapore want to attract derivatives trading News

Monday, September 4th, 2017 | Economy

According to insiders, the two compete with European cities like Frankfurt and Paris for banks, for which the business in London is becoming more unattractive due to stricter requirements and because of the brexit.
Hong Kong's financial advisors (HKMA) and Singapore's (MAS) financial institutions have independently contacted the Asifma Asian Finance Industry Association, five of which are familiar with the matter. The talks revolve around the question of what legal changes would be necessary to attract derivatives trading.
According to the Bank for International Settlements, less than ten percent of global trade in futures, options & co. One reason for this is the high costs. As a rule, banks have to deposit less equity for transactions settled in Europe because they are allowed to use their own calculation models for risk management.
According to the insiders, the authorities of Hong Kong and Singapore are considering adapting this regulation to the European standard. Against this backdrop, a shift in business to Asia is already being carried out at HSBC, Standard Chartered, UBS and Credit Suisse. HSBC stresses that Hong Kong remains the core of its own growth plans. The other casinos did not want to comment on this issue.
Regulators make initial arrangements
An increase in derivative trading not only strengthens the reputation of a trading place but also creates jobs for consultants and IT service providers, for example. At the same time, there is a risk that a bank that is in a state of misfortune will have to take care of itself. According to information from two insiders, the Hong Kong supervisory authority already provides experts, which should take the risk management of banks under the magnifying glass. If necessary, external consultants would also be hired. The financial institutions should not only book their derivatives transactions in Hong Kong, but also have to place their risk management and employees in securities processing in the city.
The HKMA welcomes all banks who wish to relocate their derivatives business to Hong Kong – "provided that the associated risks are adequately managed". The MAS from Singapore also emphasizes this aspect. From their point of view, the rapid growth of the Asian financial markets is one of the reasons for the transfer of money transactions. The Asifma banking association did not want to comment on the issue.


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