Hong Kong and Singapore regulators have been separately holding talks with the Asia Securities Industry and Financial Markets Association (ASIFMA), which represents global lenders in Asia, to explore ways to grab a bigger share of the global derivatives business, according to Reuters.
Officials from the two Asian financial centers have been in discussions with ASIFMA over the past five months on issues related to the US$540 trillion global derivatives business, the news agency reports, citing sources familiar with the matter.
The regional rivals are both eyeing a larger share of the derivatives pie, taking advantage of tough new UK and European banking rules and uncertainty created by Britain’s plans to leave the EU, the report said.
At the center of the discussions is what kind of regulatory changes would be needed in Hong Kong and Singapore to get more banks to book their derivatives business in one of the two places.
If the Hong Kong Monetary Authority and the Monetary Authority of Singapore are successful, they could lure billions of dollars of banking business and eventually create what could amount to thousands of jobs in Asia, Reuters noted.
The derivatives would include products such as interest rate swaps or foreign exchange derivatives, which allow firms and investors to hedge their exposure to interest rate rises and currency swings.
Asia has traditionally accounted for less than 10 percent of the global over-the-counter derivatives market, according to Bank for International Settlements data.
Global banks have typically held the majority of Asia-related trades on their European balance sheets, with London being a major booking center for such deals.
During the past three years, though, many banks have begun to review their Asia trade booking arrangements because of new UK and European rules that have made Britain less attractive as a global hub for Asian risk.
Brexit has made the situation more urgent by prompting many banks to move some of their operations, including trading books, out of London.
This has sparked broader internal discussions over whether more of the London book holding Asia trades should also be moved to Asian financial centers, sources told Reuters.
Banks looking to book more trades in Asia are said to include HSBC, Standard Chartered, UBS and Credit Suisse.
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