Earlier this month, Haitong International Securities Group Limited entered Hong Kong's warrants market as an issuer and market maker after deploying Horizon Software's trading and investment management technology for its warrants trading desk becoming the first Chinese brokerage house to make a foray in the country's warrants products market. SRP spoke to Ken Kwok, head of derivatives market making at Haitong International about the firm's plans in Hong Kong's equity derivatives market.

What are Haitong's plans in HK's structured products market?
Haitong International has currently offered a comprehensive range of structured products including accumulators, equity-linked notes (ELNs), options, equity swaps and other exotic products. Moreover, the stock borrowing and lending business that we've started last year allows investors to hedge their risks through long/short trading. Looking forward, Haitong International is very keen on making our foray into listed options market and callable bull & bear certificates (CBBC) issuance business.

What opportunities is Haitong looking for?
Apart from Hong Kong and Singapore, Haitong International's presence has been expanded to other major capital markets including Tokyo, London, New York after successfully acquiring Japaninvest last year. Singapore, South Korea and Australia, among others, are markets that we believe that have high potential to us too.

What is Haitong's edge in the structured products market?

We stand out in the industry as the leading players because we've strong support from our parent Haitong Securities, and is the most important business platform of Haitong Securities. In addition, we've a solid establishment in Hong Kong, serving the market for over 40 years, [and we are the largest Hong Kong based Chinese securities company in assets and equity]. In addition, we've extensive operational and client network to cover the PRC, Hong Kong and Singapore market. Haitong International currently has more than 190,000 corporate, institutional and retail clients worldwide.

 

Background


Beyond Haitong International’s plans in Hong Kong, the Chinese firm made the headlines at the end of 2014 after acquiring BESI, Portugal’s Novo Banco's investment bank, part of the 'good bank' created out of collapsed Portuguese lender Banco Espírito Santo. Haitong followed this with an expansion in Europe that included the creation of a derivatives markets business in September 2015.

The new division is led by Paul Frost-Smith, head of markets, and is developing a fully integrated and cross-asset trading and risk management platform. The fixed income, commodities and currencies (FICC) and equity derivatives origination and distribution platform, is backed by a cross asset structuring team based in London headed by Ying Xiong, head of equity derivative investor solutions who joined Haitong in 2015 from Morgan Stanley where he was head of the institutional derivatives solutions group.

Haitong’s assets under management in Europe derived from the acquisition of Novo Banco in 2014 stood at €268m at the end of 2015 in Portugal where the bank took a 4% market share. The Chinese bank is managing 108 live products issued by Novo Banco in Portugal, and ten structures that were marketed by the Portuguese bank in Spain.

Related stories:

Haitong enters HK warrants markets via Horizon

Haitong hires in London in equity derivatives push

Horizon upgrades trading platform to cover structured products in Apac