BNP opens dealing room in Shanghai
Mark O'Neill in Shanghai
With a view to a future market for yuan products, BNP Paribas yesterday opened a dealing room in Shanghai and said that it would shortly apply to trade derivatives.
The new room, on the 13th floor of the stock exchange building, offers a range of fixed-income and treasury products, including spot and forward products in foreign currencies, interest rate-related products in foreign currencies and credit derivatives in foreign currencies.
The new facility will enable the bank to offer these products directly to mainland firms, instead of having to reach them through Chinese banks as it had done when it transacted the business through its Hong Kong dealing room.
Xie Haitao, the chief executive of BNP Paribas (China), told a news conference that the bank would, after the May 1 holiday, apply to the China Banking Regulatory Commission (CBRC) for a licence to trade derivatives.
In February, the CBRC announced the first administrative rules on derivatives trading by financial institutions. Most foreign banks operating in China and some mainland banks have been offering derivative products but, as from September 1, will only be able to do so with CBRC approval.
'The [yuan] bond market is the biggest bond market in Asia, outside Japan,' said Eric Nicolas, BNP head of fixed-income Asia-Pacific. 'We will see a fast development of the [yuan] derivatives market. We are one of the top five in fixed-income in China and opened this dealing room to continue to be competitive.
'Corporations will need [yuan] derivatives to hedge their activities. It will be very important and we intend to be a leader in the [yuan] market, as we are a leader in local markets in Asia.'
BNP Paribas (China), a wholly foreign-owned bank, has a capital base of 600 million yuan and a licence to do yuan business with all corporates, both domestic and foreign, where the yuan businesses are open for foreign banks.