...DEVELOPMENT OF DERIVATIVE MARKETS IN EMERGING MARKET COUNTRIES1 A. Background Derivatives are commonly used for managing various risk exposures, including foreign exchange, interest rate, and credit risks. By allowing investors to unbundle and transfer these risks, derivatives contribute to a more efficient allocation of capital, in many cases reduce market and portfolio volatility, facilitate cross-border capital flows, and create more opportunities for portfolio diversification. Despite rapid growth over the past several years, Emerging Market (EM) derivatives account for only about 10 percent of the total outstanding notional values in global derivatives markets. Compared to mature markets, the ratio of outstanding notional value of derivatives to market capitalization of the underlying asset markets is fairly small in most emerging economies and is mainly focused on sovereign risks. The most common issues that challenge the development of local derivatives markets are (i) relatively underdeveloped markets for the underlying assets; (ii) lack of adequate regulatory, legal and market infrastructure, and (iii) restrictions on the use of derivatives by local and foreign entities.2 The problem of misuse of derivatives is perceived to be more acute in emerging market countries where prudential regulation, credit information infrastructure, and risk management practices are not fully developed and maybe in conflict with reasonable economic, investment or portfolio objectives. This...
Words: 4021 - Pages: 17
...Asian equity markets are sizable, expanding and fast growing. Asia specific derivative market has hold nearly 40 percent of world capitalization in 2015 and having annual volume of 9.7 Billion. Markets in countries like Japan, Korea, Malaysia, China, India and Korea are also sizable. Indian, China and Malaysia were second tier exchange in derivative market but growing rapidly. 2.0 Development of Derivative Market 2.1 Malaysia Malaysia start joining the derivative market trading community in October of 1980’s with the launched of crude palm oil futures at Kuala Lumpur Commodity Exchange (KLCE). KLCE was known as the first futures exchange in Malaysia and all of Southeast Asia, established in 1980. In December of 1995, Kuala Lumpur Options and Financial Future Exchange (KLOFFE) were officially licensed as a futures and options exchange, and trading on in its flagship stock index futures. In December 1998, KLCE and Malaysia Monetary Exchange (MME) were merged to establish Commodity and Monetary Exchange of Malaysian (COMMEX). Shortly after, in January 1999, KLOFFE became subsidiary of Kuala Lumpur Stock Exchange (KLSE). In June 2001, KLOFFE merged with COMMEX and form Malaysian Derivative Exchange (MDEX). Later Bursa Malaysia Derivative Berhad has listed in 2005. 2.2 China In 1980’s the relevant department study abroad to prepare and actively preparing for China's futures market .The China Zhengzhou Grain Wholesale Market, was the first commodities futures market opened at China...
Words: 1002 - Pages: 5
...and to extract maximum returns out of an Investment, one needs to keep eyes and ears wide open to sense early any opportunity coming in the way. In the last report titled ' Comprehensive Analysis of Indian Starch & Starch Derivatives Sector ' a deep tabular and a brief theoretical analysis was presented of last 10 Years' Data to understand the scope and potential of Indian Starch & Starch Derivatives Sector. Now, in this report, we will present a deep theoretical argument based on the study of Chinese Starch & Starch Derivatives Sector over last two decades to understand the tremendous growth opportunity Indian Starch & Starch Derivatives Sector provides in the coming decade. It is worthwhile to note here that Indian Sector is almost a replica of Chinese Sector and Indian Sector, as at 2010, is at a stage where Chinese Sector was there in 1992. Over the time period between 1992-2009, Chinese Starch & Starch Derivatives Sector has grown more than 10 times and Indian Starch & Starch Derivatives Sector is bound to replicate such growth in the span of coming 10 years. We will also include in our analysis the consumption-trend of Sugar vis-a-vis Starch in China as well as India as Starch-based sweetners form 50 % of the marketsize of Chinese Starch & Starch Derivatives Sector whereas use of Starch-based sweetners as a substitute to sugar is only now catching up fast in India. We will also discuss briefly in this report the valuation aspect of Chinese and Indian sector at macro level and...
Words: 4820 - Pages: 20
...THE GLOBAL DERIVATIVES MAGAZINE ROUNDTABLE Malaysia derivatives Global access through a global partner Held on September 18, 2012 in Singapore In association with 2 OCTOBER/NOVEMBER 2012 THE FOW ASIA ROUNDTABLES: BURSA MALAYSIA DERIVATIVES Sponsored by: VIP invite Date: 18 September an Bursa Malaysia Derivatives: Derivatives ccess through a Global Partner targets international growth Location: Marina Mandarin, Singapore Time: 14:45 (15:00 start) the West falter, investors are increasingly looking overseas for s mostAs established markets in The panellists will be: exciting growth markets Bursa Malaysia Derivatives (BMD) Chong Kim Seng, growth Malaysia Derivatives trading opportunities. After a decade of CEO, Bursa and a landmark deal with the CME Group and 2011 following a deal with Goh Ching Yin, targeting Devt, Securities Commission e exchange to Globex traders. in 2009, Bursa Malaysia Derivatives is ED Strategy &diversification and increasing its growing Shamsuddin bin Mohd Mahayidin, Director Foreign international participation. At the Asia Roundtables, Negara onofSeptember 18, William Mitting held Malaysia Exchange Administration Department, Bank its markets to foreign investors and ith new contract launches, more leading market participants in the Malaysian market to discuss the met with a group of Natarajan Narayanasamy, Executive Director, present themselves for international LT International Futures (M) Sdn Bhd Azila Abdul Aziz,...
Words: 5936 - Pages: 24
...Exchange banks on derivatives for growth Summary SINGAPORE Exchange, South-east Asia’s biggest bourse, is relying on derivatives for growth amid a dearth of merger and acquisition candidates in Asia. Exchanges worldwide have been building their futures and commodities businesses as the value of stock trading dropped 38 percent from June 2008, according to the World Federation of Exchanges. SGX has been searching for other growth avenues since its US$8.6 billion bid for ASX was rejected bu Australian regulators in April 2011. Located in Asia’s biggest oil-trading center, SGX also plans to introduce trading of gas and electricity futures in a few years, he said. Unit Asian Gateway Investments bought a 49 percent stake in Energy Market Co, operator of Singapore’s spot electricity market, for $17.6 million in August 2012. Key word: SGX derivative growth Analysis report This article appeared in The Straits Times at August 6 on page B12. Derivatives are financial contracts whose value derives from other related assets, such as foreign exchange, bonds, equities, commodities value. Because their values and those of the underlying assets because they have certain characteristics, derivatives are useful for hedging, speculation, arbitrage spreads, and adjusting the portfolio, at a lower cost. Derivatives have grown popular because they did not find the combination of the characteristics of other assets. [1] The most important derivatives are characterized by between...
Words: 966 - Pages: 4
...is money that flows between financial markets to get the highest short-term interest rates possible. Capital inflow is increase in the amount of money available from foreign sources for the purchase of local capital assets such as buildings, lands, and machinery. IMF intervention until now still become controversial, two of well-known economist which are Stiglitz and Sachs said that because of IMF intervention the crisis has become much worse rather than before. Moreover, we will discuss about global crisis, this crisis happened in 2007. This started in US because of housing mortgage, and also credit crunch. The difference between Asia crisis and the Global crisis also will be discussed. Asian Crisis Hot money is “Money that flows regularly between financial markets as investors attempt to ensure they get the highest short-term interest rates possible. Hot money will flow from low interest rate yielding countries into higher interest rates countries by investors looking to make the highest return” (Investopedia, 2011). Capital Inflow is “increase in the amount of money available from foreign sources for the purchase of local capital assets such as buildings, lands, and machinery” (Business Dictionary, 2011). According to Juzhong Zhuang and J. Malcolm Downing (2002) the first attributes that started financial disturbance in some Asian countries in 1997 and its transmission over time primarily because of sudden movements in market expectations and confidence followed by...
Words: 2871 - Pages: 12
...management service strive to sustain ongoing business growth and financial strengths in order to maximize every stakeholder’s interests and provide endless contribution back to the community, through service diversification and enduring global expansion. Executive Summary This report analyzes the current strategies of Marriott International and based on the given and researched information to develop a number of recommended future strategies in order to sustain the growth of the corporation. I believe that Marriott has a good chance for success even through the market is highly competitive. Marriott can successful by developing market to Asia Pacific and using the two recommendations that have been discussed, whilst being backed up throughout with the core competency of marketing. I believe that the multi-brand and product advantage can be achieved despite other hotel corporation to penetrate any market for a period of time. As the leading hospitality corporation develop over 13 multi-brand products in serving various customer needs that no other hospitality group has. However, this advantage is not sustainable in the long term and will be lost if the service is not keep advantage hospitality knowledge and up-to-date. Professional team and leading technology should be use to ensure the service stays at the forefront of the hospitality industry, but given that rapid changing customer behavior is the...
Words: 3135 - Pages: 13
...business in Asia. • Enrich bunker services coverage in both the Physical Supply and Risk Management sectors. • Build up After-Sale-Services to strengthen strategic relationship with ship owners. • Form alliances with dealing room teams internally and externally to drive the strategy forward. • Increase the Revenue of the Fuel Oil Paper business by achieving USD 3mm (EBIT) in the 1st year. • Target revenue in excess of USD 10mm (EBIT) in the 2nd year. • Include straight run / feedstock / low sulphur fuel oil business into global business portfolio. • Develop bunker business for fishing fleet. • Introduce Asia model globally to enhance The Company Brand. 2 CUSTOMER ANALYSIS 2.1 TARGET CUSTOMERS IDENTIFIED Firstly, the team will focus on the Asian Customer Base in order to grow the business in this region. What follows is by no means exhaustive in terms of client coverage. The team will not only market paper products to the customer base, but will also risk manage our positions in order to maximize profits on the trading books. Key Prospective Clients Industry Region Products Traded Swaps &/or Options (Vanilla &/or Exotics) Revenue Potential $mm APL/NOL Shipping Asia Fuel oil Swaps & Vanilla options 0.4 Chellaram Shipping Shipping Asia Fuel oil Swaps & Vanilla options 0.1 COSCO Shipping Asia Fuel oil Swaps & Vanilla options 0.3 Daiichi Chuo Kisen Shipping Asia Fuel oil Swaps & Vanilla options 0.1 Emirates Shipping Line Shipping Asia Fuel oil Swaps...
Words: 3380 - Pages: 14
...The Financial Analyst, Treasury Finance - Risk Management and Reporting, supports Manulife's Treasury Finance Risk Management and Reporting function and will contribute in the preparation of financial and management accounting reports, risk policies compliance, trading and hedging monitoring/reporting. The incumbent will support the review and analysis of Treasury Finance initiatives relating to FX hedging activities, assist in liquidity risk management analytics and actively participate in Treasury projects. The incumbent will be liaising with Treasury Capital Project Management, Corporate Actuarial, Corporate and Investment Controllers, Derivatives Middle Office, Asset Liability Management, Variable Annuity Hedging, Treasury Operations, Corporate Tax, Corporate Law, Investments and Audit. Responsibilities: • Responsible for data gathering, data mining to support liquidity risk management analytics, including liquidity sensitivity analysis, assessment of stress testing scenarios, impact of different asset mix on liquidity, evaluation of collateral funding alternatives • Determine the impact of regulatory reforms on the company's collateral obligations and liquidity (Dodd Frank Act) • Support monthly and quarterly reporting associated with the Liquidity Risk Management Policy and FX Risk Policy • Contribute in the preparation of cash flow forecasts and FX exposure forecasts • Support the maintenance of the FX VaR model and FX model back-testing ...
Words: 1199 - Pages: 5
...FIN 3103 FINANCIAL MARKETS AND INSTITUTIONS– SECTION 1A AN INTRODUCTION TO THE ASIAN EQUITY MARKET & ITS EXCHANGES SAMUEL TOW WEE YAP (A0102724U) LIEW KUANG CHEN JOEL (A0004624U) ANG CHUAN HWEN JEREMY (A0080928X) LIAW YIH HANG (A0091535E) WU GUIYAN (A0100395N) ZHAO CHUANYI (A0105563L) Contents 1. Introduction ..................................................................................................................................................................................................... 4 2. Objectives of the Stock Market ................................................................................................................................................................. 4 2.1 Capital Formation ......................................................................................................................................................................................... 4 2.2 Connecting Traders ...................................................................................................................................................................................... 4 2.3 Security............................................................................................................................................................................................................. 4 2.4 Economic Indicator ...................................................................................................
Words: 6311 - Pages: 26
...INDUSTRY ANALYSIS 1.0 Overview of Financial Market in Singapore Singapore has successfully established itself into a thriving financial center, not only in Asia Pacific region but also around the world in just over four decades. The Singapore Exchanges (SGX), which has established itself as one of the capital market in Asia-Pacific, is one of preferred listing location, with 40% of companies listed on SGX originating outside of Singapore and close to 800 global companies globally. Approximately 56% of SGX’s total revenue in 2011 was created by their International product, which sums up to an astonishing amount of $370 million dollars. Singapore’s bond market has also grown significantly throughout the years. With its extensive range of both Singapore government securities and foreign corporate bonds available, Singapore offers the fixed income investors a wide range of investment opportunities to choose from. As one of the top 4 most active foreign exchange trading centres in the world, Singapore stands as the second largest over-the-counter derivatives trading centre in Asia and also a leading commodities derivatives trading hub. With its total assets under management of around S$1.2 trillion and continues on a steady growth, Singapore is therefore recognized as one of the premier asset management location in the whole of Asia. [From SGX Annual Report 2011] 1.1 Industry analysis with Porter’s five forces DBS Group is in Singapore commercial banking...
Words: 729 - Pages: 3
...Commodity Derivatives Market in India: Development, Regulation and Future Prospects Introduction The Indian economy is witnessing a mini revolution in commodity derivatives and risk management. Commodity options trading and cash settlement of commodity futures had been banned since 1952 and until 2002 commodity derivatives market was virtually nonexistent, except some negligible activity on an OTC basis. Now in September 2005, the country has 3 national level electronic exchanges and 21 regional exchanges for trading commodity derivatives. As many as eighty (80) commodities have been allowed for derivatives trading. The value of trading has been booming and is likely to cross the $ 1 Trillion mark in 2006 and, if all goes well, seems to be set to touch $5 Trillion in a few years. Chequred History The history of organized commodity derivatives in India goes back to the nineteenth century when the Cotton Trade Association started futures trading in 1875, barely about a decade after the commodity derivatives started in Chicago. Over time the derivatives market developed in several other commodities in India. Following cotton, derivatives trading started in oilseeds in Bombay (1900), raw jute and jute goods in Calcutta (1912), wheat in Hapur (1913) and in Bullion in Bombay (1920). However, many feared that derivatives fuelled unnecessary speculation in essential commodities, and were detrimental to the healthy functioning of the markets for the underlying commodities...
Words: 3982 - Pages: 16
...Supervisory Committee: __________________________________________ Dr. Pek-Hooi Soh Senior Supervisor Assistant Professor __________________________________________ Dr. Aidan Vining Second Reader CNABS Professor of Business and Government Relations Date Approved: __________________________________________ i ABSTRACT Methanex is the world leader in methanol production and marketing. China is an important market; by 2014 it is forecasted to account for 50% of global demand. The purpose of this project is to determine whether Methanex should invest in methanol production in China. The project approach uses a multi-goal analysis focusing on three goals: (1) Consistent with Corporate Vision, (2) Sustainment of Existing Competitive Advantages, and (3) Profitability. Based on the analysis, the project concludes that Methanex should not produce methanol in China until coal to methanol technology is more profitable and environmentally feasible. The project also proposes a hybrid alternative that focuses on increasing market share and footprint in China, while continuing to monitor developments in coal technology. ii EXECUTIVE SUMMARY China is an increasingly important...
Words: 20413 - Pages: 82
...The Baltic Exchange is the provider of information on maritime transportation markets, used for the trading and settlement of physical and derivative contracts. It was located at 24-28 St Mary Axe, London until that building was destroyed by a bomb in 1992, and is now located at 38 St Mary Axe, London. It has further offices in Europe and across Asia. ------------------------------------------------- Overview Its international community of over 600 member companies encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic. Baltic Exchange members are responsible for a large proportion of all dry cargo and tanker fixtures as well as the sale and purchase of merchant vessels. The company was founded in the mid-19th century, with leading founding shareholders being Stephen Ralli and Michael Rodocanachi, whose families were from the Chian Diaspora.[1] The first use of the name was at the Virginia and Baltick Coffee House in Threadneedle Street in 1744, and was registered as a private limited company with shares in 1900. Today the exchange is owned by its member companies and is not publicly traded on a stock exchange. It is governed by a member-elected Board of Directors. The exchange provides daily freight market prices and maritime shipping cost indices which are used to guide freight traders as to the current level of various global shipping markets as well as being used to set freight contract rates and settle freight...
Words: 535 - Pages: 3
...Products and Services BM&FBOVESPA is the main Brazilian institution of intermediation for capital market operations. As the only exchange for stocks, futures and commodities in operation in Brazil, BM&FBOVESPA develops, implements and provides systems for trading involving stocks, stock derivatives, fixed income securities, government securities, financial derivatives, currencies and agricultural commodities. BM&FBOVESPA is also very important in fostering the Brazilian capital market. It plays a vital role in the development, training and inclusion of a new generation of investors in Brazil. BM&FBOVESPA believes in the development and growing sophistication of the Brazilian capital markets and their participants. The company has then accordingly introduced new products and pursued greater liquidity for existing products. Additionally, the company also intends to increase the likelihood of access to National Treasury bonds, offering new functionalities for “Tesouro Direto” (Treasury Direct) investors and incentives for brokerage houses that distribute this product. Based on the BM&FBOVESPA annual report 2011, the focus of the company in the equities market has been on developing the following products: * Securities lending (BTC), made easier by means of operational and technological enhancements. * Equity options, by increasing market maker programs for options on highly liquid stocks. * ETFs (Exchange Traded Funds), with the launch of new...
Words: 678 - Pages: 3
