China Seen Poised For Equity-Linked Deposit Takeoff | Derivatives Week
Strong growth is expected for equity-linked deposits in China this year, in part because of prodding encouragement by local regulators keen to develop the mainland market. The products, offered by onshore banks to wealthy clients, are structured by international houses who provide the derivative components from their offshore desks. One derivative official estimated the market should grow from 10's of millions to 10 or more times that size in the next few years and could rival Hong Kong's massive structured deposit business.
......Regulators are favoring lower-risk structures such as index-linked instruments over more volatile single-stock products....... Major domestic firms including Bank of China are exploring the concept. "It's still a niche market that will require a lot more investor education but this will take off longer-term," said an official at BOC, confirming the bank is also eyeing the product.
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