UBS (China) Limited (UBSCL), a wholly-owned bank subsidiary of UBS in China, has announced the establishment of a new team to offer focused coverage of exchange rates and interest rates linked swap derivatives in China’s financial institution market. The new team will fully leverage UBS’s leading position in the derivatives market globally and in particular broaden our offering to better meet the needs of domestic financial institutions.

David Chin, Head of Investment Bank Asia Pacific and China Country Head, UBS, said,

“China is a key market for UBS and we are committed to continue investing strategically. By tapping into our multi-entity platform in China, we have added this new business division to further strengthen our status as the go-to global bank for domestic clients.”

Under the local derivatives legal framework, UBSCL will offer structured solutions to local financial Institutions to hedge their exposures to foreign currencies and interest rates, thus well managing their risk exposures.

The scope will cover the seven most commonly traded currencies in the market (i.e. US dollar, euro, pound sterling, yen, Australian dollar, Swiss franc, Canadian dollar). It will also cover linked interest rates, which includes the main foreign currency benchmark interest rates that are traded in the market, such as the US dollar fixed term swap agreement rate (CMS).

The use of derivatives in China has rapidly grown in recent years, but there remains plenty of potential for their further adoption.

“In 2021, the trading volume of China interbank OTC derivatives reached RMB 158.7 trillion, up 15.6% year-on-year, representing the most significant part of the total OTC derivatives market in China. The trading volume of exchange-traded derivatives was RMB 582.1 trillion in the same year, up 33% from 20201,” said Thomas Fang, Head of China Global Markets at UBS.