OTC derivatives trading is hot UBS Securities Forecasts 2030The annual contribution rate of derivative profits reached25% ... ...

2022-9-26 13:25| Publisher: 2233| see: 222| comment: 0|original author: Cui Wenjing Xia Xin|come from: China Business Daily

abstract: Over the counter derivatives have become a race track pursued by securities firms. UBS Securities predicts that in an optimistic scenario,2030The annual derivative business is expected to bring benefits to securities firms25%Profit contribution. Securities Companies issued by the China security Association (hereinafter referred to as the "China Securities Association")2022Analysis of Business Situation in the First Half of the Year ...

Over the counter derivatives have become a race track pursued by securities firms. UBS Securities predicts that in an optimistic scenario,2030The annual derivative business is expected to bring benefits to securities firms25%Profit contribution.

OTC derivatives trading is hot UBS Securities Forecasts 2030The annual contribution rate of derivative profits reached25% ... ...413 / author:Cui Wenjing Xia Xin / source:China Business Daily

Securities Companies issued by the China security Association (hereinafter referred to as the "China Securities Association")2022In the "Analysis of Business Situation in the First Half of the Year" (hereinafter referred to as "Analysis of Business Situation"), the over-the-counter derivative business is also described as an important growth point for securities firms' operating revenue. by6At the end of the month, the outstanding initial nominal principal of over-the-counter financial derivatives of securities companies2.21Trillion yuan, an increase from the end of the previous year9.52%。

Multiple interviewees told China Business Daily that in the current environment of intensified international geopolitical risks and increased market uncertainty, there has been a significant increase in both customers' demand for hedging and the demand for securities firms to use derivatives for risk hedging, leading to a significant increase in the overall scale of derivatives. At the same time, compared to previous years, the volatility of derivative trading has significantly increased this year, and the pricing ability of derivatives outside the securities market has become more important.

estimate2030The annual contribution rate of derivative profits reached25%

According to the Business Situation Analysis, in the first half of this year, the return on securities investment in the securities industry decreased year-on-year38.53%Under the circumstances, the over-the-counter derivative business has achieved counter trend growth. by 2022year6 At the end of the month, the outstanding initial nominal principal of over-the-counter financial derivatives of securities companies2.21Trillion yuan, Growth compared to the end of the previous year9.52%。

The Business Situation Analysis states that the over-the-counter derivative business has become an important financial tool for securities companies to serve customer risk management and asset allocation, and is also an important growth point for securities companies' operating revenue. The scale of securities companies' over-the-counter derivative business continues to grow.

Multiple securities firms2022The annual semi annual report can also support the good performance of its over-the-counter derivatives business. East Securities Off MarketoptionTransaction size428100 million yuan, year-on-year growth260%Scale of return swap transactions97100 million yuan, which is the same period last year's scale64Times; The nominal principal size of the over-the-counter derivative stock of Galaxy Securities exceeds600100 million yuan, with a year-on-year increase of approximately110%; Accumulated new nominal principal of Guotai Jun'an equity over-the-counter derivatives1837.2100 million yuan, year-on-year growth34.6%。

Dongfang Securities has summarized the rapid development of its derivatives business into three major aspects: firstly, it has increased business support, increased investment in system research and development, team building, and other aspects, making over-the-counter derivatives an important tool for serving professional investors. Secondly, optimize business processes and establish relatively complete operational and management systems in accordance with regulatory requirements and in combination with our own rules and regulations. Thirdly, expand customer coverage, keep up with the market pace, actively carry out transactions with various types of customers such as commercial banks and bank wealth management subsidiaries, and expand business scale.

Galaxy Securities believes in stable development, striving to build a talent team, improving assessment and incentive mechanisms, and acceleratingITThe development and construction of the system, continuous optimization of operational processes, and improvement of digital level have made important contributions to the improvement of its derivative business. In addition, the management attaches great importance to the development of over-the-counter derivative business. As a "national team" securities firm under CIC, its own brand is relatively prominent, with a wide range of branches. The emphasis on compliance and risk control also contributes to the development of derivative business.

UBS SecuritiesACao Haifeng, an analyst in the non bank financial industry, believes that the growth of derivatives during the year was mainly driven by swap business. Swap business has two main functions: on the one hand, it can meet customers' demand for leverage; On the other hand, the swap business can be customized, and customers (usually private equity) can earn profits under different market conditions. This type of product is particularly suitable for customers who have a good judgment of the market.

Cao Haifeng is optimistic about the development prospects of derivatives business. He told reporters that according to his company's predictions, in an optimistic scenario2030In the year, the derivatives business is expected to bring benefits to the industry25%Profit contribution; Under benchmark and pessimistic scenarios, profit contribution is also expected to reach15%and8%。 Cao Haifeng believes that the driving factors mainly include the rich variety of financial derivatives on the exchange side, and the continuous relaxation of regulation on the off exchange side.

The relevant person in charge of Dongfang Securities believes that with the development of derivative business, more and more entities are participating in derivative trading, and the variety of derivative business targets is also becoming more diverse, which is expected to become one of the important sources of income for securities firms. As for whether it can become the main source of revenue, in the opinion of the person in charge, it depends on changes in the market environment and the direction of regulatory policies in the coming years.

The above person in charge stated that in the development of derivatives, Dongfang Securities hopes for the future5The annual business scale has gradually increased to the level of hundreds of billions, and the revenue contribution can be stabilized at a significant level, continuously improving the industry ranking.

Galaxy Securities professionals also believe that derivatives business will become one of the main sources of income for securities firms, mainly for three reasons: firstly《futuresThe promulgation and implementation of the Derivatives Law have provided legal basis for derivatives trading and provided legal system guarantees for the development of the derivatives market. The second is that self operated trading based on customer demand will break free from the traditional self operated business that is susceptible to market fluctuations, and by expanding the trading scale, sustainable and stable income can be obtained. Thirdly, with the development of the capital market, institutional traders will become the main force in the market, and their demand for over-the-counter derivatives as risk management and asset allocation tools is constantly increasing.

Highlighting the Pricing Ability of Derivatives Outside the Coupon Mall

Multiple respondents attributed the market volatility during the year to one of the important reasons for the surge in derivatives business.

Cao Haifeng believes that the market has been relatively turbulent this year, with increased market uncertainty, driving customer demand for risk aversion. Meanwhile, some securities firms started their derivatives business last year with a relatively low base. Since last year, many securities firms have accelerated the formation of professional teams and increased investment in derivative related systems. These companies' preparations last year have seen results this year.

The person in charge of Dongfang Securities told reporters that the increasing international geopolitical risks and market uncertainty have accelerated the gradual increase in demand for securities firms to use derivatives for risk hedging. From the results, it can be seen that the significant fluctuations in the capital market during the year have indeed increased the enthusiasm of institutional investors to participate in derivative trading. Compared to last year, there has been an increase in volatility in derivative trading this year, with particularly drastic changes from high volatility in March and April to low volatility in August and September. During this period, the pricing ability of derivatives outside the securities market has become very important.

In the view of the relevant person in charge of Galaxy Securities, compared to previous years, the derivatives business this year has shown three characteristics: there is a certain increase in the demand for securities firms to use derivatives for risk hedging; Institutional traders' commodity derivative business has significantly increased; In terms of over-the-counter derivatives, there is an increasing demand for north-south cross-border derivative transactions; In terms of derivatives on the exchange, this year the exchange added China Securities Exchange1000Index options500ETFThe development of options and derivative tools has significantly accelerated.

At present, the comprehensive registration system is being promoted, and the above-mentioned person in charge of Galaxy Securities believes that this will help further develop the derivatives business. The good operation of the registration system requires securities firms to provide supporting services. Providing customized services, including over-the-counter derivatives, for both financing and investment parties is the only way to expand market depth, "the person in charge said. He also stated that as external uncertainty increases and market risk increases, both physical enterprises and financial institutions themselves need over-the-counter business as an important risk hedging tool. The importance of over-the-counter business is increasing day by day.

Cao Haifeng believes that the domestic derivatives market is still in a relatively early stage. From the data,2019 In the year, the proportion of nominal principal of the stock of equity over-the-counter derivatives in the United States to the market value of the stock market was8.7%In China, this value is only1.1%。 In his view, the reasons for the relatively limited scale of derivatives in China are mainly reflected in two aspects: on the exchange side, there are fewer types of financial derivatives; On the off-site side, previous regulations have become stricter.

The person in charge of Dongfang Securities also believes that compared to the foreign derivative market horizontally, the domestic derivative market may be in a relatively early stage, but compared to its own vertical development, the domestic derivative market has made significant progress in the past five years. The development potential of domestic derivatives business is significant, and there is still a large amount of market demand to be tapped. Although derivative trading is mainly aimed at institutional investors, its scale is also steadily increasing and there is still significant room for development. The current geopolitical crisis combined with global high inflation has had a certain impact on the expansion of the derivatives market, but the dominant role is still in the market environment and whether the business can develop steadily and continuously in a standardized manner.

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