PASLA: Participants call for more liquidity in China
07 March 2019 Sydney
Image: Shutterstock
The industry would like to see more liquidity in China, according to an audience poll at the PASLA/RMA Conference on Asian Securities Lending.
One panellist said that this is happening, however, there is a lot of work to be done in order to achieve this.
Market participants also discussed the expansion of offshore securities lending in the Asian markets, which has often resulted in unforeseen barriers to entry.
These barriers range from lack of regulatory, legal, and tax reform to technology issues, all of which impact and potentially hinder market growth.
The moderator asked the panel how things currently stand in India and what changes are currently happening there and what has happened over the last few weeks or months.
One panellist said: “In India, if you are the Foreign Portfolio Investment you cannot short the cash market, so there are people who are unable to short cash markets. There is a need for them to borrow and short in the cash market.”
Changes that are happening in India, the speaker noted, is in the derivatives space.
The speaker cited: “The Securities and Exchange Board of India (SEBI) has said that soon in 2019 all of the securities which are available from the derivatives segment will no longer be settled in cash they will instead have to be settled physically.”
This comes after SEBI notified that stocks of heightened volatility will move to physical settlement in addition to the existing schedule of stock derivatives moving to physical settlement.
Meanwhile, discussing other movements in India, one speaker said that today we see more borrowers and fewer lenders so we need to talk to institutions such as the mutual funds.
They added: “We think the next best thing for the Indian market will be the way people trade derivatives in the India marketplace because this is going to change dramatically.”
One panellist noted: “Investor participation is key to the success that India needs. In addition to the onshore liquidity, you are going to need some offshore liquidity to help facilitate and be efficient.”
One panellist said that this is happening, however, there is a lot of work to be done in order to achieve this.
Market participants also discussed the expansion of offshore securities lending in the Asian markets, which has often resulted in unforeseen barriers to entry.
These barriers range from lack of regulatory, legal, and tax reform to technology issues, all of which impact and potentially hinder market growth.
The moderator asked the panel how things currently stand in India and what changes are currently happening there and what has happened over the last few weeks or months.
One panellist said: “In India, if you are the Foreign Portfolio Investment you cannot short the cash market, so there are people who are unable to short cash markets. There is a need for them to borrow and short in the cash market.”
Changes that are happening in India, the speaker noted, is in the derivatives space.
The speaker cited: “The Securities and Exchange Board of India (SEBI) has said that soon in 2019 all of the securities which are available from the derivatives segment will no longer be settled in cash they will instead have to be settled physically.”
This comes after SEBI notified that stocks of heightened volatility will move to physical settlement in addition to the existing schedule of stock derivatives moving to physical settlement.
Meanwhile, discussing other movements in India, one speaker said that today we see more borrowers and fewer lenders so we need to talk to institutions such as the mutual funds.
They added: “We think the next best thing for the Indian market will be the way people trade derivatives in the India marketplace because this is going to change dramatically.”
One panellist noted: “Investor participation is key to the success that India needs. In addition to the onshore liquidity, you are going to need some offshore liquidity to help facilitate and be efficient.”
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