SCB Securities (SCBS) plans an aggressive expansion into the local derivatives market via the launch of 7 billion baht worth of products this year.
The company, a unit of Siam Commercial Bank, will issue 3 billion baht worth of equity-linked notes, 3 billion in over-the-counter (OTC) options and 1 billion in derivative warrants this year.
Kawin Sangvichien, the SCBS deputy managing director, said that in this first two months, the company has launched new derivative warrants covering 11 stocks.
For the entire year, the company has a target of issuing derivative warrants covering 35 underlying stocks overall.
Mr Kawin said this will be the first year for SCBS to issue derivative warrants.
In the past, it has offered investors warrants as a sales agent.
"Trade in derivative warrants this year is expected to rise to 100 billion baht, from 69 billion in 2012. Over just these first two months, average daily trade has more than doubled from last year, to 500 million baht from 200 million," he said.
SCBS plans to announce weekly "price guidelines" based on four-day forward derivative warrant prices. To be announced every Tuesday, they are aimed at helping investors make better investment decisions through increased price transparency.
Mr Kawin said returns on derivative warrants typically outpace that of the underlying shares by three or four times thanks to leverage. SCBS will also act as a market maker for its derivative warrants to help provide liquidity for them.
Mr Kawin said the firm will aim its equity-linked notes at private banking customers, while OTC options will be directed at institutional investors.
About the author
- Writer: Darana Chudasri
Position: Business Reporter