In a departure from common practice, BNP Paribas decided to merge two traditionally separated books in its plain vanilla and exotic currency-linked structures over the last 12 months to better achieve essential scale and trade currency pairs effectively. By preparing an integrated book for clients armed with a global pool of flow data to support trading in exotic structures, BNP Paribas’ investment bank entered the market better-equipped than most in aligning its global positions of each currency pair and analysing complex risk. Regardless of product complexity, BNP Paribas quoted tighter spreads for clients and pooled greater amounts of liquidity.Of note for the year was BNP Paribas’ yuan business, which produced multi-billion dollar days of turnover through a range of 40 to 60 renminbi-linked structured options while exploiting its global footprints in the likes of Hong Kong, Taiwan and even South Korea. Bolstered by a near consensual view of renminbi appreciation by investors in Asia, BNP Paribas looked to zone in on specific opportunities. In late 2012, BNP Paribas observed that USD-CNH volatility was trading at historical lows and engaged clients to enter into an options strategy with the launch of its one-year Digital Certificate of Investment programme. Paired with the ability to offer lower notional sizes (at a minimum of RMB500,000 or US$82,150), the product proved to be a roaring success, having traded over RMB1 billion (US$164 million) in its first month alone.
The business is supported by a robust, proprietary system, CORTEX, which can quote prices of 150 currency pairs and make valuations on a broad range of complex structures in mere minutes. With execution capabilities throughout Asian and American trading hours and deep liquidity under various market conditions, CORTEX offers BNP Paribas clients a diverse range of products for their trading activities.
Evidently, BNP Paribas’ ability to deliver solutions that consist of product innovation and competitive pricing, alongside the embodiment of prudent risk management capabilities on the sell-side, have resulted in consistent win-win situations for the investment bank and its Asian private banking clients alike in 2013. As a result, Asia’s private banking industry has recognised BNP Paribas as the worthy recipient of the Best Provider of Exotic Currency-linked Structured Products in 2013.