JP Morgan has become the first issuer to launch Hong Kong dollar pair FX warrants, set to be traded on the Hong Kong stock exchange as of today, 23 November.
With this move, JP Morgan has become the first in Asia to introduce CNH/HKD and JPY/HKD as underlying currency pairs. The development is set to enable investors to further diversify their portfolios, offering an alternative investment tool.
Cedric Cheung, head of listed structured products sales for Asia at JP Morgan, explained: “FX Warrants as a hedging instrument on currency risk are flexible and they do not require any collateral or margin requirements. The downside risk is limited to the warrants premium whereas the upside potential can be captured.
“This makes FX warrants an attractive and convenient solution for investors looking to mitigate against currency fluctuations and optimise their global asset allocation.”
The new offering comes off the back of increased client demand according to the business, with investors increasingly seeking currency pairs with foreign currencies as the base currency and HKD as the quote currency.
The FX warrants allow investors to analyse currency movements and enhances their ability to capitalise on directional views as well as benefitting clients with overseas assets to more easily manage their FX risk.
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Yowjie Chien, global head of warrants and options electronic client solutions at JP Morgan, said: “As FX Warrants are linked to currency movements, they typically have lower implied volatility, resulting in a more cost-effective buying option. Additionally, the FX warrants also offer investors an efficient way to hedge their currency exposure.
“The launch of new HKD pair FX warrants reinforces JP Morgan’s commitment as a leading issuer of derivative products in Hong Kong. We are continuously innovating to meet the evolving needs of investors in changing market conditions, and to expand their investment options.”
In addition, JP Morgan has confirmed that over the next few months it expects to issue five more currency pairs.