Capital Markets, Corporate Finance and M&A, Foreign Exchange, Thailand - Monday, December 21, 2009 14:40 - 0 Comments

Asia Risk: Thai derivatives take steps towards open market

Asia Risk, December 2009

A few years ago, Thailand was not popular with foreign derivatives bankers. As the Thai baht went through a period of increasing volatility, regulators became more and more restrictive on the sale of derivatives, telling banks to submit lists of products they want to sell for approval. “At the time it was very annoying: I thought it was too draconian,” says one banker.

But Thailand’s stringency on derivatives paid off when markets turned really nasty. “In the two years or so before the global financial crisis, every new structure you wanted to bring out, you had to take it to the regulators to get an approval done for the product,” recalls Adam Gilmour, managing director and co-head of corporate sales and structuring for Asia at Citi. “That meant that by the end of 2008, when the crisis was at full steam, they had good practices in place: solid documentation, no speculation, and robust product risk they could feel comfortable about. It put them in very good stead for the crisis.” Continue…

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