The Exchange Capital Resources Asian Institutional Program is an effort divided into two phases, Educational Outreach and Access Execution.
Our message of “volatility as an asset class” will initially lead to Asian participation in the US and European markets. ECR will guide new and experienced Asian investors through this process until completion. This will lead to multiple and immediate opportunities for the US and European derivatives industry.
Educational Outreach
Ground breaking research produced over the past two years show a direct link between US beta risk and many other international investment silos. Our intent is to leverage the earned relationships we’ve built in the industry over the past 35 years here in the US, with those acquired over the past 20 years in Asia. ECR will blend academia and research from world renowned economists and mathematicians with our decades of experience as practitioners in the volatility space.
Top Asian economic policymakers are now pledging new market initiatives since capital outflows have steadied. The priorities are to enforce better risk management controls in the banking sector as well as allow a more central role for capital markets within the domestic economy. Add to that, first generation wealth for millions of Asian citizens with a desire to invest safely in products that will secure future generations.
We have C-Suite banking officials waiting to discuss the virtues and use of volatility as an institutional portfolio beta hedge to stabilize their regional markets. An additional goal is to induce larger institutional participation within their own equities market and stem investment outflows from ultra high-net worth citizens. We plan to educate and expose these institutions to volatility hedging practices in order to win over senior banking executives in the Asian markets. This will increase trading opportunities for all market participants and service providers and industry professionals in the US and Europe.
Access Execution
Once the institutional investor recognizes the value of volatility as a hedge to their holdings, ECR will perform a “needs analysis” to determine the best way for the institution to access volatility tools. We’ve created 5 channels for them to choose.
- Direct access to exchanges via a sponsored broker neutral trading platform.
- Internalize their access via an API. The investor will then be referred to the particular exchange of interest.
- Assist in creating an institutional investor operated trading desk in Asia.
- Assist in creating an institutional investor operated trading desk in the US or Europe.
- Provide guidance in selecting an investment advisor for a direct allocation, either to a hedge fund or single managed account manager.
A volatility product offering is a powerful tool for global stability.
In 2016, a significant amount economic research was published illustrating global interconnectedness to all asset classes and their relationship to beta risk and volatility.
A European Central Bank sponsored research paper was released and has shown that volatility products have more influence as a global factor, than that of US Federal Reserve Bank policy. This is in terms of global capital flow volatility, with regard to emerging market nations’ gross domestic product, including its resilience during times of economic stress and its after-periods.
This has explosive potential to open a new class of trading participants for volatility products as well as continue its development life-cycle as a mission-critical global factor for emerging markets economies for years to come. This includes the global emerging market investment community, as well as central bank officials in those developing sovereign nations.
Bottom line: Institutional hedging is paramount to mature the Asian capital markets in attracting non-residential investor capital flows inward toward the domestic economy.
