nba694class13 - Equity Derivatives I d Related Prod...

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Unformatted text preview: ' Equity. Derivatives I d Related Prod ucts .'~‘-"1'-‘.-:-»:5i‘h'.§:“.l #26: WW3“ Class 13: Equity DerivativeS' m Europe and Asia 7 Mark Zurack November 28, 2006 Nay; ’falbcw fifrq Ji’mfifflfu‘ (1/9le gr al/ enneygihj manltfi 2n jfi’fler‘vj - I ‘ To discuss the role of EMU in the development of the EurOpean Derivatives market ; .. - To introdUCe Equity Derivatives transaction driven by withholding tax issues - - a» To show... why Warrants and Structured Products have become so popular and. how inveStors use them ' ‘ > To discuss how the Equity Derivatives market developed in - Japan, the importance of the Nikkei 225 index, Barings, and the use of ETFs ' I To demonstrate how Equity Derivatives are used in Asian and other emerging markets ' 0610231-C0r-13 l . . , i . . as P80?!% in {mm—flew t peopie (5,:ch on]? éug, EMU and. not MdU’A‘r'aj Counth'fl‘ , . U5 {Aviator-maid be? ‘Rdurce on these rndexg; {05% emarfi 5L0 , The Development of the European ew We? '. - -_ _- ' . ; . V'rig'i'a ’ owl/Bil?) M61630“ “W?“ W _ _ Equity Derivatives Market W2; Prisoner-amt,“ The emergence New?! amt 5' \) . of the European Monetary Union _ in 1999 changed - . i ' the way many ., ,. institutions « invest. Instead ' of primarily ‘ investing in their _ . own home market; institutions in EMU countries View the _‘_ , aggregate of the TS EMU markets as .... their "local” . ' ' market .. Numbézrlat' .: _ _ of Stocks Itdi'ces More commit-infect; 1'14] SMaUE‘o flag/t {If " :Source': Goldman Sachs-2 Equity DeriVatives Research ' I - - _ ' A . f z 2 ' 0610231-Cor-13 * Based-on Third Quarter 2005 Statistics (Eu/2mm cater: whim MdALQ‘I'J slam #66! m ODOJ/ 70 I . Govern Mice 0F EMU teapot-ant ffMU : L2 EAWFC’d/i countess who use} some cum/envy and I“: WVEgEJ Lageé‘t’ market”; in 54mm paid forge climate/leis) (aim a lax cvecil‘lom +he alm‘d'eqd over 90% 0,1113 lax Paid (9404 pmfibn ”final {3' buli’hlzolclfnj Hm _ 9%? Pafif mica once .0L 326M (Girl/{deifldfjm Coated/WU )lifai dmund AFW‘R'e'J—“(g-C‘F mon‘l‘hé’) o_me EqUity Derivatives Transactions ‘- and Tax DriVe“ ‘ ' ,. WWWMum-xm‘w" - - In three of Europe’s largest markets local and foreign investors value dividends differently. ' Local investors sometimes receive tax credits in addition to the dividend in some cases, foreign investors incur Withholding tax 5‘25 US -:Wsi°r like bee/1W ’6‘83’9’3 - In-addition,companies usuall pay a dividend once a year. _ 4 my be 4mg (3% w. amides or page: a between March and July, sot e resultant differences In demand . . . for equntaes are seasonal - - 3141‘? _ . . HS sells CM. have”... ' Estimated Distribution of DAX, CAC and M18 Dividends Gaffe/V, gfiv’ifj; (20%ny , . ,. ‘ . .. _- . ,_ . leIolmal ' A’Mfi/lcan sells Ifsck no German-[I arid HEM/dose Julep . Divdmél Aficiifigg ——> 3MP om “fa/I hat/841‘ beMEn Z camel-rile: Court-tria- now .mqke 7‘94”?» ‘l’d/Y crpditt 0610231'Cor-13 l... cf "' ”I -. I h‘ Example: German Dividend Yield _. Enhancemnt A US client oWns 100 shares Of DeutsChe Bank AG, a German name which currently pays a dividend of 1. 70 Euro. Under cUrrent tax treaty with Germany, US holders only receive 85% of the dividend or 1. 445 Euro Investment bank can help enhance clients yield to 93% of the dividend by: l Selling Stock to bank and buying swap from bank with 93% of dividend I Bank sells stock to" German local and buys swap from German local at 95% - Bank Iqun'g stock" with 100+% dividend and short swap at 95% -"DBK Stock , DBK Stock . -~'-——-——--—-—-> --—--——-——> US Cllent .- .= ‘ .E- _.___._1 ~ DBK-Swap ' DBK swap -. - . " . " 95701ch Cflb’ideflci 93%Div _ ‘ _ - _ . 2% Div _ 09mm 36,; ,0 W- 5% Div [007; a? alimelmd) p03 ouj' 93%, and own Result: Client gets 93% of dividend, bank makes 2% of dividend, and m Hock . I . German local makes 5% of dividend , - 72M 'l’YI’a'HvII’n'tI dIHeI/mt In dIHI‘IP/TE COWITLIr'IYS" V943 ELI mmpeaa “based Moi fittings {5' “4’7 "l Zondo” Hedge ‘FU’IdS 'f’bd' [MI/t 79:31:34 JubJIdIa’IPJ cow/d a/YD be acme M l’kesfi +4019: 4 0610231~Cor-13 3:;th“; 0.43 ft) Ffjula‘f'ovg Visk . . Clarion Clearirj Corp. 515 Coo/fiery”? in option W313 m an EXCLla‘fig/‘e _ Intel Wain: 02-le by (556!le Mma'b' 0” ”L4" 4400K (like a PM alpha/.1 Whose Couri‘l’er/mng (S' Lil-d a» @023sz (Maria? Jainism? of 171%! _) " ' " ‘ i ‘ ' ' ' +8r‘ an ' -— bu'f 41 0 ho on lid-5L thzj Hm [fiver/mew? {own}: if (com [a ‘ ; COVE/Ed warrant ranSl‘bw ,j r F ’l I Prune/U {:9qu marina} 7Q)... J’b€(“fqfi'y§mdrh f5“ BaSiCProperties ofCovered Warrants ”M market— :M-Mma: M; M WM- MMM MMM: M A» MMM . . (I‘M? qeed- +0 opeq flu": act-own ”5,52: Qacyi't’r‘ +19 41am Ms Bank 1M 5 . Legally a security like a stock rather than a bilateral contract like a ma Wolfram d feCUriliE’s‘ fir shear, will ”derivative, though usually has option-like characteristics _ not 6“de 0"“? (“”53 "' - -, Have grown in popularity oUtsidethe United States for a number 0f”;- ' . reasons: ML (Hamid FSSue Warm/ifs ’i‘-0 X Zr: Ranker ' {7n {0 [cu Intel? I . . . -I f 53 'H :‘M j _ 3 {I h” + _ Settle and clear like equities —- thereforelowcost of entry for 8" if" PW“ WW" ‘ ' ' brokers, tradable through existing equity accounts for investors Private, (Lire/its _ ML obmnni'ld‘jlfb . _ . . '5‘“ij inciting Manktt fly} fad I FleXibility: in Low- cost of entry: mmnt (Mow: IE": f0 479% 10,12 — BrOad range of products ayailable'vvith almost any under-lyer' :. i, .7, : and/orrpayoff . s . . . - - .- Or‘l EJZHI’IIEJ' {LUI’HIC Mainf-amifjv _ ' . PM“? ) I: Retail friendly and non-anonymousmarket-making: . W GEM”? Nah ”I? — Available in small Size and With typically very tight spreads nix/ea m magma; Dem-3d,? : _ -- After hour trading is available in some markets ”re/elm: _wc;11~_,,u_i./,L, 4% etuifj; _. I Limited liability: Cut'll'ur‘fl'fi)" I. . .. .. . . .. '_ med q _ — _ Losses are limited to the initial investment as securitized mm” ”4%" M C”“""’.27:7””?" ; a. derivatives-cannot be shorted” neerclea in be averaged Fare. refit/ll ' : _ 0610231-Cor-13 maplc€£) a-Vrnvts’hwe'd’ banks {from Warm/it’s 00/ no (4130» Who Ward's in {only Main. m’fi‘ . y _ , _ , A /"‘\ - , _ . _ Wuifgr-i‘xyalafi’lftj at Jho'nt wan/“ants“: lag/liq Mmlot had Warmth. WW“ bu m o no”! “90pm”: “"9" g u" _ / fit ‘38 7 j P Ova/waif cove» few ' Vblfimfg 5 Warrant ACtiVity ‘zi'nfEurope 7—4- 2006* H u " “fascia; /-—- L yea/cs (3’) dig/177994 i 2A4. {46251: anf Wrisej’ .4 iYID-iqj k0? 10% Woven/Mt WWW" Total dollar volume through October 2006‘ was.$376 billion, which A“ Others translates to $17.9 11% billion. per day of notional if you assume the warrant premium Italy aqua/510% ofthe a _ _ _. ,7 __ 5180/0 share price. - -. '; . -- _ _- : _ Germany, Switzerland ' and Italy account for 89% of turnover Germany 63°/o _ Switzerland " 8°/o _* Through ‘ October 72006,- Source:- world Federation of Exchanges. 061031-00?” Retail Aggregators and the Use of Preducts l . ..-‘- mam-mu mummiv *. As Continental Europeans became more equity conscious, _ European finanCEal institutions__(banks, insurance Companies,fund-managers) used the Structured Note market to provide _-.eC|uity-'exposure in a form investors were-used .to.'recei\'Iin'g-- - ' '- Background Product ' Evolution _ 54/0/9844 (non-c UK) ‘muesm; mugged Mung; r?) bonelr Ham" banks any? Nufiht Teiekom €Z“Hj L‘eicciv'fi971'qu-mfan/ £%cmd41 IN/fihfiba: Mo'?’ (94170 £2» FZWB‘JO dealt r‘n trims/14M prodigal-{flied mien/u w/ emLeJn‘zd 920415) LTCM sold imam cram rn raw-pasts - amount of upside Yield Enhanced (“1% Securities who FarckCfiPJ m", ‘mh mud-um! Wroclaw”: More Sophisticated Principal protection, _ Jury still out varaed chair [00% a; 010mm, 5% WWW; Structures chance for high return _ ¥ -‘ - - . Ii half a ‘l’ but am i??? ~ cm My yam/,5 my (arm N am) (”‘9' 9’2? We 3 I .- High. interest rates, CapitalGuarantee pr'OVides principal _ Funds protection, and a high Interest rates declined 0610231-C0r-13 f“— \. J/A\ I ’fl \t ”(Que/jg wfivvhkles U ) St ks . 0c Increase yield declined mud 00 ml} x \ r“‘\ \L The Development of EqUity Derivatives ' _ II. E j' I Gulf-growl aVCfS'lb". 1% J‘qul’f felling (or €V€m $6."ij lo-rj, an Jellaiqj in jenPraj) In Japan mm W: WWW h a all - e ll " - ‘ . Wits,» Much Close???» +9 Mole fiduyeEjCI/ehrcle 5y whit/7' {‘3 5‘6”) Stock Index FutUres' began trading in 1988 and quickly dominated trading in Japan Volume' bill/194 giddy market?- domrhafld 5:? flat-mes“) “Fm” demWfiVflC Mdr‘fj mowkef heat/19:" I I (3" Yen) influence On Undérr‘l'i In 02:10 Mark»? A) {helm 0V9 199519?“ e 4 Who: Index Market Jo Mar/LL57. . 2(500 s . . ' - ‘ higher ? EELdbLCQ dorquhqfecf . index leqé‘c’r’gzy is Fri-cg.- Y . m a? rho/9x 947:1}?er £22an 013wa ( La? L? «Wilma-:3 m 5:13.}; :. ;' ."; .".f_5_ ' L V1. v1 ' afraid; 225— ' : .I -- . g . by “a j o F ' m r' “IU- {5-3 “Eff Shelter) ' -' ._ - -:-_ MON, Shaft: ouf’g'f'fldafrljj I mod ”((de)? _ " 0 In UJ‘. 19W mar-Q of heaVI'Pr~u/£5M€cl 1988 1989 r 1990 1991 [L‘Futuras' market: 2005* 1' J _ . ‘ *Orrginal source In dollars, translated to Yen based on April 12 Yen/Dollar rate of 107.72 Hock: lb replicate Mi" Why? Cash = 1‘649 billion, Futures : 1,418-billion . - - 513m '1» dammit MM! 225' bathed/r _-_ __ Lower commissions - _ 0.39ri55iV8 Ems-Wm!“ 4,1“ng 5W 0W '- ' Acceptable way to sell short " - .- . ,Coincided with-bubble and‘subsequent burst Im'pad ofMarke't ' _ . - -- _ f . ._ Index arbitrage more meaningfu|,_.than “5 _ ; _ _ _ 1 r _ '."- ' W Price Weighted; ‘stocks impacted more heaVily by" deriVatives- 06mm and index changes 8 vol soon 3405’ 3?: mege MBWSFaPEw owm' VWKKE/f 225 ‘ F [h “WI ann'wmcpi a Ch“? (#153 EMT/1H J‘vbcfts owf‘j 00942“ #1qu Jflaotcs m) l , j _ - ‘ at {28%, {nigh- {ATP-J £000) } heWSPqur (Manna/twat chat/13,9 +0 NIKKEI ‘5 Affed’ fight/1.0133; (Aéfléoi m Relative Performance of- the AdditiOns‘ to “a"? +00%. oust mam?- " ammo“ fromthe Nikkei 225 in 1991mm - mwmawrmwx» Few weeks heme». '-1-'°¢Iet.io'}fs=} " anmwmcem {M‘t dad {Mplemeqemn Taito - 48.22% Katakura Ind , _ -19.88% 'Teikoku Seni 7 - -22.89% Matsuzakaya. . ' -23.79% .Shochiku -18.75%' mm . f - ~ ' 43.94% Average _ 49.58% Additions - . ' Kumagai Gumi - - 6.78%- Sumitomo Heavy - _‘ .. ‘ 5.37% Topy Industries ' 26.15% .Tqmen ‘ 7.06% "Nis'sho Iwai _ 13.64% sankyu ' ' = , ' ' : ' 3 ' 21.76% . . Average 13. 46% 9 ./-\- ,-— 0610231-Oor-13 0610231-Corh13 if \ , \} Mék Lees-en‘s hem or yrdjafore oFEéc BarIngsBackground yymyy w w w .-.- .- wwwfl‘if. ' . II emw {n.aCCOU’St Q‘p CMG’JIUME‘I'J’) {Ema/R2 (’LFJ . comedy of errors (Account 88888) page.” mug an em» account) @2304 ”my six/Maia; ow wiKKEl The importance of separating reporting and trading Barings last reported capital: $615mn Trading positions ~$14 bn in Nikkei, ~$20 bn in Euroyen/JGBs- - Essentially a long dated straddle selling strategy: generates lots of premium Underlines the difficulty (but not the impoSsibility) of manipulating a major market . "This guy is *so* smart! " The rest of the street is long vol, and _ the market is trapped in a range”-- vol trader, January 1995 Kobe earthquake occurs on January 17th 10 m 1 0TH w: and (0:11; On MKKE'1CVMkM-rl’l0rfih n01: heat 90H Nd: Le n $2“ 1:“ F YCJ‘ManHZ oi‘nCF Miter) j 3 US InuESthAJC ”Mk; V! Taryn wfllfj an 9%?” _rfcle A3 Market goes down {0wa 36+ gamma and Yin-“t $9ch 1142 '04de Dealer;— +fim§eiV€§ bug!!! Widfi’li‘j four-(j 3W3 hiding [goof-F Molfifif‘tf é? beg/fit} «pr/La! flow“ lower-{:4 Implied Volatility Around Barings WW 0 W W *1’ .ln 230th] demvafiwer markef‘) ,‘F one deC ale! {—Fa tomb/591.19” 6%8wmxcle net delfidmmw one J‘Cf’eov' fhernxelyer ' The chart clearly 3“ 24,000 shows -alongdeclinein , . -. ._ 1- ' I . implied volatility . . 25 - ' 1 lekel . . a . 22.000 ast eres o “A" ' , ' (_right- scale) NL'soptions sellin _ 0 _ _ _ '_ . . — the spike in _ volatility from the 2° earthquake, and - the further spike as Barings = 15 disappeared MCK Mote MIME? 01“ «mi : POI/1t WW4?” Kobe f 10 earfiiuake £10001: voiafiqu ‘ 20.000 16.000 5 14,000 back uf ~ _ , . I ' . ' l- ‘I "de§ 1 " dlsappears I .. - 5 :5, 'j_' 5 ‘ j. Earthquake x H 12000 ' 0 ' ' ' ' ' 10,000 4-Jan-94 13-Mar-94 16 May-94 15-Jul-9416-Sep-9422-Nov-9430-Jan 95 15-Apr-95 7-Junn95 8- A-u-g -95 11 -0ct- 9514-Dec-95 1 1 0610231-Cor-13 {fi‘ 1’“. ’“\ 775£E§7IVEEEDUE3}" ;, occurs in the week following-30' -' I tttealtiatne earthquake (lnzaluanfio wonder whether ' ‘ the strategy » would have succeeded if hheuvalmacilhetuw no seismic ' aictibdtyn.. 0610231‘C0r-13 ,.1qooo.¢3..fi.__c_ 8000 6000 ' 4000 _2000 1 -2000 ‘ 4000 ‘res ActiVities Barings Net Change in Open Interest vs. Nikkei 225 Index Level d'x..e'hf{ffirj 2'9,me Vohfijtfi 106cm“ o‘F “(he aha-(”t it W 9 20,000 19,500 19,000 13,500 _18000 ;; 11500 ‘ 17000 16,500 ‘12 ETFs are Used to Monetize Bank Crossholdmgs -mv:me.m. mm _ Step --1-".' Existing crossheld ' portfolio A'- neeat o W {94%ng vack; BUY TPX Receive ETF ' MT [’3‘ ETF’ “WT rebalancing wave B - med 1‘» do 9441' - ”ATPX ETF +--+—-.- Result: Step 3-. Broker sens TPA Sell' ETF. to broker I fufitégseto. c"f-‘ssholder ‘ Broker holds: 'I holds: nothing _ T. - - - . - ' TPX ETF A Short TPA @ EMF? To'y/ jalpmege bank: held +00 mud} 99% in an ajjferrii't, be“ man kd‘: M _ Wefidl’d’. +0 univai +9193“ m5§holcffrjr 13 woman?!“ 304k: used. ETF: 3L0 Momefiag fine!» cmSShOJO'f/IQ‘ F“ {V \ '/-'I\1 . (“N Hoflj koqj"; A1144 cur/Eng; 01/351} (of? {n {178'} skck (‘40wa MW [n m? Issued ETF“: flat/0:314 ~1qu m (Wt/Pr f9 ETF Growth in Japan . reclc'shrilawte J‘l/la/erfi' bbEjj’l‘f' baa/i Wmummvw 4 TOPIX ETF: Net Asset Values 2,500 2,000 lNomura (1306) I Nikko (1308) Daiwa (1305) - - W m Wis-5:) 1,500. Bln JPY moo 500 0 . 5.5-5. 3.2-5 .53. 3. 5?" 9339.99 3:1? 9 9 9 =3 "' «W' ' 'I...h-" -—--- u > o : 39%o--33§%wa%§ggg’%goama dwozowmfi'ififi (m 20.07": 14 061023I-Cor—13 Equity Derivatives in Non- -Japan Asia andotherEmergIng Markets E) Korea Index Enhancement Through Equity'-SWaps__ Market Access Products 9 MW PM“ ”“9 . YES—Hay Woe M (1/01/6110ng er-LQ‘IS‘: I @ Les—J— jrtufof Funafuti? “—9 ho‘f,‘ war MCI“); Vcigfilifi {QWOIMUEI (QECQHS'Q, [jar-def f-o [490,32 M 4.9 lgw jliqu-j ) J1: FWJOLcJZI are MOQHJ cjéifR—l Produc/b‘ @ Cwflhca Donne}: _ @Jhore sellinj Jaime”, credit! Erie/Firmmi M65 140ng +5 Lama) @Fodijo huh/{dim ( U5 MPH/”’5‘. ”Wk "HOW?“- fi OW “we JflCkr) 15 0610231-Cor-13 f' \ _ /”‘\I ”“1 Top 5 Contracts by Volume Contract Kospi 200 Options, Korea Exchange Eurodollar Futures, CME Euro-Bond Futures, Eurex 10-Year T-Note Futures, CBOT E—mini S&P 500 Index Futures, CME Top 5 Eguigg Futures Markets Futures Stock Index Volume* Volume* Total US. 87,954 76,739 DAX 18,200 . 4,454 Total Japan 13,161 15,307 KosRi--200_-_ 11,469 . 3,078 1:758:00" ‘.'8,035 12,349. - ; * Data from 2005 in $MM wuuwawn - fin“ Jacht 2005 - 2,127,979,767 348,197,334 254,097,170 181,274,409 174,504,146 .i-..| EliIIII ] " IIIIIEIIIII 'Iiifiilli." _ Mispricing (%) :_- RatioJ '- - < ofFuturesLStocks .7 "1.15 ' 4.09 0.86 i 3.73 1:10.651 . - ' 1996 1997 1998 1999 . 2000 2001 2002 2003 2004 "1 $771M I [3% inch-enf' 799m 700% vafluz 198cm bed? Fania— J‘ec alkyd-ob a‘mi selling 16 W‘fhoud’ Shack [can Pea/kirk? Mflpmciwj hi?” (mafia/165) 0610231'C0r-13 !/ "' ‘ \ Index Enhancement Through Swaps - . .mwmw: II Customized Synthetic Equity Exposure .I_I Usually-the investor receives an equity index return and pays the interest rate (priced off of Libor and dividends) - Can be terminated prior'to expiration, subject to potential penalties I EXampler L—350 Price Return Swaps Price Return of Taiwan Index _——-—~—-—————~——-———> '(——__——...._.._—___..___. $0.5. Libor — 350 bps Cusitémer fl joy; r991 overvaiuah‘m in “Pbiihrm wriwi, mitt [ad/hurrah became, Mr aim/2.0L +0 514%? I Cd“ dIO‘MHS mural/(54 Qiul'ljjnindfx J‘LUaF Swap 0/, Pi’lluliomflS index Came m marfcgfz index Jwa ) Mai—ch buflw‘r (VIOL I8” 993/ .Jtaovfiéfliui‘irjfo Pa} methidj «SwaFJ‘ {-6.161 10 be Jinn” 17 {x EWMPIQ: TIN-JIM 3+0Ck omlra have I‘L\0‘IC 3140/35- In 009% mves‘i-memf Aw ‘I 3 113%: of" Int/fiSi‘O'T IQLOC"? “WWI/“£9 Mgr: Y’fffi’Ideai; @Fz’i’l‘ffin Unlimi‘k‘a ‘ - " II' II ,I - ‘ law (We mar II'I'I‘IIlke «III. III: @ma c/IIIIyw-Wf _ @ Hedi}? 79 ct Ma"! 32 dome/If” wan; 7;)?" gremwh/ J' c -}o jg 44m Prue-65$ iv. “7‘“? Emiga Inveshr JILm‘I/Ir/ II; (A? Jwesm who; 5 we FII m ffidm and 4.7]: +0 61%? 0L. MarketAccess on Individual StocksIIImIII II III A_.,.,.I.Q.W w wt! I J A Ck What It Is ' I Using Equity Derivatives to synthetically access stocks in . I I . " Emerging Markets _ Products Used - I Zero— Strike OTC Options or Underlying Stock - - Expiration = typically 1 year (may be customized) 9”? flue s iock by Imgwj — Exercise price + US$0. 0001 a “II ”Phi“ WI 1%th Price of _.—— OptiOn premium per share— - cost of one share of 0 (a, “I”; ,s m IIIIIIIIireI-I) underlying stock — Value of option =2 value of underlying stock I '- I; Avoiding cumbersome regUlatory approVal proCess and retaining confidentiality ". Avoiding paying for ADR/GDR premiums I Trading in local markets .WIth greater lI quidity: avoiding large spreads in illiquid ADR/GDR markets ' I: Obtaining access to greater universe of Stocks (some ' not traded in ADR/GDR form) Benefits ' 18 GGIOBl-COI-B OSIOBl-COf-B 9’ Mann _ "Foreign _ _ , . . ' “shareholding limit ' for a'few highly ' Legal ., _ Im'pediments . traded stocks Foreign investors must have individualized Investment ID approved by the MOFE CK var/firm inc :60 ) Local currency _. funds must be in local custodial - ' account, preferably prior to trading ,. ~ Operational _ _ Impediments ' ditficmlt igc Poof/e, who dow'rt ”We”? mmrm Kor’f’a Foreign - shareholding limit 0n stocks, but no large cap has approached the limit . Foreign investors must have - individualized QFII - - account approved by SEC Local currency funds must be pre-positioned- in local custodial account prior to . trading Foreigners can currently buy “B” shares in USD or HKD listed in Shanghaior Shenzen China has just I released rules that will allow direct foreign investment in the local markets via a QFII system similar to Taiwan our/maria risk want-Bot by. [may 6 O’fiflfke “Facadmficafl N denominfllled “’1- USD) Jerri-mu l» gar WIT-MM accomt #23 enwij invinkct Shck ents—in Trading Local Shares- Foreign shareholding limit on stocks, with several large caps having approached the limit Have .- individualized FII account approved by SEBI; choice of vehicle affects whether investor pays capital gains _ tax Local currency must be pre— positioned 19 ...
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