Tier 2 OTC Dealership

The official website of the Securities Association of China announced the seventh batch of over-the-counter options dealerships recently. UBS Securities Co., Ltd. was listed as a tier 2 OTC dealership for options business. This is the only foreign-controlled joint venture dealership that has been approved for domestic over-the-counter options business so far. UBS Securities was approved as a dealership for over-the-counter derivatives. On one hand, it shows that institutionalized innovative businesses are encouraged by securities market in China. On the other hand, it is also an important step to further open China's financial market to foreign capital.
 
UBS enjoys a long history of derivatives trading and has been trading options since 1977. UBS Securities has been through the cycles of derivatives and economic ups and downs. A complete set of risk control and client suitability management system was established after years of experience. This is in line with the expectations of China's regulators to conduct over-the-counter options business with compliance and prudence and prioritize requirements of clients for risk management.
 
The new Administrative Measures for Over-the-Counter Options Business of Securities Companies issued by the Securities Association of China outlined a tiered approach for the management of dealerships in over-the-counter options trading. Based on the capital, classification results, overall risk management level, professionals and technical systems, securities companies are further categorized as tier 1 dealership and tier 2 dealership. The Administrative Measures lowered the rating standards for management based on different classes and strengthened the requirements for over-the-counter options practitioners, technology, and risk control, which shows the progress made by regulators in precision management. The gradual and orderly approach taken by China to further open up the over-the-counter options market is a meaningful step in the development of derivatives market in China.
 
The Administrative Measures and the newly gained status as tier 2 OTC dealership for options business, coupled with UBS Securities’ past business capabilities and unique insights into the Chinese market, will undoubtedly bring greater market opportunities for UBS Securities to better provide its clients with sound risk management solutions.
 
Ken Chen, general manager of UBS Securities, said: “I hope to provide good risk management solutions for suitable clients and improve their risk-returns with the new dealership status. We strive to expand and optimize our business to live up to the trust of regulators in us and act as a role model to promote the sound development of the derivatives industry."