The International Swaps and Derivatives Association (ISDA) published a paper that discusses the uses and benefits of derivatives for buy-side firms – a category that includes investment managers, pension funds, insurers, hedge funds and non-dealer banks – as well as some of the regulatory barriers and other constraints these firms face in using derivatives in the rapidly growing economies of Asia Pacific, noting the adverse consequences of these restrictions on the region’s capital markets and economic development.
“Given the growth and diversification of Asia-Pacific economies, market participants will increasingly need derivatives for better cashflow management and to hedge against risks they are exposed to in their business value chain. The use of derivatives to hedge can help reduce volatility, stabilize financial performance, reduce capital cost and boost investor confidence,” ISDA wrote.