What is iMarkets?
iMarkets is a B2B electronic platform created to promote liquidity,
depth and innovation for structured investment products (SIPs) (see
below). iMarkets is not a product provider and does not participate
in any transaction.
What is the difference between a traditional financial portal
and iMarkets?
Traditional financial portals provide a platform for trading single
products such as bonds, which are one building block of SIPs. By
providing standardised products, the traditional portal is merely
a price aggregator, driven by the nature of the products, not by
customer requirements. iMarkets however provides an online platform
for customised products meeting clients' preference. It is, in other
words, client driven.
How does iMarkets add value?
By providing an electronic platform, iMarkets integrates the strength
of private banks, investment banks, commercial banks, stockbrokers
and other market players into one powerful hub to accelerate development
of SIPs. We add value by improving liquidity, depth, efficiency
and innovation to the SIP market. iMarkets is designed to introduce
a wide variety of products to investors and to provide the broadest
distribution channels to financial institutions. iMarkets aims to
offer straight through processing (STP) (see below) to facilitate
the ease and efficiency of transactions.
What are Structured Investment Products (SIPs)?
Structured Investment Products (SIPs) are investment packages structured
to meet investor's individual risk-return criteria. SIPs normally
consist of a combination of bond, asset, and derivatives, such as
call and put options. The idea being to leverage one investment
product off another and thus produce a better risk/return profile
than is available from investments in individual products. This
means that the rate of return may not necessarily be the same as
that of the underlying assets, indeed the objective is to produce
better rates of profit, on a risk adjusted basis.
Why invests in SIP?
There are a wide variety of SIP options designed to ensure that
all investor's risk-return criteria can be met. SIPs are designed
for sophisticated investors who have taken a view on the potential
of various markets and different classes of investment and need
an instrument through which to obtain maximum profit by acting on
this view. For example, investors with a view on the likely upward
direction of various listed stocks are likely to be attracted to
Equity Linked Notes (see below) because they offer the opportunity
for obtaining both higher than market level rates of interest or
the prospect of purchasing a stock below its current market price.
What products are currently traded through iMarkets?
At present iMarkets is offering Equity
Linked Notes (ELNs), Principal
Guaranteed Notes (PGNs), and Equity Options. Other products
will be rolled out in the near future.
What are the specifications of ELN commonly traded through iMarkets?
Example of specifications of ELN commonly traded through iMarkets:
| Asset Class |
: Hong Kong Stock Exchange traded equities |
| Maturity |
: 1st business day of each calendar month |
| Settlement |
: 10 business days from contract date |
| Strike/Spot % |
: from around 96% to 87% (represented by 5
strike intervals) |
| Underlying asset |
: major Hang Seng Index constituents |
| Valuation (Fixing) Date |
: 2 days before maturity |
| Settlement at maturity |
: physical settlement (cash for odd lots) |
Who should invest in ELN?
An investor who has developed a view on a stock and would like to
buy equity at a lower than market price may consider investing in
ELN. However investors must be prepared to take delivery of the
underlying stock when the closing market price of the stock is lower
than the strike (exercise) price on the fixing date of the ELN.
In other words at the date when the note comes to maturity. If however,
the underlying stock closes at or above the strike price, as anticipated,
investors will have achieved a rate of return several times higher
than the market interest rate.
Who participates in iMarkets?
iMarkets serves as a virtual platform. Financial institutions can
become a member participant of the platform by registering as a
product provider or marketer.
Product provider participants (usually investment banks) will provide
products for the marketer participants to trade on the platform.
Marketer participants (usually stockbrokers, private banks, commercial
banks) trade the products provided on the platform, either on behalf
of their clients or for their own accounts.
Individual clients can participate via one of the marketer participants
by establishing trading accounts similar to other arrangements with
banks or stockbrokers.
What is straight through processing?
Straight through processing (STP) is a term describing the automated
processing of trades from the time when prices are established to
execution by the back office for clearing and settlement. The objective
is a seamless, electronic transfer of information to all parties
involved in the transaction cycle by combining the expertise of
participants with cutting edge technologies. One of iMarkets' targets
is to add value by eventually developing STP in all transactions.
This will reduce cost and ease the transaction flow.
What is meant by "turning complexity into advantage"?
iMarkets has developed a revolutionary and innovative technology
to assist investors in choosing a product that matches their risk
and return preference. Our patent-pending technology is capable
of breaking complex SIPs into simple and manageable financial building
blocks. These include bonds, underlying securities of different
asset classes, call and put options (both long and short sides).
The platform is able to "structure" an SIP according to
investors' risk and return preference. Our pricing engine can select
a combination of best-priced derivatives and bonds/securities to
provide the best value SIP. In addition, the execution engine offers
instantaneous product delivery and initial hedging.
Who runs iMarkets?
iMarkets was established in 2000, as a wholly owned subsidiary of
Cheung Kong (Holdings) Limited. It was founded to develop the SIP
market. Being a user driven platform iMarkets will reflect the needs
and preferences of member participants and their end user clients
who will decide which products and services should be supplied by
the platform.
Which regulatory bodies does iMarkets register with?
iMarkets is registered with the Securities and Futures Commission
of Hong Kong, which has granted a Registered Dealer License (No.
DC 001453).
For further information on SIPs trading on the iMarkets' platform,
please contact iMarkets
Partner Firms.
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