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China’s Banks Trade Derivatives That Have Burned European Firms – Bloomberg Law

Oct. 15, 2021, 3:55 AM

A trade that’s already snared several European banks is now drawing the attention of regulators in China.

China’s investment banks are rushing to sell a complex derivative — similar to the products that cost Natixis SA almost $300 million in 2018 — to the country’s institutions and wealthy investors. It promises a bond-like coupon linked to an equity index with double-digit returns as long as markets don’t crash.

Known as a “snowball” in China, it has in the space of a couple of years become a big seller for the nation’s largest brokers including Citic Securities Co. and China International …