HSBC wins six Apac FX house of the year awards

With one of the strongest footprints in the Asia-Pacific region (Apac), HSBC provides international clients with an extensive local FX franchise while facilitating local clients’ access to international markets

Since its inception in Hong Kong and Shanghai in 1865, HSBC’s primary role has been to facilitate finance and cross-border FX transactions between Apac and the rest of the world. That role remains as relevant today as then – but on a grander scale.

Apac is a core region within HSBC’s worldwide operations, and its presence in many of its local markets is testament to its outsized role there compared with many of its peers.

“We are the go-to bank when it comes to West-to-East foreign direct investment capital expenditure, for example, from the US and Europe into India and Asean [the Association of Southeast Asian Nations],” says William Shek, head of fixed income, currencies and commodities, Apac, at HSBC.

The bank’s ability to source liquidity, internalise and warehouse risk, and provide best execution is the reason clients choose to partner with HSBC.

“It’s about being dynamic – our clients’ needs constantly change with market conditions. We’re able to help them look at the full spectrum of global growth opportunities and, equally, we have the local regulatory experience to tackle uncertainties when they arise. There’s a level of confidence and trust there,” adds Shek.

While Hong Kong is its central hub in the region, and mainland China and India have been the drivers of regional growth for HSBC for many years, the bank nonetheless sees tremendous opportunities in other countries, such as South Korea, and across many markets in Southeast Asia – notably Thailand and Vietnam.

Shek says that a sizeable proportion of China’s trade continues to ship through Hong Kong, which remains an attractive gateway to mainland China.

He adds: “Supply chain integration is key to smaller economies scaling up supply capacity in regional production networks. The corridor opportunity between China and Southeast Asian economies is an immense growth opportunity for our clients.”

As evidence of these trends, HSBC Global Research shows intra-regional trade in Apac is set to rise 65% – US$400 billion per year until 2030 – led by the China–Asean and India–Asean corridors.

“One example is Chinese car makers building more manufacturing capabilities in Thailand. The sheer scale and scope of regional trade integration has created huge corridor activity, which is supported by our FX platform and its comprehensive coverage of clients’ cross-border needs,” Shek explains.

Opportunities are especially prevalent in the growing electronification of the FX market in the region, such as in the spheres of risk management and hedging on the back of geopolitical events and increasing currency volatility.

“Last year we implemented sophisticated pricing and automated risk management for onshore-USD/INR, facilitating more dynamic pricing and higher-quality liquidity provision to clients. This paves the way for us to extend to other restricted currencies,” says Shek.

As each country in the region has specific rules regarding FX, HSBC caters to the individual needs of the full range of client types, be they retail, corporate or institutional.

The bank’s presence and service to the wider Apac region’s FX market were recognised at the FX Markets Asia Awards 2024, where it was named FX house of the year for China, Hong Kong, India, South Korea, Thailand and Vietnam.   

In its Hong Kong hub, HSBC offers a robust set of services to its client base. It not only connects global clients to Hong Kong and local businesses to international markets but – given the territory’s unique link to mainland China – serves as a go-to liquidity provider for on- and offshore renminbi and is a key bridge between the two markets for eligible foreign investors requiring onshore deliverable yuan.

The bank also offers cross-border payment and multicurrency risk management solutions directly embeddable in clients’ systems, which provide guaranteed FX rates executed electronically in real time 24/7, 365 days a year, in around 130 currencies. In a similar vein, HSBC Hong Kong serves as the sole settlement bank for Hong Kong–Thailand cross-border QR-code payments, which are used by an estimated 8 million businesses in Thailand.

In mainland China, HSBC has an impressive network of outlets spanning more than 50 cities, the widest geographical reach of any foreign bank in the country. Given this extensive local presence and expertise, it is no surprise that HSBC supports around one-third of all qualified foreign institutional investors, and a sizeable share of central bank and sovereign wealth fund clients manage their renminbi FX risk derived from onshore investments.

In India, HSBC is one of the largest market-makers in the country’s interbank FX options market. The bank now offers clients a complete suite of vanilla and structured FX options in line with recent regulatory changes in the country’s FX market. HSBC is working on rolling out algorithmic pricing to corporates after introducing the offering to institutional clients in 2023. It is also expanding its offering in the Gujarat International Finance Tec-City – a purpose‑built business district – that will allow more international corporate and institutional clients to access the Indian market.

In South Korea, HSBC is particularly active in the electronic trading space. Indeed, the bank’s e-trading volumes have shown significant growth through 2022 and 2023 on the back of a volatile FX environment.

Given that South Korea is one of the world’s pre-eminent export-oriented markets, with the majority of the country’s gross domestic product linked to international investments or commerce, the ability to hedge against currency risk is a top priority for many clients. HSBC provides FX hedging services to a significant proportion of all inbound foreign direct investments in the bond and equity space, as well as a substantial portion of in- and outbound trade settlement for corporates.

While HSBC was first to issue banknotes in Thailand (in 1889) and first to provide a foreign loan to the Thai government (for a railroad construction project), the major focus for the bank these days is on the electronification of the country’s FX market. From payments and pricing to electronic and algo execution, the bank has invested heavily in digital solutions for its clients and its own operations. The initiative has yielded positive results, as 60% of HSBC client trades are now executed electronically.

The bank is committed to growing its FX franchise in the country and is looking to expand its offering of exotic non-deliverable forwards to currencies such as the Egyptian pound, Brazilian real and Vietnamese dong. It is also working on growing its FX application programming interface and multicurrency pricing products aimed at hotels, online travel agencies and payment service providers.

With more than 150 years of heritage in Vietnam, HSBC is a key player in the country’s FX market. It was the first bank to launch an electronic FX single-dealer platform (Evolve) in the country (in 2017), it continues to accommodate large FX tickets within short execution windows despite liquidity challenges, and it was instrumental in making markets throughout the disruption caused by the Covid-19 pandemic.

“International connectivity is our superpower and at HSBC we specialise in connecting our global network of clients to where the growth is. The FX business is at the heart of this strategy,” says Shek.

HSBC was named FX house of the year for China, Hong Kong, India, South Korea, Thailand and Vietnam at the FX Markets Asia Awards 2024.

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