A healthy derivatives market is an important element to Japan’s plan to become a global leader in asset management. Asset managers are eager to increase their use of derivatives to better take and manage risk, but note that there is an opportunity to make the market more accessible. Discussions with 20 senior asset managers based in Japan revealed that reducing barriers in the market would enable them to utilize derivatives more efficiently, which, in turn, could enhance Japan’s competitiveness in the global market.

Nearly 80% of respondents indicated that derivatives are currently important to help achieve their strategies and objectives, and also mentioned that derivatives usage benefits both portfolio management and product development. Therefore, they are looking to improve how they trade and process derivatives.

Portfolio managers will need to respond to the changing macroeconomic environment and look to the derivatives market to help manage the implications of potential drivers such as interest rate changes. They may add derivatives to an existing strategy or launch new investment products. Either way, a robust market is necessary to ensure that portfolio managers succeed on behalf of their clients.

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