Merrill Launches Yuan-Denominated Prime Brokerage Services

Nov 22 2010 | 10:34am ET

Bank of America Merrill Lynch's prime brokerage has launched a pair of Chinese yuan services designed to capitalize on growing hedge fund demand in the region.

The firm has begun accepting deposits of yuan and/or yuan-denominated securities. The former will allow hedge funds to create yuan-denominated share classes, while the latter custody accounts will make it easier for hedge funds to buy (and borrow against) yuan-settled instruments.

"Large international hedge funds used to use non-deliverable yuan forward contracts to make such bets," Merrill's Ben Williams told Bloomberg News. "These new services allow them to make the same bets through the potentially cheaper offshore yuan market."

He added, "given investor demand and the increasing focus on China, we're likely to see the development of yuan share classes among both regional and global hedge funds."


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