Derivatives house of the year Australia: UBS

Risk Asia Awards 2026

Copyright UBS

If 2025 was a year of tariff-driven volatility, the past 12 months ushered in a new kind of stress. Escalating geopolitical risk pushed up energy prices, disrupted supply chains and revived inflation fears, leaving central banks caught between softer growth and sticky prices. Artificial intelligence-led investment, meanwhile, kept equity markets buoyant but increasingly uneven.

As a result, UBS’s Australian clients – superannuation funds, asset managers, corporates and wealth managers – cut back on outright directional positions and made more use of overlays. These included tactical cross-asset positions, factor and sector tilts, portfolio hedges and systematic strategies, which can be adjusted or closed as markets move.

“The macro thematic backdrop was predominantly shaped by AI, driving increased equity market concentration and single-stock dispersion, alongside the impact of inflation on interest rates and liquidity in private markets,” says Matthew Campbell, head of derivatives and solutions for Australia and New Zealand, UBS.

“Combined with heightened geopolitical uncertainty, these dynamics have contributed to elevated risks across both tails of the distribution,” says Campbell. “In response, investors increasingly looked to cross-asset derivative strategies as a scalable and capital-efficient means of gaining exposure to structural themes while navigating a progressively uncertain market environment.”

The macro thematic backdrop was predominantly shaped by AI, driving increased equity market concentration and single-stock dispersion

Matthew Campbell, UBS

Building on strength

UBS retains its crown in the Derivatives house of the year Australia category from a dominant position. It ranks first by contracts and premium traded in Australian exchange-traded options, with shares of 14.33% and 15.62%, respectively, between January 2025 and early June 2026 – well clear of the second-placed firm. It also leads the Australian Securities Exchange cash market, with a 22% share as of May 31.

Recent tax changes are expected to increase demand further. The Australian Federal Budget for 2026–27 included changes to the capital gains tax discount and to negative gearing on residential property. UBS expects these to shift the investment mix for many investors, as after-tax returns from capital gains could be significantly reduced.

A bespoke approach 

Sample trades from the past year, spanning wealth, institutional and corporate clients, demonstrate the breadth of UBS’s capabilities.

A large Australian wealth manager wanted 12-month exposure to Chinese equities – reflecting the growing AI weighting in the broader market – with a targeted outcome while ensuring its capital was fully protected. Working with wealth managers, UBS delivered an Australian dollar-denominated capital return note on the CSI 300. It offered enhanced participation in the underlying index gains, with an index cap, for a maximum return in line with the targeted outcome. The existing relationship and account setup meant the opportunistic trade could be executed quickly.

For another institutional client, a straightforward portfolio hedge evolved into a request-for-proposal process for a capital-aware overlay protection against severe equity drawdowns with a minimal carry during calm markets. UBS aligned the structure with the client’s regulatory capital framework, supported by bespoke stress tests, historical crisis and drawdown analysis, including margin modelling. Execution was phased as macro conditions evolved.

The overlay was structured to deliver targeted tail-risk protection in a capital-efficient structure, balancing downside resilience with carry and portfolio efficiency

Stuart Trueman, UBS

“The overlay was structured to deliver targeted tail-risk protection in a capital-efficient structure, balancing downside resilience with carry and portfolio efficiency,” says Stuart Trueman, head of derivatives distribution for Australia at UBS. “Critically, integrating regulatory capital considerations into the design ensured that protection remained aligned with the client’s asset, liability and capital objectives across both normal and stressed market environments.”

UBS’s proprietary index capabilities came into play for a client that gained diversified exposure to equities, rates and commodities through a quanto Australian dollar call option on the UBS Multi-Asset Strategy Tactical Rotation index. Wrapped in a limited-recourse note, the structure caps the maximum loss while removing foreign exchange risk.

Corporates were active too. An Australian client seeking to stabilise revenues from a copper business line chose an average price swap – receiving a fixed price and paying the monthly average of daily fixings – over option-based alternatives. Executed via UBS’s European commodities desks during times of deeper liquidity, the hedge locked in elevated copper prices with minimal upfront cost. Separately, a corporate hedging US dollar revenues used a strip of zero‑cost collars with trigger-based execution, monitored across time zones to capture dips in AUD/USD.

Rita Elkazzi, head of execution sales for Australia and New Zealand at UBS, explains how cross-regional collaboration transformed a complex set of commodity and FX exposures into a co-ordinated hedging solution: “By connecting our global commodities expertise with our Australian client coverage, regional structuring, and European liquidity analysis and trading capabilities, the transaction aligned bespoke risk management with efficient execution and the client’s broader objective of improving cashflow certainty.”

The retention of [this] award for a third successive year reflects the strength of the Australian franchise. Specifically, it showcases our ability to combine deep local client engagement with the scale and expertise of our regional and global platform

Rita Elkazzi, UBS

Recycling risk

Much of this client activity also helps UBS recycle risk across its own book. Dispersion has become a core source of flow, from AS51 multi-name trades to global and thematic cross-corridor variance dispersion structures. Gap trading around volatility spikes adds further activity.

The key, UBS says, is matching flows across its client base. Private bank and distributor demand for yield is offset against institutional appetite for volatility, dispersion and convexity, reducing reliance on external hedges and keeping pricing tight.

“Volatility and dispersion emerged as increasingly important investable asset classes, as relatively benign index volatility masked significant divergence at the single-stock and sector level,” says Trueman. “This created opportunities for institutional investors to systematically monetise dispersion through volatility recycling, options-based strategies and cross-asset risk transfer.”

Looking ahead, the bank expects demand for flexible, capital-efficient solutions to keep growing.

“The retention of the Risk Asia Derivatives house of the year Australia award for a third successive year reflects the strength of the Australian franchise,” says Elkazzi. “Specifically, it showcases our ability to combine deep local client engagement with the scale and expertise of our regional and global platform. This allows us to work collaboratively with clients to deploy capital efficiently, manage risk and capture opportunities across market environments.”