Equity derivatives house of the year: UBS

Risk Asia Awards 2026

Alistair Holroyd, UBS

On June 22, South Korea’s benchmark Kospi closed at a record high of 9,114, having more than doubled since the beginning of the year. The following day the index recorded one of its largest ever single-day falls. The artificial intelligence-driven memory-chip boom that had sent Samsung Electronics and SK Hynix soaring had also made for a rollercoaster ride of a market.

For UBS’s Asia-Pacific equity derivatives franchise, the volatility that swept across the region from tech-heavy stock markets such as Korea helped make for a record-breaking year.

The bank’s global markets division recorded a record second quarter, with revenues increasing by 31% to just over $31 billion. Equities trading and the Apac region were noted by chief financial officer Todd Tucker to have both made major contributions to this performance.

“For a franchise like UBS with a longstanding focus on equity derivatives, the elevated levels of volatility has created favorable market conditions,” says Romain Barba, head of structuring Apac, global markets at UBS in Hong Kong. “It’s been a very strong period for the business.”

Investor enthusiasm for AI-linked stocks triggered a structural shift in equity markets volatility this year in Apac, and it was a change that UBS was quick to capitalise on.

Romain Barba, UBS

“The AI rally has changed the volatility landscape in Asia more significantly than in Europe or the US,” says Shane Carroll, head of derivatives strategy, Apac at UBS. “We have seen a lot of client flow and business off the back of this shift.”

One example is the Kospi, where at the peak of this year’s rally Samsung Electronics and SK Hynix became 60% of index capitalization. After the Hong Kong listing of 2x leveraged exchange traded funds on the stocks last year, UBS became a swap counterparty for the ETF provider CSOP Asset Management, trading crash puts to help them hedge their gap risk. The risk from these trades was then recycled with hedge funds looking for relative value opportunities.

But with Samsung and SK Hynix pushing Kospi volatility to historic heights – fuelled in part by ETF daily rebalancing – options premiums were exploding and downside protection on the index was getting increasingly expensive. UBS helped its institutional clients collect options premiums instead, through a combination of call spreads and short puts and accumulator structures.

“We’ve been seeing hundreds of millions of notional going into Korea, including onshore tickers and recently listed American Depositary Receipts,” says Jennifer Wong, head of intermediaries cross-asset sales, Asia ex-Japan. “We’ve been trading a range of structures – including call options, bullish strategies and autocallables – and we’re able to do it at scale.”

Overall, UBS’s performance in equity derivatives in the past year has not been solely down to volatility creating more trading flow. Rather, it reflects the bank’s ability to anticipate and respond to changing volatility regimes and capture revenue through structured products and flow trades.

Snowball surge

In China equities, AI has also been a big theme. Increasing allocations to AI industry chain sectors have helped some Chinese semiconductor and memory chip stocks like Longsys, VeriSilicon and HGTECH make the leap from the CSI 100 up to CSI 300 index. Investors promptly shifted money from the CSI 1000 to the CSI 300 along with them.

Jennifer Wong, UBS

This has had an impact upon outperformance rates on CSI 300 China A-Share swaps, due to AI-linked stocks being more expensive to borrow. As a result, the CSI 300 index has become more of a focus for investors wanting long exposure to China A-Shares through equity swaps. UBS was able to facilitate that demand, passing on some of the securities lending revenue it earns on the underlying shares to investors in the form of a higher outperformance rate.

The influx of new AI names has also made CSI 300 become the dominant index for snowball products. These are autocallable-type structured products that offer double-digit returns so long as the index spot rate remains between an upside and a downside barrier.

The products have long been popular with Hong Kong distributors and private banks, but now UBS is also seeing demand for CSI-linked snowballs from other global clients.

“Our China A-Share franchise had a record year in 2025, and momentum has remained strong this year,” says Jianan Lu, China A-Share equity derivatives trader at UBS in Hong Kong. “We are seeing growing interest from clients outside mainland China in bullish options structures, with demand increasingly shifting towards products linked to the CSI 300.”

In the past year, UBS has seen the distribution of these products evolve into a repeatable, flow-driven franchise. This is largely a result of the bank’s unique ability to internalise and redistribute the risk efficiently through CSI-linked options, dispersion and other hybrid trades that mirror the risk-return profile of snowballs with hedge funds and other distribution clients.

“We have a trading desk that is focused on facilitating this client activity, and our ability to recycle the risk definitely helps us support additional client flow,” says Alistair Holroyd, head of equities derivatives institutional flow, Asia ex-Japan.

One wealth management client marks out the bank’s capacity to respond quickly to new equity market trends like AI with compelling new trade ideas as one of their biggest strengths.

“They’re very good at bringing us new ideas,” says the wealth management client. “They regularly come to us with fresh structures and themes; like a new payoff or a new way to capture emerging trends in the equity derivatives market.”

Taiwan transformation

A timely revamp of UBS’s Taiwan sales desk undertaken last autumn has also been a boost for the bank’s Asia-Pacific equity derivatives franchise in 2026.

Paul Chiu, UBS

Taiwan’s structured products market has boomed this past year, fuelled – like Korea and mainland China – by demand for yield-enhancing products on tech and chip names like Nvidia and TSMC. But as the Taiwan structured products pie grew in size as more and more international banks began to enter the fray, eating away at UBS’s market share. UBS conducted a review of its business, which resulted in the relocation of senior staff from Hong Kong to Taipei to lead a rebuild.

The push quickly began to yield results, with UBS rising from 11^th last year to first in the issuance of structured notes in Q1 2026, according to data from the Taiwan Depository & Clearing Corporation. This was achieved in part by strengthening the local distribution footprint, where the bank has added 10 additional onshore distributors in just the past year. The bank also focused at first on a limited range of payoffs it was best placed to monetise, before gradually growing the product range.

“We’re not just gaining market share; we’re transforming our Taiwan equity derivatives franchise,” says Paul Chiu, execution sales, Global Markets, Greater China.

Korea comeback

The Korean structured products market is another Apac business UBS has been busy rebuilding. Issuance of worst-of three index autocallable structures took a nosedive in 2024 after regulators launched an investigation into distributors’ sales practices following losses among retail investors. Now, with a new regulatory framework in place, sales of the products – with some tweaks – are beginning to make a comeback. UBS was quick to turn the rebound into revenue.

“The Korean structured product market has been gradually recovering,” says Sean Jang, derivatives sales Korea at UBS. “After reaching its lowest point in 2024, issuance rebounded in 2025 and has continued to grow in 2026.”

Sean Jang, UBS

There have been several big changes in the market. First, distribution of autocallables, which was historically carried out through bank trust channels, has now shifted to private placement channels. Second, single stock and single index autocallables have, for the first time, been gaining some traction with investors, accounting now for more than a quarter of the market.

According to Korean Securities Depository data, non-private placement issuance was around 15.8 trillion won ($11.8 billion) in the first nine months of 2025, compared with 12.1 trillion won ($9 billion) over the same period in 2024.

“These products initially gained traction among institutional clients, and later we expanded those payoffs into securities retail distribution,” Jang says. “Market acceptance increased, and Kospi 200 mono payoffs became a meaningful segment of the Korea index autocallable market.”

Once again, the AI rally and explosive volatility in semiconductor stocks have been central themes that UBS’s structuring teams and sales desks have sought to exploit.

“One example was our effort to explore short-tenor structures linked to SK Hynix, which were well received by both distributors and high-net-worth clients,” says Jang.

Warrant winners

In Hong Kong’s listed structured products market, the volatility seen in Asia equities this past year has proved a big challenge for issuers. In this new volatility landscape, the ability to maintain strong liquidity provision on derivatives warrants and callable bull and bear certificates with reliably tight bid-ask spreads has become an even greater competitive advantage than before.

Winni Cheuk, UBS

“When there are AI or semiconductor names that are up or down 10% on a daily basis, a lot of issuers may not be able to handle it because of the risk involved,” says Winni Cheuk, head of sales, Apac public distribution. “But on our side, we were still able to tighten the spreads, provide reliable and consistent market-making, and also very stable pricing during the volatile market.”

Underscoring its ability to do just that, UBS ranked first among 15 active issuers by net notional sold across warrants and callable bull and bear certificate (CBBC) contracts in 2026 year to date, with a market share of 15.95%.

Part of the reason that UBS has been able to maintain its leading position in Hong Kong’s listed structured products market is the investment in its platform over the years, giving the bank a competitive edge when it comes to latency. But more recently, the bank has also been focusing on making best use of its data to optimise its pricing.

“We want to capitalise on all the data we have now,” says Vassili Reperant, co-head of equity derivatives trading Apac global markets at UBS. “I think there is extremely good progress being made to optimise our pricing in terms of structured products – being able to price all the opportunities, reduce missed opportunities due to pricing issues, achieve a higher hit ratio, and provide clients all the potential opportunities they are looking for.”