The Philippine Dealing and Exchange Corp. (PDEX) is set to introduce a new derivative product next week, marking a significant development in the country’s fixed-income market. The peso-denominated interest rate hedge, initially available exclusively to banks, provides a tool for managing interest rate risks in the local currency.
Antonino Nakpil, PDEX president and CEO, highlighted the innovation behind the product, emphasizing that it is the first of its kind purely denominated in Philippine pesos. “We’re excited about this because it’s a new and locally tailored solution,” Nakpil said.
Unlike traditional futures contracts, this product will be settled via an over-the-counter (OTC) forward method, offering a forward-looking hedge without the leverage typically associated with futures markets. Nakpil further explained, “It’s not a futures contract, so there’s no leverage. It’s designed for professionals—dealers and qualified investors—only.”
The move is expected to strengthen PDEX’s position in the country’s derivatives market, which has seen growing interest from institutional investors seeking better hedging tools. While the product is not intended for retail investors, Nakpil emphasized that it fills a critical gap by offering a customized, local solution for interest rate hedging.
The new product comes as the exchange targets P600 billion in capital raised this year, a significant increase from the P360 billion raised in 2024. However, Nakpil noted that geopolitical challenges and domestic economic factors, such as inflation, could lead to a downward adjustment in their targets.
“We’re seeing more activity from issuers that had planned to enter the market late last year. We expect a strong start to 2025, with three or four large deals expected to hit in February,” Nakpil said.
