Strategic indexes regain popularity in Asia

Demand for proprietary indexes in Asia dried up after the financial crisis revealed flaws in their construction, but banks are once again rolling out hedge fund-like strategies by the hundreds. Can they avoid making the same mistakes? Yakob Peterseil reports

When BNP Paribas sold a three-year option linked to one of its proprietary indexes in Asia in March this year, the $20 million deal was remarkable, but not for the usual reasons, like size or structure. It was the fact that it was struck in Korea, where both the end-client, an insurance company, and the bank's partner on the deal, a local securities firm, are based.

Proprietary indexes have a chequered past in places such as Korea, Hong Kong and Indonesia. Post-2008, these indexes were marketed