The International Swaps and Derivatives Association (ISDA) and Crisil Coalition Greenwich published research finding that Japanese asset managers expect derivatives to be central to investment strategy execution and to Japan’s ambition to become a global asset management centre, but that several market and policy frictions still constrain wider adoption. Based on discussions with 20 senior asset managers in Japan, 80% of respondents said derivatives are important for both portfolio management and product development, 90% saw value in expanding their use, and 89% believed greater use would directly or indirectly support the Japanese government’s asset management strategy. The report links expected growth in derivatives activity to the end of the Bank of Japan’s eight-year negative interest rate policy in 2024 and cites uneven liquidity in some market segments, low levels of electronic execution and processing, regulatory and accounting issues, and a shortage of local derivatives expertise as key constraints; it also notes that since 2023 the Japanese Financial Services Agency has announced initiatives aimed at strengthening Japan as an asset management hub, including measures to remove barriers to entry and broaden investment opportunities.
ISDA 2025-10-16
International Swaps and Derivatives Association and Crisil Coalition Greenwich report highlights derivatives’ role in Japan’s asset management push and identifies barriers to wider use
Research by ISDA and Crisil Coalition Greenwich shows Japanese asset managers see derivatives as crucial for investment strategies and Japan's goal to become a global asset management hub, despite market and policy frictions. Constraints include uneven liquidity, low electronic execution, regulatory issues, and a lack of local expertise, with the Japanese Financial Services Agency implementing initiatives to enhance Japan's asset management sector.