O'Connor, the $5.6 billion hedge fund owned by UBS, has been has been expanding its presence in Asia. It has hired traders from UBS's proprietary trading desk to work in its Hong Kong and Singapore offices. In August, it hired John Yu, a former analyst at SAC Capital Advisors.
It is not alone. Bankers, brokerage firms and hedge funds have all been quietly expanding their Asian operations to take advantage of one event: the biggest opening into China in years.
China plans to connect the Shanghai stock exchange to its counterpart in Hong Kong over the next month as part of an initiative announced by Premier Li Keqiang this year to open China's markets to foreign investors who have been largely shut out.
The move will allow foreign investors to trade the shares of companies listed on the Shanghai stock exchange directly for the first time, and Chinese investors to buy shares in companies listed in Hong Kong.
The potential rewards of an open market between the mainland and Hong Kong are enormous for investors. Currently, the only way for foreign investors to trade Chinese stocks is indirectly through a limited quota program that allows a trickle of foreign money into the country.
"This is the single most important development in China's intention to internationalize this market," one senior Western banker in Asia said of the planned reform, speaking on the condition he not be named because he was not authorized to speak publicly on the matter.
The program, called the Shanghai-Hong Kong Connect, will create the second-largest equity market in the world in terms of the market value of the combined listed companies, said Dawn Fitzpatrick, the chief investment officer of O'Connor.
"It is also going to create a much more efficient way for the global marketplace to value many Chinese companies, and this attribute alone makes the market more attractive," she added.
The formal starting date for the program has not been announced,but officials have been aiming for sometime next month. Employees at brokerage firms across Hong Kong have been working extra weekend shifts since August, participating in mock trading sessions to test their readiness for the new program. On one recent weekend, 97 brokerage firms accounting for about 80 percent of the trading turnover in the Hong Kong market simulated a failure of their backup data systems for the Shanghai-Hong Kong two-way trade.
O'Connor, for its part, is among a small group of hedge funds that have already participated in the quota program, named the qualified foreign institutional investors program. They buy and sell shares denominated in both renminbi and Hong Kong dollars.