Improving mobile access and preparing the roboadviser route, Swissquote

Following the addition of Vontobel to Swiss Dots, SRP spoke to Marc Bürki (pictured), chief executive officer at Swissquote Group Holding and Swissquote Bank, about the digital bank's growth in 2016 and its plans for its over-the-counter (OTC) derivatives platform.

Swissquote Bank has updated its mobile banking and trading app for iOS gadgets, as well as a 3% increase in the number of products transacted on Swiss Dots, the OTC platform launched by the bank, UBS and Goldman Sachs and which now offers 65,000 leveraged products.

Swissquote is aiming to add 100,000 new accounts by 2020, according to Bürki. "In 2016, assets under management in ePrivate Banking topped the CHF100m (€93m) threshold for the first time," said Bürki. "The robust growth of 60.2% underscores the potential of this business. Organically and together with partners, Swissquote plans to build up assets under custody to over CHF1bn by 2020."

Swiss Dots was launched in 2012 to contest the monopolistic position the Six Swiss Exchange has in Switzerland "because any listed product has to be registered in the exchange", according to Bürki. "We developed an alternative platform, not an exchange, where all the products are traded OTC without a central order book," said Bürki. "Swiss Dots has become an important part of our overall offering. The advantage for the client and for the issuer is that they don't have to pay any fees to use the platform, and we only charge a fee if a transaction is executed."

There is no limit to the number of products issuers can list in the platform, according to Bürki. "The other difference is that issuers don't have to go through a central order book to list their products and there is no possible arbitrage," said Bürki. "Our platform has a request for quote set up: a request is sent to the issuer via the platform and then the issuer has six seconds to accept the offer. We charge CHF9 per transaction and we also charge a global fee for issuers to cover the IT."

The recent move by the Swiss Six exchange to launch an OTC platform is testimony of the appeal of such a set-up, according Bürki. "This is a positive development, because competition will always improve the offering and the service end-clients and investors receive, and will lower the prices and fees," said Bürki. "This kind of competition has forced the exchange to look at innovative ways to lower fees, which benefit the entire market, because, although we do a lot of trades on our platform, the biggest ones are done through the exchange."

Swiss Dots has about 35% of Six exchange's volumes on leveraged products, according to Bürki. "The focus is on leverage products, but there is scope to add more investment products so that we don't only cover the more speculative side of the market, but also buy and hold."

In structured products, the bank will continue to develop new functionalities, such as the bank's Themes Trading and expand the offering to respond to client demand for ways to navigate the market more efficiently, according to Bürki.

The bank has developed a roboadvisory service as a complement to its structured products offering. "Our roboadvisor offers portfolio capabilities of around 2,500 equity and ETF products," said Bürki. "There are no structured products offered via the roboadviser, but this will also change as the market and our offering evolve." The service is aimed at medium- to long-term investors, whereas leverage products are aimed at the more speculative investor, according to Bürki. "However, once we build our offering around investment products, there will be opportunities to include these."

Low interest rates remain a challenge and "continue to drag on the structured products market", limiting issuers "as they cannot offer competitive features on their products, let alone protection", according to Bürki. "This could change very quickly: the last two years have been very challenging but we see volumes coming back," he said. "This is also positive for the structured products market, because investors can see that they deliver and provide a very good way to protect capital when markets are not performing, but also during falling and sideway markets."

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