More bonus certificates from Commerzbank, the introduction of a new payoff for retail investors by Kempen, questions in parliament about structured deposits, and a sustainability score made available to clients of Binck, were among the highlights of the Dutch market in recent weeks.
Year to date issuance in the Dutch market, at 78 products (including flow but excluding leverage and flow), has already exceeded last year's total of 55. The main reason behind the hike in new structures is the fact that Commerzbank has significantly increased the issuance of its listed investment products. The German investment bank has introduced a number of new product lines in the past 11 months, including bonus, twin-win, rendement, and discount certificates, and of these, the bonus certificates especially have generated plenty of interest from investors in the Netherlands, according to Christophe Cox, derivatives public distribution Belgium and the Netherlands, Commerzbank.
"We see more and more trades [in bonus certificates], although volumes are not yet at the same levels as those of other listed products such as turbos," said Cox.
Commerzbank launched 12 new bonus certificates linked to shares on Euronext Amsterdam which struck on July 7. "Since these products are aimed at investors in the Netherlands we have issued them on Dutch shares that pay a high dividend," said Cox. "That way we are able to provide an attractive bonus and/or lower barrier."
The bank intends to stick to indices and shares as underlying for its bonus certificates, according to Cox. "For now there are no plans to issue certificates on other asset classes such as FX and commodities."
A product closely related to bonus certificates is Bufferfund, an open-ended investment fund, which trades in capped bonus and reverse capped bonus certificates listed in Germany. The fund, which was first launched in August 2016, manages assets worth €26.4m and has yet to register a negative monthly performance. Even in June, when the funds benchmark, the Eurostoxx 50, lost 2.9%, Bufferfund, with a closing price of €107.38, registered an increase of 0.23%.
Kempen introduced the worst-of autocallable payoff for the first time to its retail clients, although the bank has been issuing this type of product as private placements for many years, according to Laurent Guntenaar, director structured investments. The bank's VL Trigger Plus Note Eurozone - Emerging Markets 17 21 is linked to a basket comprising the Eurostoxx 50 and Vanguard FTSE Emerging Markets ETF. The latter, also a first for the Dutch market, is used instead of the underlying index it tracks, because the advantage of the ETF is that it closes for trading in the US at 10pm, which makes it easier to hedge, according to Guntenaar.
Members of the Dutch labour party (Partij van de Arbeid - PvdA) have questioned why structured deposits which are linked to the interest rate are not covered by the Markets in Financial Instruments Directive (Mifid 2) regime, according to a note send to Parliament by Jeroen Dijsselbloem, the Dutch minister of finance.
The labour members suggested this could lead to confusion with investors. According to the note, structured deposits with a variable coupon of which the return is coupled to an interest-index are not classified as a structured deposit (Article 4, paragraph 1, part 43 of Mifid 2), as such deposits have the features of a savings product. However, structured deposits linked to an equity index such as the AEX, are more dependent on the investment return are considered to have the characteristics of an investment product and therefore do fall within the scope of Mifid 2.
In the same document, it said that with the proposed article 1:77f of the Act on Financial Supervision (Wet financieel toezicht - Wft) the possibility is created for the Netherlands Authority of Financial Markets (AFM) to restrict or ban the sale of certain financial instruments or structured deposits. Other prohibitions or restrictions may also be imposed on other investment services or investment activities.
BinckBank has become the first bank in the Netherlands to add the Morningstar Sustainability Rating to hundreds of investment funds and exchange-traded funds (ETFs). Investors of Binck Fundcoach and Alex Self Investing can now select funds at a glance based on a sustainability score, which can range from one to five rating globes.
The sustainability rating is based on the sustainability of the underlying companies in which the funds invest. Morningstar determines a score for as much as 35,000 funds worldwide. In addition to environmental performance, it also looks at social and governance factors.
'More and more investors are willing to invest more sustainable,' said Jeroen Sonsma, director of Binck Netherlands, in a statement. 'With this sustainability rating method, it will be much easier to find and compare sustainable investment opportunities. In addition, more than one hundred funds offered by us score in the top two categories.'
Click the link to view the full Mifid note (in Dutch).
Related stories:
Dutch merchant bank debuts ETF in first worst-of play for retail investors
The Netherlands Market Review - May 2017
SRP 3-minute Q&A: Laurent Guntenaar, Kempen
We do not have a vision on the market, we have a vision on volatility, Bufferfund