In the second part of an interview, Marco Amato, chief financial & risk officer, Leonteq, talks to SRP about the company's commitment to the Asia Pacific region, the pensions and insurance market, its multi-issuer platform and the differences between the institutional market and the retail market.

"The Apac region is our fastest growing best performing market and we want to benefit from that momentum," says Amato. Leonteq is looking to set up a partnership with a strong issuer in Apac to be able to establish a solid foothold and continue expanding to the different countries, according to Amato. "This will take priority over any projects in Switzerland and Europe which gives you an idea of our commitment to the region," he says.

"Our market share is still small but there is appetite in those markets for structured products in general and for fintech in particular."

Leonteq's Insurance and Wealth Planning Solutions segment, which is newly headed by Jochen Kühn, a former partner from McKinsey, since the beginning of this year, contributes 10-15% of the firm's top line," according to Amato. "[Insurance and Wealth Planning Solutions] has a meaning full bottom-line impact with an appealing cost-income ratio of below 50%," says Amato. "Protection and income are in high demand and unit-linked life insurance policies can deliver just that. It will allow us to create long-term and stable revenue and we will continue to build our offering for insurance companies."

The long-term savings market in Switzerland is still under pressure due to the low interest rate environment, according to Amato. "Traditional products are tied to the technical interest rate for regular premium guarantees which was recently reduced from 75 bps to 25 bps, rendering these products less attractive for policy holders," he says. "In comparison, Leonteq enabled capital protection solutions are tied to market rates and benefit immediately from hikes."

Amato believes the mind set from providers and investors alike has changed in the structured products market. "The focus is no longer on providing products that will get you the higher fees or commission but about delivering products that make sense and add value to investors so that they come back to you," he says.

"Leonteq has state-of-the-art manufacturing and structuring capabilities. We have a strong platform which will be fully compliant with the Priips and Mifid 2 regimes, and a very competent sales force," says Amato. "Our technology has been set up to set us apart in the market but it is our people who made the platform we need.

"We differentiate ourselves from other provider by being a one-stop-shop for our partner banks when it comes to structured investment products," says Amato. "Our aim is not to be a pricing platform for issuers but an outsource facility that covers the full value chain of structured investment products." Amato thinks Leonteq's offering is superior "as it goes well beyond connectivity and addresses a number of other needs of products issuers and distributors". "We don't think there is a comparable outfit in the structured products market which means that we can capitalise on that uniqueness."

Structured products continue to deliver to investors because they can extract value in different market situations and you can use them to buy and hold but also to be more speculative, according to Amato. "The market has benefited from regulation and education," he says. "Despite the low interest rates environment and volatility levels coming down significantly markets continue to grow (Switzerland 16% according to the SSPA) and that's proof that these products can play a role in any portfolio," says Amato. "They can also deliver income and protect investors' capital which makes them very attractive."

According to Amato, the retail segment is driving most of the activity. "You can manage the institutional market with a handful of people (large tickets, long maturities...) doing manual work and institutional investors usually don't seek quotes in real time," he says. "The retail market is the opposite because it now requires higher efficiency and automated tools to deal with market making, tighter spreads, daily volumes, liquidity... the retail market has pushed the industry forward and brought innovation."

Leonteq has issued 815 structured products this year to date, making it the second most active provider in Europe, behind Vontobel, according to SRP data. Leonteq has just under 3,400 live products across jurisdictions, the majority of which are aimed at retail investors in the company's home market Switzerland, while Germany, Austria, Italy, France are the other European markets where Leonteq has products outstanding.

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