Vontobel enters Hong Kong's listed products market

Vontobel Financial Products has launched its first ten listed structured products on the Hong Kong Stock Exchange.

On the first day of trading, the two warrants listed were among the top traded already. In the coming 12 months, 300 to 400 warrants and Callable Bull Bear Contracts (CBBCs) will be launched, covering all popular underlyings, according to the Swiss bank.

According to Simon Yung, head of public distribution at Vontobel in Hong Kong, there is 'a lot of demand for such listed structured products due to their low transaction fees, variety of exposures and access to liquidity'.

'We have started with these products having seen a lot of investor demand for these products in recent years,' said Yung. 'We will have a very active role in educating Hong Kong's investors on these types of products since these 'high reward' products also inherently carry risk. At the same time, we will bring new and innovative products to Hong Kong by leveraging the deep experience of our global team.'

The Swiss bank plans to leverage its comprehensive product suite in Europe to build upon and expand this initial product launch in Hong Kong with plans to add new products over time to include products on oversea stocks, commodities, Forex, and other structured products.

Roger Studer (pictured), head of Vontobel Investment Banking, said the bank wants to play a 'key role in introducing new structured products which allow investors to have choices of different level of leverage and variety of payoffs'.

'With the market entry in Hong Kong, we reaffirm our commitment to growing our presence within Asia Pacific's listed structured products industry,' said Studer, adding that Vontobel will provide a 'high performance market making approach from European markets to achieve a high standard of liquidity provision'.

Hong Kong is the biggest market globally for leveraged products in terms of trading volume and the percentage of total market turnover. According to SRP data, the leverage segment of the market is dominated by Citi with over US$10bn and 61% market share in 2016, followed by Societe Generale (US$1.1bn/7%), JP Morgan (US$1.06bn/6%), Bank of China (US$956m/6%), and UBS (US$796m/5%).

Vontobel which made its market debut in the Netherlands and France earlier this year unveiled its plan to offer its range of leverage products on the Hong Kong stock exchange in the second half of 2017 in its half year results released in July.

As part of its Asia Pacific expansion the Swiss bank entered into a strategic agreement in February with Bank of Singapore through which clients of the Singaporean private banks will be able to book their assets in Switzerland and have access to Vontobel's range of wealth management European financial products and services, including the bank's structured products Deritrade platform, as well as Deritrade SmartGuide, the bank's B2B4C offering which combines wealth planning advisory services, pricing, structuring/engineering and trading functions.

SRP data shows that the Swiss bank is the fifth most active European provider - with 72,084 products marketed year to date - and tops the sales volume ranking with €4.8bn sold so far this year. In Switzerland, Vontobel appears as the third most active issuer of products with 5,470 in the first half of 2017 and the top seller with CHF4.3bn (€3.8bn).

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