Societe Generale (SG) is gearing up to launch its SG Markets Structured Products in the Asia-Pacific region following a "very positive" year for the electronic trading platform serving structured products desks, distributors, private banks and wealth managers in Europe, according to David Wood (pictured), head of electronic business equity, derivatives and cross asset at SG.
"Our plan is to make a hard launch in Apac and customise the offering for that region," said Wood. "Products transacted in different markets have similarities, but there are also nuances in each market and we have to address aspects, such as legal programmes in the US versus the legal set-up in Europe and Asia. This is also to do with local market specifics, but also the way investors behave and trade. For instance, the US onshore market doesn't have the same flow nature as the Asian or European markets."
SG Markets has seen a large increase in the use of the platform in terms of the number of countries and clients using it this year, according to Wood. "[This] has increased the volume of prices we provide and the trades we have executed," said Wood. "The growth in trading volumes has been significant this year (100+% impact), and the improvement is notable compared to last year."
SG Markets can be accessed in different languages (English, French, German and Japanese) and includes research, trading, document generation, commodities offering, pricing and valuation, and lifecycle management, as well as an OTC functionality and a secondary market capability. The platform provides access to an underlying universe of around 1,500 assets and a diverse set of payoff profiles, including participation, call and put spreads, outperformance, bonus certificates and credit-linked notes.
While the emphasis last year was on the launch and the promotion of new capabilities, (products, underlyings, payoff types), and functionalities such as stress testing and high efficient tools for high volume users, "this year it has been more on consolidation across the clients using it", according to Wood.
Adding clients in Asia has turned the platform into a global operation, although there will be a degree of tailoring to make sure the platform provides the products to support the different behaviours and client needs in the different markets. "The Asian market is pretty much a multi-dealer story and we see continued growth in this segment, but we certainly see opportunities to leverage our capabilities and where our single-issuer platform can sit alongside multi-issuer platforms to provide support to clients in particular ways," said Wood. "The outlook for Asia-Pacific is positive for platforms and there is room to bring innovation through single-issuer offering."
From January 2018, platforms will have to comply with upcoming regulatory requirements, which will shape the first half of the year. Platforms are well placed to address a number of Mifid 2/Priips regulatory requirements around transparency, disclosure and so on, according to Wood. "[However] they will have to evolve and incorporate those regulatory requirements, as clients would not want to return to manual documentation generation, or give up real-time pricing on demand," said Wood. "Platforms will need to deliver all the relevant tests, documents and additional regulatory data to continue to offer click-and-trade capabilities and this is a sizable change to what they do now."
Platforms have the ability to generate a key investor document (Kid) in multiple languages in a realistic timeframe to support the advising of a trade can only be achieved by automation, according to Wood. "The technical difficulties to manage that kind of task on a manual basis has put automation and platforms at the forefront of developments to address this kind of challenge," he said. "On the best and quality of execution, our ability to provide pricing in real time for our products helps advisors to meet their best execution obligations in terms of being able to access liquidity very quickly and deliver a higher degree of execution reporting, so it is a win-win for product manufacturers and investors."
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