Commerzbank has launched a tool in the Netherlands that allows investors to create tailor-made turbos. By completing a questionnaire, investors can indicate which type of turbo they prefer (barrier equals strike, classic or limited); the strategy they want (long or short); on which underlying; and whether or not they want a maturity date for their product. The survey also allows investors to decide on the stop-loss level or leverage.

Investors use the 'make your own turbo tool' mainly (but not exclusively) to create turbos linked to shares, according to Christophe Cox (pictured), vice president, public distribution, equity markets and commodities, Belgium and the Netherlands. "People do not necessarily request new underlyings, but they also request other stop-loss values or leverage factors that are not available on existing underlyings," said Cox.

Requests for new turbos are accepted not automatically as there is a cost attached to manufacturing listed products and the proposals must therefore meet a number of criteria. "We have to look at several factors before we can add a new underlying," said Cox. "There must be commercial interest from investors, it must be possible for our traders to hedge the product and the product must fit within the prevailing market conditions."

It is not possible to create a turbo on a company with a low market capitalisation or with a limited daily trading volume, according to Cox. "We cannot add underlyings, or do all the groundwork, if little or no trading takes place in that particular underlying."

Once the request is accepted, the new turbo can be available within one or two trading days following the request. "An application which is made in the morning gives us the opportunity to have the product ready in the market the next trading day," said Cox.

More than 4,400 turbos from Commerzbank have been added to the SRP Netherlands database in 2018 to date. The products are listed at Euronext Amsterdam and include 3,012 open-ended turbos, with the remaining turbos having a fixed maturity.

Almost 2,600 products were linked to a single share with the bank using stocks of 347 different companies to underlie its turbos. Arcelor Mittal was the most popular share (63 products) followed by Altice (62), Tom Tom ((58), Air France-KLM (56), and Tesla (50). More than 1,500 turbos were linked to a single index of which the AEX, seen in 620 products, was the most used. In total there were 31 indices made available to Dutch investors by the bank including, among other, Cac 40, Dax, Eurostoxx 50 and the Vstoxx.

Three-hundred and thirty-one turbos were linked to commodities with gold (63), Brent Crude oil (46), silver (45) and WTI Crude oil (26) and cocoa (15) the most frequently used. Thirteen different currency pairs were used by the bank in 98 products while another 19 products were linked to the interest rate, predominately Italian, German and US government bonds.

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