Vontobel has announced JP Morgan as the latest addition to its Deritrade structured products multi-issuer platform (MIP) in Switzerland following its move last week to expand activities in Asia. The US investment bank will join Deutsche Bank, Morgan Stanley, Societe Generale, UBS, Vontobel and ZKB, which account for more than 70% of the exchange-traded volume of structured products in the European country.
"We see the addition of JP Morgan as a re-endorsement of our strategy and business model," said Gerhard Meier (pictured), global head of Deritrade. "We see [the platform] as a dynamic business with no limit to the number of issuers we can onboard. The goal is to build a comprehensive multi-issuer platform with the relevant market players that brings true price competition and transparency for the benefit of investors."
The attraction for JPM is price transparency on a centralised platform that lowers costs, brings price efficiency and opens up new opportunities for client advisers. "Multi-issuer platforms create value for clients through their ability to customise products and efficiently source prices from a selection of issuers," said Nick Mihic, head of distribution for Switzerland, Germany and Austria at JP Morgan in a statement. "The automation of the value chain relating to structured products helps further increase efficiency and drive growth."
In Asia, Deritrade is in a market paradox as some of its partners in Switzerland are competitors there. SG and JPM are in the consortium of banks behind Contineo, the Hong Kong-based multi-issuer structured products platform and messaging network which went live earlier this week. "We see this as a healthy sign, because banks work at many levels where they compete with each other but also work in partnership," said Meier. "The situation in Asia with the other issuer platforms is different, and we don't see it as competition but as a complement. Our focus is not only on providing price transparency, but about the value proposition for distributors of structured products as we cover the full cycle from pricing to post-trading."
Meier declined to comment on market rumours suggesting that Vontobel could join Contineo or that there could be a cooperation agreement in the making between the two platforms. "There are rumours, [but] I cannot comment on any particular discussion," said Meier. "[However], we are very active in the market and we are in talks with multiple relevant market players; and if we see opportunities to create value in the market, we will react accordingly."
The increased activity in Asia and the interest from private banks is a reflection of how the market is changing, said Meier. "Private banks are looking very carefully at lowering costs, especially in the structured products market, and we have a tool that can reduce those costs substantially," he said. "We welcome this being on the agenda of private banks, as it is an area where we can add value to their businesses. We are confident we will continue adding issuers and distributors to our platform."