BNP Paribas, Citi, Credit Suisse and JP Morgan have teamed up with Linklaters to develop the Single Platform Investment Repackaging Entity, or Spire platform - a tool for institutional investors looking to buy repackaged structured products.
Repacks, or repackaged transactions are structured products that combine a debt security and a derivative and function much like a structured note, offering access to all kinds of assets and payoffs.
The investment process for Spire will be a standard primary market operation, much like any private placement, where the investor comes to the dealer and receives a bespoke quote, according to a representative at Spire, a Luxembourg-registered company. The benefit of Spire, in contrast to the traditional process, is that every dealer the client approaches on the platform will provide a quote for the same issuance vehicle, using the same note programme.
"Spire works much like a third-party medium-term note issuer, where each transaction is a bilateral trade between investor and dealer, and the note is issued by Spire," said the representative. There is a single, shared set of documentation that will be used by dealers, so comparison between the offers of the four dealers is quick and straightforward.
Spire's repacks will allow investors to gain exposure to all kinds of asset classes, payoffs and underlyings, but not proprietary indices, which are boutique, in-house instruments and, as such, are not shared between the dealers on Spire, as well as other particularly illiquid assets. "Clients will be able to buy into asset classes, such as interest rates, credit and equity - most of the standard universe of structured products," said the representative.
The client focus is particularly pronounced on Spire, not least because the whole thing was set in motion by investors who approached the banks involved and encouraged them to set up a social, centralised platform. "It's very much an investor-driven initiative," said the representative. "As such, we've been in collaboration with key investors in Europe and Asia over the course of the development."
The programme has been hardwired for institutional clients from the start, he noted, and there are no current plans to expand access to retail investors. The platform will be available to institutional investors outside the US.
Spire will be an open platform, and while there would be only four dealers initially, at some point others will be allowed in subject to certain criteria. "There is no specific launch date yet, as the final touches are still being ironed out," the representative said.
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