Latest: Finra fines TD Ameritrade for disclosures on callable securities

The Financial Industry Regulatory Authority (Finra) has fined TD Ameritrade Clearing US$500,000 for failing to disclose fully information about callable securities, including exchange-traded notes (ETNs) and preferred securities, to millions of customers over five years.

According to the regulator, the lack of disclosure from January 2016 to June 2021 for almost 10 million transactions omitted required statements that the securities were callable, meaning the issuer of the security could repurchase it by a specific date, which could affect the securities’ yield, particularly in regard to the ETNs.

TD Ameritrade self-reported the matter to Finra, according to the settlement, in which the company agreed to Finra’s findings without admission or denial.

Charles Schwab Corp., which acquired TD Ameritrade in 2020, said the settlement resolves an ‘unintentional oversight about the placement of certain information on trade confirmations for a few securities’.

According to Finra, TD Ameritrade sent trade confirmations to clients who made more than 9.8 million purchases of the securities in question that failed to disclose the securities could be redeemed, and in the case of the ETNs, that a redemption before reaching full maturity could affect the yield of the securities.

Click in the link to read the Finra notice.

Luxsipa boost member ranks

The Luxembourg Structured Investment Products Association (Luxsipa) has announced that Canadian Imperial Bank of Commerce (CIBC) and Banque Transatlantique Luxembourg have joined the association as new members.

CIBC started its structured products business in Canada in 1995. In 2012, the bank’s structured notes business was launched in Europe through its London branch. However, because of Brexit, CIBC Capital Markets (Europe) was then established in Luxembourg in 2020, offering a subset of capital markets products to European clients.

Banque Transatlantique Luxembourg, a subsidiary of Crédit Mutuel Alliance Fédérale, was established in 1989. Its structured products business is headed by Renato Strillacci, director of the investment department at the bank.

Last month, the association appointed Pierre Stoll as its new secretary general.

Luxsipa was founded in 2019. Its members include Banque de Luxembourg, Banque et Caisse d’Epargne de l’Etat Luxembourg (Spuerkeess), Banque Internationale à Luxembourg (BIL), BGL BNP Paribas, BNP Paribas, Quintet Private Bank (Europe), Intesa Sanpaolo Wealth Management, Société Générale Luxembourg, Société Générale, Société de la Bourse de Luxembourg.

Luma onboards BNP Paribas

Luma Financial Technologies has announced the addition of BNP Paribas to its pool of structured products issuers connected for fully automated pricing and trading.

As part of the agreement Luma is now connected to the BNP Smart Derivatives API, allowing users to access automated pricing from BNP Paribas.

Luma users can view BNP Paribas’ indicative and final term sheets as well as regulatory documentation, fed automatically from the Smart Derivatives API. Trades can be confirmed automatically by BNP Paribas via Luma’s online trade workflow.

‘By connecting to BNP Paribas’ Smart Derivatives API, our clients will be able to price multiple product types with the option to trade electronically or with support from the BNP Paribas sales team, benefitting users seeking maximum efficiency when creating structured products,’ said David Wood, managing director of Luma’s International Business. 

The news comes on the heels of the partnership announced by the platform last week with Chicago-based SpiderRock Advisors to provide advisors with direct access to structured note replication strategies via Separately Managed Accounts (SMAs) and the expansion of its product coverage with interest rates structures.

Hang Seng releases high div China-HK indices

Hang Seng Indexes Company has launched the Hang Seng SCHK High Dividend Yield Screened Index and Hang Seng SCHK China Central SOEs High Dividend Yield Index, as it continues to expand its range of factor indices targeted at investors seeking to diversify their portfolios.

With the rising popularity of dividend yield strategy among factor indices, there has been a strong net inflow for dividend related exchange-traded funds (ETFs) in Apac during the previous three years. The index provider believes a defensive investment solution such as the dividend yield strategy could deliver a relatively stable performance for income-oriented investors and enable them to navigate the dynamic economic environment.

The Hang Seng SCHK High Dividend Yield Screened Index reflects the performance of high-yield large-cap and mid-cap securities listed in Hong Kong that are eligible for trading via the Southbound trading link of Stock Connect Scheme. This new index selects high dividend-paying and financially sound companies, aiming to offer sustainable income, avoid yield traps and create long-term value for investors.

To capitalise on the growing interest in central State-Owned Enterprises (SOEs) recently, the launch of the Hang Seng SCHK China Central SOEs High Dividend Yield Index tracks the performance of high-yield securities listed in Hong Kong with central SOEs as the largest shareholder, which are eligible for trading via the Southbound trading link of Stock Connect Scheme.

Amid SOEs reform gaining momentum continuously, the new index will help investors to seize investment opportunities related to these strengthening SOEs in China as well as harvesting stable incomes over the long run.

The two new indices are calculated and disseminated in real-time at two second intervals and have been designed to enhance the risk adjusted return of the portfolio, through capturing one or more long-term factor risk premiums.

Nomura deploys first bond-inverse tracker in Japan

Nomura Asset Management (NAM), the core company within the Investment Management Division of Nomura Group, has announced the launch a new ETF designed to track the performance of the JPX JGB Futures Double Inverse Index. The ETF is the first bond-inverse ETF in Japan.

The ETF has been approved for listing by the Tokyo Stock Exchange (TSE) with a listing date of 23 June 2023. From the listing date, investors will be able to trade the tracker fund on the TSE through securities dealers and traders in Japan. The minimum investment amount for the ETF is expected to be approximately 7,500 yen (per 10 units). The ETF is part of Nomura’s Next Funds range which now comprises 68 products.

JPX JGB Futures Index Series is calculated by applying a multiplier to the daily rate of return of the JGB Futures, where the index series consist of four indexes including the JPX JGB Futures Index, JPX JGB Futures Inverse Index, JPX JGB Futures Leveraged Index, and JPX JGB Futures Double Inverse Index.

The indexes will be published once a day every day with a base date of the calculation of 30 December 2008, and the base value of 10,000 points.

Image: Blue Planet Studio/Adobe Stock.