That Was The Week: Baby steps

Sparring with obvious requires intellectual rigour that requires a thought of what lies behind headlines and resides deep.

An example. If you were to, say, create a nomenclature for structured products in one country, or across one region, you might think that some of the best options may lie in having a look at what you have and building on that. After all, it is familiar, but, moreover, your underlying purpose is to make things as simple as possible for an investor – the simplest of souls, or that’s the way you must look at it.

If your example country was the US, then you might have been talking to some of the leading lights and doers every third Tuesday of every month this year. Those conversations would have been about the naming conventions of products to ensure that any buyer can simply compare the benefits of one with another, without the paraphernalia and complication of marketing that individual issuers have invested in.

All agree, but all are, at the same time, divided by the glossy and creative thinking that has gone behind ensuring that one bank has a fancier name and presentation than the other, which, while not meaning that a wheel is still a wheel, may have you wondering why a wheel cover may also be known as a hubcap.

It’s odd, but also entirely appropriate, that the US is at the heart of the nomenclature discussion, debate and destiny. It was the US that decided to drive on the right, profoundly alter the spelling of the English language, just to be its own person. In short, the US wanted to be different. While removing the stain of colonialism, the upshot of much of this thought and action was the creation of marketing. Europe may have had some fancy pictures and logos, but that was nothing compared to the onslaught of glitz that emerged from America in the middle of the last century.

Having celebrated its right to be different and for everyone to have their own brand, the structured products fraternity has realised, after more than 10 years of talking and sharing the odd cocktail, that the only way forward is a united front, so here we are.

And sometimes the best way to turn that corner requires the removal of one of the things that had always been a given, that all had marketed in much the same way, and certainly with the same name. Hello and perhaps good bye to the reverse convertible (aka, groovily, the revcon).

The 26-page initial structured products classification document that was released at the end of the summer for comment from interested parties did not include the reverse convertible. Initially baffling, with excuses for the cliché, you can’t make an omelette without breaking a few eggs. The logic is that revcons can fit into more than one of the new classification categories, so could not be retained in its own right.

Now there are a lot of categories, as you’ll see from the number of graphs you have to flitter through when examining the pictures and words of description, but the baby steps have, finally been taken. As little as it can seem, this is real progress. Roll on the undoubtedly troublesome adolescence.