Latest: LBBW launches ESG index for structured products

The index replicates the performance of the Dax 50 ESG NR Index assuming a constant markdown of four percent per annum, accruing on a daily basis.

Sustainability is an integral part of LBBW’s corporate strategy and business policies, and is core to the product suite it seeks to offer clients, according to Jan Krüger (pictured), head of equity markets at LBBW.

Structured products have been the vehicle of choice for many retail investors, in Germany and beyond, targeting ESG strategies. A total of US$4.6 billion was invested in index-based, ESG-focused structured products in the first six months of this year, according to SRP data. That compares with US$6.6 billion for all of 2020.

‘This new index marries Qontigo’s strong index capabilities and LBWW’s long-standing expertise as issuer of retail financial products. It is another example of how we can partner up with clients to build customized and rules-based solutions that are efficient for end investors,’ said Serkan Batir, managing director Dax at Qontigo.

Solactive acquires Dutch benchmark administrator

Solactive has announced the acquisition of 100% of the share capital of Global Property Research (GPR) from Van Lanschot Kempen.

GPR is a registered benchmark administrator under the European benchmark regulation. The company was launched in 1995. It is a global index provider in property and infrastructure research and provides its services to leading financial institutions.

‘We share a customer-centric and tailored approach to indexing with GPR,’ said Steffen Scheuble, CEO of Solactive.

Jeroen Vreeker from Global Property Research added: ‘GPR continues to address trends that are reshaping investment management, including the growth of passive investing, the incorporation of sustainability factors, and the transition towards customization of benchmarking solutions catered to the needs of investors.’

CSOP Asset Management introduces two new L&I ETPs

CSOP Asset Management has licensed two Solactive indices to be used as underlying for the CSOP WTI Crude Oil Futures Daily (-1x) Inverse Product and the CSOP Gold Futures Daily (-1x) Inverse Product, which were launched on 13 December 2021.

The former is a combination of futures and swap-based replication strategies, to provide investment results that closely correspond to the inverse (-1x) of the daily performance of the Solactive WTI 1-Day Rolling Futures Index, which in turn tracks the performance of the CME (Nymex) active month WTI Crude Oil Future. 

Meanwhile, the CSOP Gold Futures Daily (-1x) Inverse Product follows the objective to provide investment results that closely correspond to the inverse (-1x) of the daily performance of the Solactive Gold 1-Day Rolling Futures Index, which in turn tracks the performance of the CME (Comex) active month Gold Future.

‘L&I products are increasingly gaining importance for investors who tactically want to diversify their portfolios,’ commented Timo Pfeiffer, Chief Markets Officer at Solactive.

South Korea’s DLS/ELS outstanding value hits new low in Q3

The outstanding value of derivatives-linked securities issued in South Korea reached its lowest level in nearly eight years in the third quarter of 2021 as a result of falling Hong Kong share prices, according to the Financial Supervisory Service (FSS).

The amount of outstanding equity-linked securities (ELS) and derivatives-linked securities (DLS) came to KRW79.9 trillion (US$67.1 billion) as of the end of September, down KRW300 billion compared to the previous quarter, according to the latest report from the country’s regulator.

The September count recorded the lowest value since the end of 2013. The outstanding value in the South Korean market has been on the decline since June 2020.

According to the report, the outstanding value of ELS stood at KRW53 trillion at the end of June, down 0.6% compared to the previous quarter. ELS are sold as hybrid debt securities linked to the performance of benchmark stock indexes such as the Korea Composite Stock Price Index - Kospi 200, S&P 500, Eurostoxx 50, Hang Seng China Enterprises Index (HSCEI) and Nikkei 225.

The value of outstanding DLS instruments, which offer exposure to interest rates, currency values and other underlying assets, amounted to KRW26.9 trillion, the same as at the end of June.

The report noted that ELS and DLS sales fell by KRW6.4 trillion from the previous quarter to KRW14.6 trillion at the end of September. ELS and DLS do not guarantee the principal invested.

BNP Paribas sells Bank of the West to BMO

BNP Paribas has reached an agreement with BMO Financial Group for the sale of 100% of its retail & commercial banking activities in the US conducted through its subsidiary Bank of the West, for US$16.3 billion in cash.

The agreement announced in late December is expected to formally close in 2022, as it is pending approval of the relevant antitrust and regulatory authorities. The transaction will generate at closing a one-off capital gain (net of taxes) estimated at approximately €2.9 billion and a positive impact on BNP Paribas Group’s Common Equity Tier 1 (CET1) ratio of approximately 170 basis points.

BNP Paribas intends to redeploy the remaining proceeds (equivalent to approximately €7 billion in capital release), to improve long-term value creation through the acceleration of organic growth, in particular in Europe, targeted investments in technologies and innovative business models, and bolt-on acquisitions in value-added businesses.

The acquisition will bring nearly 1.8 million customers to BMO and will further extend its banking presence through 514 additional branches and commercial and wealth offices in the US market.

Bank of the West was BNP Paribas’ main outlet for retail structured products in the US. The French bank marketed 100 market-linked certificates of deposits (MLCDs) with an estimated value of US$605 billion, according to SRP data.

There are currently eight live structures mostly linked to equity shares although the French bank also deployed a number of structures linked to proprietary and custom indexes such as the BNP Paribas Multi Asset Diversified 5 Index, DWA Large Cap Sector Rotation Target Volatility 7 and Morningstar Ultimate Stock-Pickers Target Volatility 7 Index.