In this week’s roundup, we look at the latest update on Korean regulator’s probe into mis-selling, acquisitions by Crystal and MSCI, offering from Hedonova, and more.
Korea’s Financial Supervisory Service (FSS) warned financial institutions of ‘stern measures’ on mis-selling practices when addressing its 2024 agenda on 7 February.
Financial companies evading responsibility by disregarding customers’ profit or not recognizing the losses that they have, will face stern measures and even risk getting kicked out from the market - Lee Bokhyun, FSS
‘Starting this year, financial companies evading responsibility by disregarding customers’ profit or not recognizing the losses that they have, will face stern measures and even risk getting kicked out from the market,’ said Lee Bokhyun (pictured), the regulator’s governor.
Bokhyun noted reckless investing in real estate project financing and excessive fees from mis-selling of equity-linked securities (ELS) charged by local banks. In addition, the authorities expect to release the findings of a probe by next month on the possible mis-selling of the ELS linked to the Hang Seng China Enterprises Index (HSCEI), which fell to a record low in January.
The investigation started on 8 January and has included on-site inspections at a total of 12 banks and brokerage firms that sold ELS tied to the China equity index, as SRP reported.
Crystal to expand in structured products post-acquisition
France’s Crystal Group, backed by private equity firm Seven2, has entered into exclusive negotiations with the shareholders of Primonial Ingénierie & Développement (PID), a major player in the independent wealth management sector in France with €21 billion in assets under management.
Under the deal, Crystal would acquire 100% of PID’s capital by 30 June 2024, aiming to make it a French leader in wealth management and independent private management through a multi-channel operation.
The deal would also cover PID’s B2C and B2B2C distribution activities, which have €13 billion in advised assets, structured product brokerage activities through DS Investment Solutions, head office services and dedicated support.
Post-acquisition, the new group will bring together the Laplace, Zenith-IS and Primonial brands, with a combined €21 billion in outstandings, collections exceeding €5 billion, and €280 million in turnover.
SRP counts eight structured products sold by DS Investment Solutions in 2023, half of which are on the paper of SG Issuer. The distributor is also behind the Deal of the Year won by Société Générale in 2022.
MSCI acquires fintech to bolster custom index offering
MSCI has agreed to acquire Foxberry, a London-based provider of front-office index technology for investors, to scale its ability to deliver client ideation through simulation and analysis and introduce new features.
Founded in 2014, Foxberry specialises in delivering investment solutions driven by technology, account for a specific set of criteria, and increase the value-add for end users. These are enabled by the firm’s foxf9 platform, which focuses on index and strategy creation through hyper customisation, extensive back-testing and simulation capabilities, sustainability criteria, and reporting.
“Investors face the challenge of balancing competing investment objectives. This acquisition will allow MSCI to better meet demand for customized portfolios that reflect unique views and meet specific outcomes, emphasizing our commitment to providing tailored index solutions,” said Jana Haines (above right), head of index at MSCI.
The transaction is expected to close in the second quarter of 2024. Foxberry’s financial results will be presented as part of MSCI’s Index reportable segment.
Hedonova introduces short fund investing in structured products
The Morgan Stanley-backed hedge fund has unveiled its Short Fund, which it said ‘challenges conventional investment wisdom with a unique approach designed to thrive in both bull and bear markets’.
The fund operates as a collective investment scheme under a regulatory-compliant framework in Abu Dhabi and the US, targeting global investors seeking alternatives to traditional methodologies.
‘While many funds focus on average returns in bull markets, our Short Fund truly shines in bear markets. It is strategically positioned to achieve substantially higher returns by capitalizing on market downturns,’ said Alexander Cavendish (right), the company’s founder and a former banker at Morgan Stanley.
The fund features short positions in equities and currencies by incorporating structured products and derivatives for hedging with an objective of providing a buffer against market volatility, enhancing overall portfolio stability.
Established in December 2019, Hedonova received an initial investment of US$90m from founders the Royal House of Oman and Morgan Stanley.
Spectrum onboards Germany’s bwf
The pan-European trading venue for securities has become a member of the Frankfurt-headquartered Federal Association of Investment Firms (bwf), ‘continuing its commitment towards industry progress, regulatory alignment, transparency and investor protection around the security industry’, according to Spectrum Markets.
The membership is on the heels of the exchange’s onboarding of the Italian Association of Certificates and Investment Products (Acepi) in December 2023. Spectrum is also a member of the Italian Association of Financial Market Intermediaries (AMF Italia) and the German Structured Securities Association (BSW).
The bwf promotes the common professional interests of investment firms and institutions, within the framework of upcoming national and European regulatory, legislative and subordinate regulatory projects in the area of financial services and capital markets law.