Activity across European exchanges has increased year on year with €440 billion open interest and further turnover increase reported by Eusipa member markets.
Sales of investment and leverage structured products across European markets have remained constant at €35 billion (US$39 billion) in the second quarter of 2024 but were up 15% compared to the previous year, according to the latest update from the European Structured Investment Products Association (Eusipa) and its member associations.
Sales of investment products (35 % of total trading volume) on European trading venues fell by eight percent quarter on quarter but increased 39% year on year.
The association led by secretary general Thomas Wulf (pictured) also reported that sales of leverage products including warrants, knock-out warrants, and factor warrants amounted to €23 billion from April to June, accounting for 65% of total sales. On the other hand, the sale of leverage products increased 39% year-on-year and five percent on a quarterly basis.
"Structured product manufacturers have shown their ability to adapt to markets over the past months," Wulf told SRP. "Since investors were, rightfully as it turned out, anticipating further central bank rate cuts as a response to slowing inflation across major economies, many unsurprisingly opted to invest directly into equity."
Wulf noted that structured products "always have a role to play, though, under most market conditions". While turnover dipped from Q1 to Q2 it was still way higher than a year ago, with volumes steadily rising, he said.
"Should the ECB rate cuts continue over the coming months, as many observers seem to expect, investors will again likely look at structured products as a hedge against overheating bull markets, using, for example, capped structures, with the cap traded against a certain loss limitations, and even the much-loved monthly coupons as a way of managing portfolio risk," added Wulf.
At the end of June, trading venues in the reporting Eusipa markets listed 474,293 investment products and 1,976,671 leverage products. This represents a four percent decrease in the number of products on a quarterly basis, but a 10% increase compared to the same period of the previous year.
In the second quarter of 2024, banks issued 1,775,280 investment and leverage products, three percent less than in the previous quarter but 25% more than the previous year.
In addition, a total of 153,737 investment products were launched, accounting for nine percent of new issues. The 1,621,543 new leverage products comprised 91% of the total. Investment product issuance was down 21% on the first quarter of 2024.
In Austria, Belgium, Germany, Switzerland, Luxembourg, and Italy, the market volume of investment and leverage products issued as securities remained steady quarter on quarter at €439 billion. However, this represents a 15% increase on a yearly basis.
Investment structured products continued to dominate across the region with the market volume of standing at €421 billion at the end of June, a oone percent increase on the previous quarter.
On the leverage side of the market, the outstanding volume of leverage products amounted to €19 billion at the end of June, a 41%increase on the previous year but a seven percent decrease on the first quarter of 2024.
Eusipa members providing figures for the market report include Zertifikate Forum Austria (ZFA), the Belgian Structured Investment Products Association (Belsipa), Association Française des Produits Dérivés de Détail et de Bourse (AFPDB), Bundesverband für strukturierte Wertpapiere (BSW), Associazione Italiana Certificati e Prodotti di Investimento (Acepi), the Netherlands Structured Investment Products Association (Nedsipa), the Swedish Exchange Traded Investment Products Association (Setipa), the Swiss Structured Products Association (SSPA), and the Luxembourg Structured Investment Products Association (Luxsipa).