From the latest regulation news to the market dynamics, here's a weekly news recap on the structured product industry.

The European Structured Investment Products Association (Eusipa) and 11 other financial associations have sounded the alarm on the upcoming European Retail Investment Strategy (RIS), calling for a competitiveness check on regulation.

According to the trade associations, the RIS must be subjected to further probing in light of the European Commission’s (EC) competitiveness goals, and the need to advance a European Savings and Investments Union.

‘It is essential to subject the Retail Investment Strategy to a “competitiveness check”,’ stated the letter. ‘As it currently stands, the RIS will not achieve its initial goal of increasing retail participation in European capital markets.’

In Sweden, the latest paper published by Finansinspektionen, the country’s financial watchdog, found that autocalls are often expensive, associated with high risks and difficult to understand.

The analysis showed that in many cases, autocalls provide a lower return than if the consumer had bought the underlying shares directly. In 67% of the cases investigated by the watchdog, investors would have obtained better results by directly investing in an equally weighted portfolio consisting of the shares to which the autocall was linked.

‘Autocalls are often marketed as a product that should be beneficial in sideways, rising and sometimes falling markets,’ commented Mathias Lien Oskarsson, an analyst at Finansinspektionen. ‘But autocalls are associated with high risks and our analysis also shows that in most cases they are unprofitable compared to a direct investment in the underlying shares.’

Markets activity

Trading volumes increased by 24% month-on-month (MoM) in October in Austria, driven by bonus- and express certificates, which were up 58% and 175% MoM, respectively, the latest figures released by the Austrian certificate association revealed.

In Thailand, sales of structured notes saw a pick-up in the third quarter of the year, with volumes surging nearly 38% year-on-year to THB34.4 billion (US$1 billion), SRP data shows. Interest rate-linked structured notes overtake equity-linked structure to lead the product sales in the third quarter of the year.

SRP’s Nikolay Nikolov provided an analysis of the slowdown in the European market in Q3 2024. Despite this contraction, the year-to-date performance remains stronger than the average levels seen in 2023, reflecting a growth-oriented trajectory overall, Nikolov wrote.

Looking at indices, recent research by The Index Standard (TIS) shows that comparing live performance of intraday risk control indices with that of traditional risk control indices which measure volatility over longer periods found that the risk/return ratio of the intraday risk control mechanism is more effective to achieve better index performance.

“We see growing demand for these intraday indices, especially in the annuities market,” Laurence Black, founder of TIS, told SRP. “The intraday technology is being widely used and becoming a standard feature in many new index launches.”

SRP caught up with FTSE Russell Global Head of Custom Index Solutions Gerald Toledano, to discuss his mandate and plans in the structured products market. One area of focus will be customised solutions, where the provider of benchmarks and indices will capitalise on its data and content capabilities, “to become a more integral part of our clients' investment strategies,” said Toledano.

Movers & shakers

Former BNP Paribas banker Francisco Oliveira has joined Société Générale’s global markets division as co-head of global markets and head of fixed income and currencies, effective 6 January 2025. He will succeed Sylvain Cartier, and report to Anne-Christine Champion and Alexandre Fleury, co-heads of global banking and investor solutions at SG.

Meanwhile, Cartier will return to New York as head of global markets for the Americas, effective 1 January 2025, a role he held from 2017 to 2019. He will locally report to Stephane About, chief executive officer of SG Americas with a global reporting line to Oliveira and Mustapha. He will remain part of the group management committee. In the new role, Cartier will replace Fouad Farah who held the position for one year before his relocation to Paris in August 2024.

Mohamed Braham has been appointed deputy head of fixed income and currencies based in Paris, effective 6 January 2025. He will also report to Oliveira and Mustapha, and remain part of the group management committee.

Product manufacturers

Goldman Sachs Finance Corp International, an active issuer entity of Goldman Sachs Group for structured products (warrants, certificates and notes) in Europe and Asia, has posted a net loss of US$10m for H1 2024, and a gain of US$78m year-on-year.

This is mainly due to ‘lower net gains on the company’s lending activity and higher net losses on the company’s issuance and hedging activity,’ according to vehicle's latest financial report.

Barclays has negotiated a settlement over the fallout of its exchange-traded notes over-issuances in a class action lawsuit at a federal trial court in Manhattan.

The British bank has agreed to pay US$19.5m over the fallout of its structured product over-issuances after over two years since the blunder was reported to the regulator. Lead plaintiff Boston Retirement System proposed the settlement to the US District Court for the Southern District of New York last Tuesday, seeking preliminary approval from Judge Katherine Polk Failla.

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