Latest: Montreal Exchange - ETF options boosted by structured notes hedging

The Montreal Exchange has logged the average daily volume (ADV) of exchange-traded fund (ETF) options of 88,000 contracts for 9M 2024, a 21% increase year-on-year (YoY). 

‘ETF options are booming on the back of structured notes issued by banks and distributed to their retail clients, notes that are leveraging the high interest rates environment and are using options on sectors such as banking,’ stated MX in its Q3 2024 highlight report. The trend is expected to continue ‘for the near future’.

Meanwhile, the ADV of equity options dropped 14% to 145,000 for the first nine months as delta one strategies are less profitable under current conditions. The exchange’s flagship S&P/TSX 60 Index Standard Futures (SXF) saw another volume contraction in Q3 24 from the previous quarter as the impact of the forward repricing hasn’t bottomed out yet (ADV -8.5% Q3 vs Q2, -20% YoY).

 _{Source: TMX}

For interest rates, the overall uncertainty about Bank of Canada’s rates policy brought record activity across the curve with 139,000 ADV for three-month CORRA Futures (CRA), 67,000 for two-year Canada Bond Futures (CGF) and 72000 for five-year CGF. The easing monetary cycle continued in Q3 24 with the central bank having cut by an additional 25 bps in July while the Fed cut the rate by 50 bps.

Click here to read the report.

Singapore regulator bans ex-UOB banker convicted of structured deposits forgery

The Monetary Authority of Singapore (MAS) has issued 14-year prohibition orders against Sheng Yang Loh, a former representative of United Overseas Bank (UOB), following his conviction for cheating, forgery and acquiring benefits of criminal conduct.

Mr Loh’s offences have given MAS reason to believe that he will not perform financial advisory and capital markets services honestly

Loh defrauded a total of 17 victims of more than SG$1 million (US$741k) by inducing them to sign up for fictitious UOB fixed and structured deposit products between June 2021 and February 2023, according to a statement from the Singaporean financial watchdog.

He instructed the victims to transfer monies to him, in cash and to various bank accounts, for the placement of the purported deposits, the MAS said. Forged documents were also given to some victims to convince them that their monies had been deposited with the bank. He subsequently used the monies obtained from the victims for online gambling.

According to the MAS, Loh started committing the offences while he was employed as a representative for UOB and continued even after he was suspended by UOB and while he was under investigation by the Singapore Police Force.

On 15 February, he pleaded guilty to nine charges, including seven counts of cheating, one count of forgery and one count of acquiring benefits of criminal conduct, as well as another 13 charges being taken into consideration for sentencing purposes. He was sentenced to 68 months’ imprisonment.

Under the latest probation orders, which took effect on 26 November, Loh is prohibited for 14 years from providing any financial advisory service and from taking part in the management, acting as a director, or becoming a substantial shareholder of any financial advisory firm under the Financial Advisers Act.

‘Mr Loh’s offences have given MAS reason to believe that he will not perform financial advisory and capital markets services honestly,’ the MAS said.

He is also prohibited from performing any regulated activity and from taking part in the management, acting as a director, or becoming a substantial shareholder, of any capital markets services firm under the Securities and Futures Act. 

Hang Seng Indexes rolls out INdexLab

Hang Seng Indexes Company (HSIL) has launched of Hang Seng INdexLab (INdexLab), an custom indexing platform designed for the Hong Kong and mainland China markets.

INdexLab accelerates the development of bespoke financial products that help financial institutions effectively meet the diverse investment needs of their clients - Anita Mo

INdexLab is a cloud-based web tool that will enable users to test and design custom indexes. By applying various index construction rules, users can create tailor-made indexes while utilising a comprehensive suite of analytics tools to perform in-depth analysis and discover unique index characteristics, stated HSIL.

Key analytics features include performance analysis via time-series charts to visualise index performance, industry distribution and key risk attributes, such as annualised return, volatility, and turnover; as well as factor exposure by analysing the exposure of the custom index to different factors, including quality, momentum, value and more.

Users will also be able to access statistics on the contributions of different industries or factors to the index return and create detailed reports and factsheets for the custom index.

INdexLab is targeted at passive fund managers, hedge fund managers and investment banks, and asset owners. The platform is available in English, Traditional Chinese and Simplified Chinese.

Anita Mo, chief executive officer at Hang Seng Indexes Company, said: ‘INdexLab accelerates the development of bespoke financial products that help financial institutions effectively meet the diverse investment needs of their clients.’

EU banks continue to meet their MREL obligations

The European Banking Authority (EBA) has published its Q2 2024 quarterly dashboard on minimum requirement for own funds and eligible liabilities (MREL), which discloses aggregated statistical information for 339 banks earmarked for resolution across the European Union and for which EBA has received data about both decision and resources.

According to the banking regulator, all banks meet their MREL requirements in line with the Bank Recovery and Resolution Directive (BRRD) deadline of 1 January 2024, with the exception of 21 banks which are still in their transition period and have reported a shortfall.

The amount of instruments becoming ineligible over the next year for the sample reached €220 billion (US$231 billion), which according to the EBA ‘appears manageable’.

As of 30 June 2024, 318 banks out of a sample of 339 met their MREL target while 21 are still in their transition report a shortfall – this is down from 30 as at end 2024 on a comparable sample. Their combined outstanding shortfall reached €6.1bn or 2.6% of their combined risk-weighted assets.

Banks in the sample reported €220 bn (US$231 bn) of MREL instruments that will become ineligible by the end of June 2025 due to their residual maturity falling below one year. These account for around 18.6% of MREL eligible instruments other than own funds.

Transfer strategies continue to be the preferred option in terms of number of decisions (61%), while bail-in is the favoured option in terms of RWAs covered (94%). This reflects the fact that transfer strategies are favoured for smaller banks, while bail-in is the preferred option for the larger ones.

More details on MREL roll over needs and the state of resolution planning will be included in the upcoming Autumn 2024 EBA Risk Assessment Report.

Barclays to establish new PB booking centre in Singapore

Barclays has unveiled plans to establish a new Private Bank booking centre in Singapore.

Establishing the new booking centre further strengthens our global proposition, allowing us to better serve our clients - Sasha Wiggins

The new booking centre is part of Barclays Private Bank’s commitment to expanding in Asia with a focus on specialist investment, banking, lending and wealth advisory services to ultra-high-net-worth (UHNW) and global family office (GFO) clients.

Through the Singapore booking centre, Barclays Private Bank will offer clients a comprehensive wealth management offering, with the ability to book assets locally.

Barclays Private Bank is seeking to leverage its partnership with Barclays Investment Bank to offer an integrated ‘one-bank’ proposition that will provide clients with quasi-institutional investment solutions, including access to more sophisticated financial products such as structured products and cross-asset class offerings.

‘Establishing the new booking centre further strengthens our global proposition, allowing us to better serve our clients,’ said Sasha Wiggins (right), CEO, Barclays Private Bank and Wealth Management.

‘This centre will not only strengthen our operational capabilities but will also allow us to offer our clients a greater range of wealth management products and services,’ said Evonne Tan, head of Barclays Private Bank, Singapore.

The new booking centre in Singapore is expected to be operational by 2026.

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