As the end of the year looms, we look at the headlines that dominated the week before we break for the Christmas holiday.
Last week Leonteq made the headlines after the Swiss regulator ordered the company to pay US$10m by for breaching risk management and suitability obligations - Finma also ordered the Swiss structured products provider to halt its existing relationships as well as new business with unregulated distributors.
According to the regulator, the Leonteq financial group (LTQ) seriously breached its risk management obligations and the obligations to ensure suitability in connection with the distribution of its financial market products by some distributors abroad.
This follows an order issued by the German Federal Financial Supervisory Authority (BaFin) against Leonteq Securities (Europe) about a year ago urging the Swiss structured products specialist to remedy deficiencies in its precautions to prevent money laundering and terrorist financing.
The latest chapter of the saga suggest that the story is far from over and is expected to have further developments.
The latest annuities roundup brought news of Allianz’s partnership with Empower Annuity Insurance Company of America, a retirement service provider with approximately US$1.7 trillion assets under administration, to roll out the platform’s first fixed index annuity (FIA).
The Allianz Lifetime Income+ Annuity is an in-plan guaranteed lifetime income option for defined contribution plans on the paper of Allianz Life Insurance Company of North America, and it is the second largest FIA issuer in the US with US$10 billion sales for 9M 2024 – on top of an S&P 500-linked option, the annuity offers exclusive access to the Bloomberg US Dynamic Balance II Excess Return Index, a US balanced futures index (BTSIDB2E).
Allianz was back on the headlines last week as Gregoire Tournant, who was chief investment officer (CIO) of Allianz Global Investors US (AGI US) when the Structured Alpha funds scandal was unveiled, avoided prison time due to health issues regarding the multi-billion-dollar fraud scheme but was sentenced to 18 months home confinement and three-year probation at a federal court in Manhattan.
The funds were among the most profitable products managed by AGI US with US$550m racked in commissions and US$11 billion AuM at its height but lost in excess of US$8 billion in value and US$3 billion in principal; faced margin calls and redemption requests, and ultimately were shut down, after the March 2020 market meltdown.
Looking at the Middle East, the full structured products value chain is looking at new developments as the market moves from an institutional focused space towards the first stages of development for onshore distribution of structured products market in the region.
In a recent interview with Elie Geagea, head of equity derivatives solutions, Middle East, HSBC, following SRP’s first event in Dubai on 20 November the UK bank’s executive noted that structured products are very much on the region’s distributors’ agenda and that there is significant momentum as brokerages are also expanding in the region.
“There are many enablers including an increasing local wealth/retail client base, an attractive region for high-net-worth individuals and family office institutions,” Geagea said, adding that on the distribution side, the main drivers of demand are Tier 1 foreign private banks based in Dubai, Abu Dhabi and Qatar for offshore accounts, “but also local private banks looking to develop their structured notes offering for onshore clients as well as local retail banks looking to develop their structured deposits offering for onshore clients”.
League tables
Also, on the other side of the pond, the end of the year league table for the Americas unveiled the top issuers of the structured products in the Americas year-to-date based on SRP data.
By sales volume, J.P. Morgan finished the year in the top spot among a total of 22 issuers as the largest player in its domestic market with US$17.8 billion amassed from around 7,000 products, commanding a 13.9% market share.
In Canada, the number one is the Canadian Imperial Bank of Commerce (CIBC) with 1,089 issued products, accounting for over 40% of the total; whereas in Brazil is Banco Santander with approximately 80% of the 1,276 the certificado de operações estruturadas (COE) issued over the last six months. In Mexico, it was Monex dominated the ranking with US$13.2 billion collected from 3,371 issuances.
In Apac, the H2 24 league tables show different dynamics across markets and in Europe the ranking was focused on the best-sellers during the period which saw French issuers callables breached the €1 billion mark.
Our data analysis stories shed light into several areas and markets such as the issuance activities in Q3 24 across the Americas and listed products dynamics in Hong Kong SAR; while other market updates showed an increase of 16% YoY in sales across Europe’s listed markets, and a 20-month trading volume high on the Swiss SIX Exchange driven by crypto products.
Another highlight of SRP’s news coverage last week was the partnership between Raiffeisen Bank International (RBI) and Dom Inwestycyjny (DI) Xelion for the distribution of structured products in Poland.
The Austrian bank has issued its first product in the country in collaboration with the Polish investment house.